THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

The definitions and interpretations commencing on page 8 of this circular have, where appropriate, been used on this cover page.

Action required

If you have disposed of all of your Synergy shares, then this circular, together with the attached notice of general meeting, form of proxy and the revised listing particulars, should be handed to the purchaser of such shares or to the broker, CSDP, banker or other agent through whom the disposal was effected.

Beneficial shareholders who hold dematerialised shares through a CSDP or broker but who have not elected “own name” registration who wish to attend the general meeting must request their CSDP or broker to provide them with the necessary letter of representation to attend the general meeting or must instruct their CSDP or broker to vote on their behalf in terms of their agreement with their CSDP or broker.

Shareholders are referred to page 4 of this circular, which sets out the detailed action required of them in respect of the transaction and ancillary matters set out in this circular.

If you are in any doubt as to the action you should take, please consult your broker, CSDP, banker, legal advisor, accountant or other professional advisor immediately.

Synergy does not accept responsibility and will not be held liable for any failure on the part of the CSDP or broker of any holder of dematerialised shares to notify such shareholder of the action required of them in respect of the transaction and ancillary matters set out in this circular.

Synergy Income Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2007/032604/06)JSE share code: SGA ISIN: ZAE000202883JSE share code: SGB ISIN: ZAE000202891

(Approved as a REIT by the JSE)(“Synergy” or “the company”)

CIRCULAR TO SYNERGY SHAREHOLDERS

relating to the strategic repositioning of Synergy as a specialist high yielding, high growth fund with an internally-managed portfolio comprising retail, office and industrial assets, by way of:

• the acquisition by Synergy of the entire issued share capital of VAM from Vukile (resulting in the effective internalisation of Synergy’s asset and property management) in consideration for the issue of 22 945 522 SGB shares to Vukile;

• the exchange of Synergy’s portfolio of retail properties for the Vukile portfolio comprising 29 high yielding retail, office and industrial properties, a disposal of all of Synergy’s assets, as contemplated in section 112 of the Companies Act, and as such an “affected transaction” in terms of the Companies Act;

• the acquisition by Synergy of the entire issued share capital of Cumulative, a subsidiary of Arrowhead that will own approximately 100 high yielding retail, office and industrial properties, in consideration for the issue of 271 412 267 SGB shares to the Cumulative shareholders, triggering a mandatory offer to Synergy “A” and “B” shareholders in terms of the Companies Act, in respect of which a waiver is being sought;

• the change of Synergy’s name to “Gemgrow Properties Limited”;

• an amendment of Synergy’s MoI; and

• the reconstitution of the company’s board of directors,

together constituting a category one related party transaction in terms of section 10.4 of the JSE Listings Requirements and a reverse takeover of Synergy,

and enclosing:

• a notice of general meeting of Synergy shareholders;

• a form of proxy to attend and vote at the general meeting of Synergy shareholders, for use by certificated shareholders and dematerialised shareholders who have elected “own name” registration only; and

• revised listings particulars.

Corporate advisor and sponsor Attorneys and competition law advisors

Independent expert Independent reporting accountants

Independent property valuer Independent property valuer

Independent property valuer

Date of issue: Monday, 26 September 2016

This circular is available in English only. Copies of this circular may be obtained from the registered office of the company between 09:00 and 16:30 from Monday, 26 September 2016 to Monday, 10 October 2016, both days inclusive. The circular will also be available on Synergy’s website (www.synergyincomefund.com) from Monday, 26 September 2016.

This circular should be read with the Synergy revised listing particulars posted with this circular.

1

CORPORATE INFORMATION

Registered office of SynergySynergy Income Fund Limited(Registration number 2007/032604/06)One-on-NinthCorner Glenhove Road and Ninth StreetMelrose Estate, 2196(PO Box 2234, Parklands, 2121)

Company secretary Johann Neethling (FCIS, MCom)Synergy Income Fund LimitedOne-on-NinthCorner Glenhove Road and Ninth StreetMelrose Estate, 2196(PO Box 2234, Parklands, 2121)

Corporate advisorJava Capital Proprietary Limited(Registration number 2012/089864/07)6A Sandown Valley CrescentSandown, 2196(PO Box 2087, Parklands, 2121)

Sponsor Java Capital Trustees and Sponsors Proprietary Limited(Registration number 2006/005780/07)6A Sandown Valley CrescentSandton, 2196(PO Box 2087, Parklands, 2121)

Independent expertPSG Capital Proprietary Limited(Registration number 2006/015817/07)1st Floor, Ou Kollege Building35 Kerk StreetStellenbosch, 7600(Postal address as above)

Attorneys and competition law advisorsCliffe Dekker Hofmeyr Inc.(Registration number 2008/018923/21)1 Protea Place (c/o Protea Place and Fredman Drive)Sandton, 2196(Private Bag X40, Benmore, 2010)

Independent reporting accountants Grant Thornton JohannesburgChartered Accountants(Practice number 903485E)@Grant ThorntonWanderers Office Park52 Corlett DriveIllovo, 2196(Private Bag X5, Northlands, 2116)

Independent property valuerKnight Frank (Gauteng) Proprietary Limited(Registration number 2011/100568/07)50 Old Kilcullen RoadBryanston, 2191(Postal address as above)

Independent property valuerQuadrant Properties Proprietary Limited(Registration number 1995/003097/07)16 North Road, Dunkeld WestSandton, 2196(PO Box 1984 Parklands 2121)

Independent property valuerReal Insight Proprietary Limited(Registration number 2012/101775/07)5th Floor, North WingHyde Park CornerHyde Park, 2196(PO Box 413581, Craighall, 2024)

Transfer SecretariesLink Market Services South Africa Proprietary Limited(Registration number 2000/007239/07)13th Floor, Rennie House19 Ameshoff Street Braamfontein, 2001(PO Box 4844, Johannesburg, 2000)

Cumulative Properties Limited(Registration number 2015/335578/06)2nd Floor18 Melrose BoulevardMelrose Arch, 2196(PO Box 685, Melrose Arch, 2076)

Vukile Asset Management Proprietary Limited(Registration number 2007/016890/07)One-on-NinthCorner Glenhove Road and Ninth StreetMelrose Estate, 2196(PO Box 2234, Parklands, 2121)

Date and place of incorporation of the companyIncorporated in the Republic of South Africa on 13 November 2007

Date and place of incorporation of VAMIncorporated in the Republic of South Africa on21 June 2007

Date and place of incorporation of CumulativeIncorporated in the Republic of South Africa on 21 September 2015

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TABLE OF CONTENTS

The definitions and interpretations commencing on page 8 of this circular have, where appropriate, been used in the following table of contents.

Page

Corporate information 1

Action required by Synergy shareholders 4

Salient dates and times 6

Definitions and interpretations 8

PART I – THE TRANSACTION

1. Introduction 13

2. Rationale for the transaction 14

3. Strategy and prospects 14

4. Mechanics of the transaction 15

5. Section 164 appraisal rights 24

6. Section 115 of the Companies Act 25

7. General meeting 26

PART II – PROPERTY INFORMATION

8. The Synergy portfolio 27

9. The Vukile portfolio 28

10. The Cumulative portfolio 30

11. Vendors 32

PART III – FINANCIAL INFORMATION

12. Forecast statements of comprehensive income in respect of Synergy 33

13. Pro forma consolidated statement of financial position in respect of Synergy 33

14. Historical financial information in respect of Synergy 33

PART IV – GENERAL

15. Statement as to listing on the JSE 34

16. Dividends 34

17. Directors’ interests 34

18. Executive shareholding 35

19. Directors’ emoluments 36

20. Major and controlling shareholders 37

21. Relationship information 38

22. Material borrowings and loans receivable 38

23. Material contracts 38

24. Material changes 39

25. Adequacy of capital 39

3

Page

26. Litigation statement 39

27. Directors’ responsibility statement 40

28. Opinion and recommendation 40

29. Consents 40

30. Estimated expenses 41

31. Conflicts of interest 41

32. Documents available for inspection 41

Annexure 1 Independent expert’s fair and reasonable opinion in respect of the transaction, including the waiver of mandatory offer

42

Appendix Sections 115 and 164 of the Companies Act 48

Annexure 2 Knight Frank summary valuation report in respect of the properties comprising the Synergy and Vukile portfolios

53

Annexure 3 Quadrant summary valuation report in respect of properties comprising the Synergy and Vukile portfolios

60

Annexure 4 Real Insight summary valuation report in respect of the properties comprising the Cumulative portfolio

68

Annexure 5 Details of the Synergy portfolio 79

Annexure 6 Details of the Vukile portfolio 80

Annexure 7 Details of the Cumulative portfolio 82

Annexure 8 Forecast statements of comprehensive income in respect of Synergy 86

Annexure 9 Independent reporting accountants’ limited assurance report on the forecast statements of comprehensive income in respect of Synergy

89

Annexure 10 Pro forma consolidated statement of financial position in respect of Synergy 92

Annexure 11 Independent reporting accountants’ assurance report on the compilation of the pro forma financial information of Synergy

95

Annexure 12 Independent reporting accountants’ review report on the value and existence of the Cumulative and Vukile portfolios

97

Annexure 13 Historical financial information in respect of Synergy 99

Annexure 14 Vendors 135

Annexure 15 Details of property and asset managers 137

Annexure 16 Extracts from the memorandum of incorporation 140

Notice of general meeting of Synergy shareholders Attached

Form of proxy for certificated and “own name” dematerialised shareholders Attached

4

ACTION REQUIRED BY SYNERGY SHAREHOLDERS

The definitions and interpretations commencing on page 8 of this circular have, where appropriate, been used in this section.

THE GENERAL MEETING

A general meeting of Synergy shareholders will be held at 10:00 on Tuesday, 25 October 2016, at the company’s registered office (One-on-Ninth, corner Glenhove Road and Ninth Street, Melrose Estate, 2196), for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions required to be approved by shareholders in order to authorise and implement the transaction. The notice of general meeting is attached to and forms part of this circular.

Certificated shareholders and “own name” dematerialised shareholders who are unable to attend the general meeting but who wish to be represented thereat are requested to complete and return the attached form of proxy in accordance with the instructions contained therein. The duly completed forms of proxy are requested to be received by the transfer secretaries by no later than 10:00 on Friday, 21 October 2016. Forms of proxy not lodged with the transfer secretaries in time may be handed to the chairman of the general meeting immediately before the commencement thereof.

Dematerialised shareholders who have not elected “own name” registration in the sub-register of Synergy and who wish to attend the general meeting must instruct their CSDP or broker timeously in order that such CSDP or broker issues them with the necessary letter of representation.

Dematerialised shareholders who have not elected “own name” registration in the sub-register of Synergy and who do not wish to attend the general meeting but wish to vote thereat, must provide their CSDP or broker with their instruction for voting at the general meeting in the manner stipulated in the agreement governing the relationship between such shareholders and his/her CSDP or broker. These instructions must be provided to the CSDP or broker by the cut-off time and date advised by the CSDP or broker for instructions of this nature.

Synergy does not accept responsibility and will not be held liable for any failure on the part of the CSDP of a dematerialised shareholder to notify such shareholder of the general meeting or any business to be conducted thereat.

IMPLEMENTATION OF THE TRANSACTION

No further action is required to be taken by shareholders in order to facilitate the implementation of the transaction. Should the transaction be implemented, dematerialised shareholders will have their account held at their CSDP or broker updated to reflect the change of name.

ELECTRONIC PARTICIPATION

The company has made provision for shareholders or their proxies to participate electronically in the general meeting by way of telephone conferencing. Should you wish to participate in the general meeting by telephone conference call, you, or your proxy, should advise the company thereof by no later than 10:00 on Friday, 21 October 2016, by submitting by e-mail to the company secretary at johann.neethling@vukile.co.za relevant contact details, including an e-mail address, cellular number and landline as well as full details of your title to Synergy shares and proof of identity, in the form of copies of identity documents and share certificates (in the case of certificated shares) or written confirmation from your CSDP confirming your title to the dematerialised shares (in the case of dematerialised shares). Upon receipt of the required information, you will be provided with a secure code and instructions to access the electronic communication during the general meeting. Shareholders should note that access to the electronic communication will be at the expense of the shareholders who wish to utilise the facility.

Shareholders and their appointed proxies attending by conference call will not be able to cast their votes at the general meeting through this medium. Accordingly, shareholders making use of the electronic participation facility are requested to submit their forms of proxy to the company, as directed.

5

VOTING PROCEDURE AND QUORUM FOR THE GENERAL MEETING

The quorum requirement for the general meeting to begin or for a matter to be considered at the general meeting is at least three shareholders present in person. In addition:

• the general meeting may not begin until sufficient persons are present in person or represented by proxy to exercise, in aggregate, at least 25% of the voting rights that are entitled to be exercised in respect of at least one matter to be decided at the general meeting; and

• a matter to be decided at the general meeting may not begin to be considered unless sufficient persons are present in person or represented by proxy to exercise, in aggregate, at least 25% of all of the voting rights that are entitled to be exercised in respect of that matter at the time the matter is called on the agenda.

Every shareholder present in person or represented by proxy and entitled to exercise voting rights at the general meeting shall be entitled to vote on a show of hands, irrespective of the number of voting rights that shareholder would otherwise be entitled to exercise. On a poll, any person who is present at the general meeting, whether as a shareholder or as proxy for a shareholder, has the number of votes determined in accordance with the voting rights associated with the shares held by that shareholder.

Notwithstanding the above, the voting rights controlled by Vukile and its associates will not be taken into account in determining the outcome of ordinary resolutions 1 – 3, as set out in the notice of general meeting, although will be taken into account in determining the requisite quorum. The voting rights controlled by Vukile and its associates, related persons and persons acting in concert with Vukile (as defined in the Companies Act), if any, will be excluded both for purposes of determining the requisite quorum and in determining the number of votes in support of special resolution 2, as set out in the notice of general meeting.

6

SALIENT DATES AND TIMES

2016

Record date to receive the circular, incorporating the notice of general meeting and the revised listing particulars Friday, 16 September

Circular, incorporating the notice of general meeting and the revised listing particulars, issued Monday, 26 September

Announcement relating to the issue of the circular and the revised listing particulars released on SENS Monday, 26 September

Announcement relating to the issue of the circular and the revised listing particulars published in the press Tuesday, 27 September

Effective date Saturday, 1 October

Representation relating to the waiver to be submitted to the TRP by no later than 17:00 Tuesday, 11 October

Last day to trade in order to be eligible to participate in and vote at the general meeting Tuesday, 11 October

Expected date of receipt of approval of the transaction from the Competition Authorities (to the extent required) Wednesday, 12 October

Voting record date Friday, 14 October

Last day to lodge forms of proxy for the general meeting with the transfer secretaries, by 10:00 (forms of proxy not lodged with the transfer secretaries in time may be handed to the Chairman of the general meeting immediately before the commencement thereof ) Friday, 21 October

Last day for shareholders objecting to the Vukile asset exchange to notify Synergy of their objection in terms of section 164(3) of the Companies Act, by 10:00 Tuesday, 25 October

General meeting held at 10:00 Tuesday, 25 October

Results of the general meeting announced on SENS Tuesday, 25 October

Results of the general meeting published in the press Wednesday, 26 October

Announcement regarding the TRP ruling in respect of the waiver of the obligation of Arrowhead to make the mandatory offer released on SENS Thursday, 27 October

Announcement regarding the TRP ruling in respect of the waiver of the obligation of Arrowhead to make the mandatory offer published in the press Friday, 28 October

If the Vukile asset exchange was approved in terms of section 115 of the Companies Act by shareholders at the general meeting, but with 15% or more votes in opposition, last day on which shareholders who voted against the Vukile asset exchange can require the company to seek court approval in terms of section 115(3)(a) of the Companies Act Tuesday, 1 November

Shareholders to request the Takeover Special Committee to review the TRP exemption ruling Thursday, 3 November

TRP waiver proceedings to be regarded as completed, subject to shareholders not requesting a review of the TRP ruling Thursday, 3 November

Last day for shareholders who voted against the Vukile asset exchange to apply for leave to apply to court for a review of the Vukile asset exchange in terms of section 115(3)(b) of the Companies Act Tuesday, 8 November

Last day for Synergy to send notice of the approval of the Vukile asset exchange to shareholders who qualify to receive such notice in terms of section 164(4) of the Companies Act (if any) Tueday, 8 November

Last day for shareholders to deliver written notice in terms of section 164(7) of the Companies Act demanding that Synergy pay the shareholder the fair value for all of the Synergy shares held by that shareholder3 Tuesday, 22 November

Expected date on which the transaction becomes unconditional4 Wednesday, 23 November

Expected release of the finalisation announcement in respect of the transaction on SENS Wednesday, 23 November

7

Expected publication of the finalisation announcement in respect of the transaction in the press Thursday, 24 November

Expected listing of VAM consideration shares and Cumulative consideration shares on the JSE from the commencement of trade Wednesday, 30 November

Expected implementation date, being the date on which the VAM consideration shares and Cumulative consideration shares will be issued to Vukile and Arrowhead respectively Wednesday, 30 November

Expected last day to trade prior to the change of name being effected Tuesday, 6 December

Expected termination of trading in the name of “Synergy Income Fund Limited” on the JSE, termination of the “A” shares trading under the share code “SGA”, short name “SynergyA” and ISIN ZAE000202883 and termination of the “B” shares trading under the share code “SGB”, short name “SynergyB” and ISIN ZAE000202891, from the commencement of trade Wednesday, 7 December

Expected trading in the new name of “Gemgrow Properties Limited” on the JSE, with “A”  shares trading under the share code “GPA”, short name “GemPropA” and ISIN  ZAE0000223269 and “B” shares trading under the share code “GPB”, short name “GemPropB” and ISIN ZAE0000223277, from the commencement of trade Wednesday, 7 December

Record date in respect of the change of name Friday, 9 December

Expected date dematerialised shareholders will have their accounts updated with shares trading in the new name “Gemgrow Properties Limited” at their CSDP or broker Monday, 12 December

Synergy expected to terminate trading in “Retail REITs” sector and commence trading in “Diversified REITs” sector, from the commencement of trade Monday, 12 December

Notes:

1. All dates and times in this circular are local dates and times in South Africa and are subject to change. Any changes will be announced on SENS and published in the press.

2. Synergy shareholders are referred to page 4 of this circular for information on the action required to be taken by them.3. This date applies to shareholders who objected to the Vukile asset exchange in terms of section 164(3) of the Companies Act before the commencement

of the general meeting and thereby qualify to receive notice of the approval of the Vukile asset exchange in terms of section 164(4) of the Companies Act and who actually receive notice on the date of the general meeting. The date applicable to any specific shareholder should be determined in accordance with section 164(7) of the Companies Act.

4. The implementation of the transaction is subject to the receipt of all necessary regulatory approvals, including the approval of the Competition Authorities (to the extent set out in the transaction agreements). As receipt of these regulatory approvals is difficult to timetable, the company has assumed that the approval of the Competition Authorities will be obtained on Wednesday, 12 October 2016. Thereafter, provision has been made for completion of waiver proceedings and proceedings in terms of sections 115 and 164 of the Companies Act, for receipt of confirmation by the Companies and Intellectual Property Commission that it has accepted and placed on file the relevant documents required to effect the transaction (including the change of name) and for receipt of the requisite clearance certificate from the TRP, such that the transaction becomes unconditional on Wednesday, 23 November 2016.

8

DEFINITIONS AND INTERPRETATIONS

In this circular and the annexures hereto, unless the context indicates otherwise, references to the singular include the plural and vice versa, words denoting one gender include the others, expressions denoting natural persons include juristic persons and associations of persons and vice versa, and the words in the first column have the meanings stated opposite them in the second column, as follows:

“30 September 2016 dividend” Synergy’s dividend for the six months ending 30 September 2016 (being the period ending immediately prior to the effective date);

““A” share” or “SGA share” an “A” ordinary share of no par value in the share capital of Synergy;

““A” shareholder” the holder of an “A” share;

“Arrowhead” Arrowhead Properties Limited (Registration number 2011/000308/06), a limited liability public company duly incorporated in South Africa, the issued ordinary shares of which are listed on the JSE;

“ Arrowhead property management agreement”

the management agreement entered into between Arrowhead and JHI on or about 13  September 2011 and amended on 12 December 2014, in terms of which JHI is appointed as the property manager of all properties owned or managed by Arrowhead, further details of which are set out in Annexure 10 of the revised listing particulars;

““B” share” or “SGB share” a “B” ordinary share of no par value in the share capital of Synergy;

““B” shareholder” the holder of a “B” share;

“board” or “directors” or “board of directors”

the board of directors of Synergy as set out on page 13 of this circular;

“Broll” Broll Property Group Proprietary Limited (Registration number 2008/027519/07), a limited liability private company duly incorporated in South Africa, full details of which are set out in the Corporate Information section;

“business day” any day other than a Saturday, Sunday or official public holiday in South Africa and in the event that a day referred to in terms of this circular should fall on a day which is not a business day, the relevant date will be extended to the next succeeding business day;

“category one acquisition” an acquisition in respect of which the consideration payable is or is anticipated to constitute 30% or more of the market capitalisation of the company or may result in a dilution of 30% or more of the issued shares of the company, as contemplated in the JSE Listings Requirements;

“category one disposal” a disposal in respect of which the consideration received is or is anticipated to constitute 30% or more of the market capitalisation of the company, as contemplated in the JSE Listings Requirements;

“certificated shareholders” shareholders who hold certificated shares;

“certificated shares” shares which have not been dematerialised into the Strate system, title to which is represented by a share certificate or other physical documents of title;

“change of name” the proposed change of name of the company from “Synergy Income Fund Limited” to “Gemgrow Properties Limited”, as more fully detailed in paragraph 4.11;

“circular” this circular to Synergy shareholders dated 26 September 2016, including all annexures, the notice of general meeting and the form of proxy;

“clean VWAP” volume weighted average price per share, excluding any dividends declared, insofar as such share is trading cum dividend;

“Companies Act” the Companies Act, No. 71 of 2008;

“company secretary” the company secretary of Synergy;

“Competition Act” the Competition Act, No. 89 of 1998;

9

“Competition Authorities” the Competition Commission of South Africa, the Competition Tribunal of South Africa and/or the Competition Appeal Court of South Africa, as the case may be, being the regulatory and/or judicial authorities established in terms of the Competition Act;

“conditions precedent” the conditions precedent to which the transaction is subject, as set out in paragraph 4.14;

“corporate advisor” Java Capital Proprietary Limited (Registration number 2012/089864/07), a limited liability private company duly incorporated in South Africa, full details of which are set out in the Corporate Information section;

“cost sharing agreement” the cost sharing agreement entered into between Arrowhead, Synergy and Vukile on 29 August 2016, in terms of which inter alia the parties agree upon the manner in which the transactional and conveyancing costs incurred in respect of the transaction are to be shared;

“CSDP” a Central Securities Depository Participant, as defined in the Financial Markets Act, appointed by a shareholder for purposes of, and in regard to, dematerialisation and to hold and administer dematerialised shares or an interest in dematerialised shares on behalf of a shareholder;

“Cumulative” Cumulative Properties Limited (Registration number 2015/335578/06), a limited liability public company duly incorporated in South Africa and a subsidiary of Arrowhead;

“Cumulative acquisition” the acquisition by Synergy of the Cumulative equity, in consideration for which Synergy will issue the Cumulative consideration shares to the Cumulative shareholders, as more fully described in paragraph 4.10;

“ Cumulative acquisition agreement”

the sale of shares and claims agreement entered into between Synergy, Arrowhead, Vividend, Gerald Leissner, Imraan Suleman, Mark Kaplan and Cumulative on 29 August 2016, in respect of the Cumulative acquisition;

“ Cumulative consideration share issue price”

the five-day clean VWAP of a “B” share immediately preceding the implementation date. Given the delay anticipated between the date of this circular and the issue of the Cumulative consideration shares, as further set out in the Salient Dates and Times section, an indicative issue price of R6.77 has been used for purposes of this circular, being the five-day clean VWAP of a “B” share as at the last practicable date;

“ Cumulative consideration shares”

271 412 267 “B” shares, to be issued to the Cumulative shareholders in terms of the Cumulative acquisition;

“Cumulative equity” 100% of the issued shares and claims in Cumulative;

“Cumulative portfolio” collectively, those properties owned or to be owned by Cumulative, as detailed in Annexure 7, and more broadly incorporating the rental enterprises conducted in respect of such properties and including Cumulative’s rights in terms of the leases and contracts in respect of such properties;

“Cumulative shareholders” Arrowhead, Vividend and any executives, who will collectively own 100% of the issued share capital of Cumulative as at the implementation date and to which Synergy will issue the Cumulative consideration shares, in proportion to their shareholding in Cumulative as at the implementation date, in terms of the Cumulative acquisition;

“dematerialise” or “dematerialisation”

the process whereby certificated shares are replaced by electronic records of ownership under Strate and recorded in the sub-register of shareholders maintained by a CSDP or broker;

“dematerialised shareholders” shareholders who hold dematerialised shares;

“dematerialised shares” shares which have been incorporated into the Strate system, title to which is not represented by share certificates or other physical documents of title;

“documents of title” share certificates, certified transfer deeds, balance receipts and any other documents of title to shares;

“effective date” 1 October 2016;

“executives” collectively, Gerald Leissner, Imraan Suleman, Mark Kaplan and any other directors or persons to be appointed as directors of the company that are shareholders of Cumulative as at the implementation date;

10

“Financial Markets Act” the Financial Markets Act, No. 19 of 2012;

“financial year” the financial year of Synergy, ending on 30 September;

“general meeting” the general meeting of Synergy shareholders to be held at 10:00 on Tuesday, 25 October 2016 at the registered office of the company (One-on-Ninth, corner Glenhove Road and Ninth Street, Melrose Estate, 2196), for the purpose of considering and, if deemed fit, passing the resolutions set out in the notice of general meeting;

“GLA” gross lettable area;

“IFRS” International Financial Reporting Standards;

“implementation date” the date on which the transaction will be implemented, being the later of the effective date and the fifth business day following the fulfilment or waiver of the last of the conditions precedent;

“independent board” a sub-committee of the board comprising only the independent non-executive directors of Synergy, namely Martin Kuscus, Lizwi Mtumtum, Sean Segar and Ilan Zwarenstein, which has been specifically constituted to appraise the transaction on behalf of the board;

“ independent expert” or “PSG Capital”

PSG Capital Proprietary Limited (Registration number 2006/015817/07), a limited liability private company duly incorporated in South Africa, acting as independent expert and appointed to provide external advice to the independent board and Synergy shareholders in relation to the transaction, full details of which are set out in the Corporate Information section;

“independent property valuers” collectively, Knight Frank, Quadrant and Real Insight, and “independent property valuer” shall mean any one of the them as the context may require;

“ independent reporting accountants” or “Grant Thornton”

Grant Thornton Johannesburg (Practice number 903485E), a partnership formed in terms of the laws of South Africa, full details of which are set out in the Corporate Information section;

“JHI” JHI Properties Proprietary Limited (Registration number 2007/021131/07), a limited liability private company duly incorporated in South Africa, full details of which are set out in the Corporate Information section;

“JSE” the Johannesburg Stock Exchange, the exchange operated by the JSE Limited (Registration number 2005/022939/06), a public company duly incorporated in South Africa, and licensed to operate as an exchange under the Financial Markets Act;

“JSE Listings Requirements” the Listings Requirements published by the JSE from time to time;

“Knight Frank” Knight Frank (Gauteng) Proprietary Limited (Registration number 2011/100568/07), a limited liability private company duly incorporated in South Africa, full details of which are set out in the Corporate Information section;

“last practicable date” Monday, 12 September 2016, being the last practicable date prior to the finalisation of this circular;

“m2” square metres;

“mandatory offer” the mandatory offer that would be required to be made by Arrowhead to the remaining “A” shareholders and the remaining “B” shareholders in terms of section 123 of the Companies Act, to acquire all “A” and “B” shares held by such shareholders pursuant to the implementation of the Cumulative acquisition, on the terms set out in paragraph 4.10.2 below, and in respect of which the waiver is being sought;

“MoI” or “existing MoI” the memorandum of incorporation of Synergy;

“MoI amendment” the amendment of the MoI, as more fully described in paragraph 4.12;

“new directors” Gerald Leissner, Gregory Kinross, Clifford Abram, Ayesha Rehman and Mervyn Serebro, further details of whom are set out in paragraph 3.1 of the revised listing particulars;

“notice of general meeting” the notice of the general meeting, attached to and forming part of this circular;

11

““ own name” dematerialised shareholders”

dematerialised shareholders who/which have elected “own name” registration;

“press” the Business Day newspaper;

“Quadrant” Quadrant Properties Proprietary Limited (Registration number 1995/003097/07), a limited liability private company duly incorporated in South Africa, full details of which are set out in the Corporate Information section;

“R” or “Rand” South African Rand, the lawful currency of South Africa;

“Real Insight” Real Insight Proprietary Limited (Registration number 2012/101775/07), a limited liability private company duly incorporated in South Africa, full details of which are set out in the Corporate Information section;

“REIT” a Real Estate Investment Trust, being an entity that receives REIT status in terms of the JSE Listings Requirements and qualifies as such in terms of the Income Tax Act, No. 58 of 1962;

“register” the securities register of the company;

“remaining “A” shareholders” “A” shareholders other than Arrowhead, those persons related or inter-related to Arrowhead and persons acting in concert with any of them;

“remaining “B” shareholders” “B” shareholders other than Arrowhead, those persons related or inter-related to Arrowhead and persons acting in concert with any of them;

“revised listing particulars” the revised listing particulars of Synergy, dated 26 September 2016, accompanying this circular and providing additional information in relation to Synergy and its portfolio of properties after the implementation of the transaction;

“SENS” the Stock Exchange News Service of the JSE;

“ shareholders” or “Synergy shareholders”

collectively, “A” shareholders and “B” shareholders, or either of them, as the context may require;

“shares” or “Synergy shares” collectively, “A” shares and “B” shares, or either of them, as the context may require;

“Strate” Strate Proprietary Limited (Registration number 1998/022242/07), a limited liability private company duly incorporated in South Africa, which is licensed to operate in terms of the Financial Markets Act and responsible for the electronic settlement system used by the JSE;

“Synergy” or “the company” Synergy Income Fund Limited (Registration number 2007/032604/06), a limited liability public company duly incorporated in South Africa, the issued shares of which are listed on the JSE and full details of which are set out in the Corporate Information section;

“Synergy group” or “the group” the company, its subsidiaries, associates and joint ventures;

“Synergy portfolio” collectively, the properties detailed in Annexure 5, and more broadly incorporating the rental enterprises conducted in respect such properties and including Synergy’s rights in terms of the leases and contracts in respect of such properties;

“Takeover Regulations” the regulations made in terms of section 120 and 223 of the Companies Act;

“transaction” the strategic repositioning of Synergy as a specialist high yielding, high growth fund with a portfolio comprising retail, office and industrial assets, to be broadly achieved through the implementation of the VAM internalisation, Vukile asset exchange, Cumulative acquisition, change of name, MoI amendment and reconstitution of the board of directors, as more fully detailed in this circular;

“transaction agreements” collectively, the VAM internalisation agreement, Vukile asset exchange agreement, Cumulative acquisition agreement and cost sharing agreement, and “transaction agreement” shall mean any one of the them as the context may require;

“transfer secretaries” or “Link Market Services”

Link Market Services South Africa Proprietary Limited (Registration number 2000/007239/07), a limited liability private company duly incorporated in South Africa, full details of which are set out in the Corporate Information section;

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“TRP” the Takeover Regulation Panel established in terms of section 196 of the Companies Act;

“VAM” Vukile Asset Management Proprietary Limited (Registration number 2007/016890/07), a limited liability private company duly incorporated in South Africa and a wholly-owned subsidiary of Vukile;

“ VAM asset management agreement”

the agreement entered into between Synergy and VAM, in respect of the asset and property management services provided (or outsourced) by VAM in respect of the Synergy portfolio, on or about 18 November 2011;

“VAM consideration shares” 22 945 522 “B” shares, to be issued to Vukile in terms of the VAM internalisation at an issue price per share equivalent to the five-day clean VWAP of a “B” share immediately preceding the implementation date;

“VAM equity” 100% of all issued shares and claims in VAM;

“VAM internalisation” the acquisition by Synergy of the VAM equity, in consideration for which Synergy will issue the VAM consideration shares to Vukile, and as a result of which Synergy’s asset and property management function will effectively be internalised, as more fully described in paragraph 4.8;

“VAM internalisation agreement” the sale of shares and claims agreement entered into between Vukile, Synergy and VAM on 29 August 2016, in respect of the VAM internalisation;

“VAT” value added tax as defined in the Value Added Tax Act, No. 89 of 1991;

“Vividend” Vividend Income Fund Limited (Registration number 2010/003232/06), a limited liability public company duly incorporated in South Africa, a wholly-owned subsidiary of Arrowhead and shareholder of Cumulative;

“voting record date” the business day on which shareholders must be recorded in the register in order to participate in and vote at the general meeting;

“Vukile” Vukile Property Fund Limited (Registration number 2002/027194/06), a limited liability public company duly incorporated in South Africa, the issued shares of which are listed on the JSE;

“Vukile asset exchange” the exchange by Synergy of the Synergy portfolio for the Vukile portfolio, and by Vukile of the Vukile portfolio for the Synergy portfolio, as more fully described in paragraph 4.9;

“Vukile asset exchange agreement” the exchange agreement entered into between Vukile and Synergy on 29 August 2016, as amended, in respect of the Vukile asset exchange;

“ Vukile directors” or “Vukile board of directors”

the board of directors of Vukile;

“Vukile independent board” a sub-committee of the Vukile board of directors comprising only the independent directors of Vukile, namely Anton Botha, Steve Booysen, Peter Moyanga, Mervyn Serebro, Hatla Ntene, Nigel Payne and Renosi Mokate;

“Vukile portfolio” collectively, those properties detailed in Annexure 6, and more broadly incorporating the rental enterprises conducted in respect of such properties and including Vukile’s rights in terms of the leases and contracts in respect of such properties;

“Vukile share” an ordinary share of no par value in the share capital of Vukile; and

“waiver” or “waiver of mandatory offer”

the proposed waiver by independent “A” and “B” shareholders of the benefit of the mandatory offer, in terms of Takeover Regulation 86(4), by way of ordinary resolution to be proposed at the general meeting.

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Synergy Income Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2007/032604/06)JSE share code: SGA ISIN: ZAE000202883JSE share code: SGB ISIN: ZAE000202891

(Approved as a REIT by the JSE)(“Synergy” or “the company”)

Directors

Laurence Rapp (Chairman)Sedise Moseneke (Chief Executive Officer)Rob Hawton (Financial Director)Michael Potts (Non-Executive Director)Martin Kuscus (Independent Non-Executive Director)*

Lizwi Mtumtum (Independent Non-Executive Director)*

Sean Segar (Independent Non-Executive Director)*

Ilan Zwarenstein (Independent Non-Executive Director)*

* Member of the independent board

CIRCULAR TO SYNERGY SHAREHOLDERS PART I: THE TRANSACTION

1. INTRODUCTION

1.1 Synergy is a retail-focused REIT listed on the JSE, with a portfolio of 14 medium-sized community and small regional shopping centres throughout South Africa, valued at approximately R2.475 billion. In the period to February 2015, Vukile increased its shareholding in Synergy to 65.0%, subsequently also assuming the property and asset management function in respect of Synergy’s portfolio of properties through the acquisition of 100% of the issued share capital in VAM.

1.2 Arrowhead is an internally managed REIT listed on the JSE, with a portfolio of retail, office and industrial properties. Its subsidiary, Cumulative, will house a portfolio of approximately 100 exclusively high yielding properties across South Africa.

1.3 As announced on SENS on 29 August 2016, Synergy has entered into the transaction agreements, in terms of which:

1.3.1 Synergy will internalise its asset and property management function through the acquisition of 100% of the issued share capital of VAM from Vukile, in consideration for which Synergy will issue 22 945 522 “B” shares to Vukile, as more fully described in paragraph 4.8;

1.3.2 Synergy will exchange the Synergy portfolio for the Vukile portfolio, as more fully described in paragraph 4.9;

1.3.3 Synergy will acquire 100% of the issued share capital of Cumulative, in consideration for which Synergy will issue 271 412 267 “B” shares to the Cumulative shareholders, as more fully described in paragraph 4.10;

1.3.4 Synergy’s name will be changed to “Gemgrow Properties Limited”, as more fully described in paragraph 4.11;

1.3.5 the MoI will be amended, as more fully described in paragraph 4.12; and

1.3.6 the board of directors will be reconstituted, as more fully described in paragraph 4.13.

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1.4 The transaction will result in Arrowhead holding 61.7% of issued SGB shares (and 55.2% of Synergy’s total issued share capital), with Vukile holding 29.5% of SGB shares (and 27.4% of Synergy’s total issued share capital). Insofar as the actual income generated by the Vukile portfolio and/or the Cumulative portfolio for the 12 months to 30 September 2017 materially differs from the forecasted income, arrangements have been agreed to between Vukile on the one hand and Arrowhead and Vividend on the other hand in terms of which they will, amongst themselves, adjust their relative holdings of SGB shares.

1.5 Upon implementation of the transaction, Synergy will effectively be repositioned as a specialist high yielding, high growth fund with an internally managed portfolio comprising retail, office and industrial assets, forming part of Arrowhead’s core portfolio. The portfolio will be run by a strongly incentivised, dedicated and proven executive management team, subject to strategic oversight by Arrowhead.

1.6 The board of directors has filed the requisite notice of a change in the financial year of the company to 30 September, in terms of section 27(4) of the Companies Act. This change is required in order to align with the financial year of Synergy with that of Arrowhead. The rights of “A” shareholders to distributions on their SGA shares will not be diminished or adversely affected by the change of year end.

1.7 Following implementation of the transaction, Synergy will trade in the “Diversified REITs” sector of the JSE.

1.8 The purpose of this circular is to:

1.8.1 provide Synergy shareholders with information relating to the transaction and the manner in which it will be implemented, so as to enable shareholders to make an informed decision as to whether or not they should vote in favour thereof; and

1.8.2 give notice convening the general meeting at which the resolutions necessary to approve and implement the transaction, as more fully detailed in this circular, will be considered and, if deemed fit, approved with or without modification. The notice convening general meeting of Synergy shareholders is attached to and forms part of this circular.

1.9 The transaction, if implemented, will result in a reverse take-over of Synergy in terms of the JSE Listings Requirements and revised listing particulars have accordingly been posted to shareholders together with this circular.

2. RATIONALE FOR THE TRANSACTION

2.1 Synergy has been operating as a specialist retail property fund with a specific focus on medium-sized community and small regional shopping centres in high growth nodes, but illiquidity in its shares has hamstrung its growth. As a small capitalisation fund with limited capacity to aggressively acquire assets and grow the company to a meaningful size, Synergy’s prospects for future growth remain constrained.

2.2 The transaction will reposition Synergy as a high yielding, high growth income-focused property fund internally managed by an executive team with proven credentials and experience relevant to its new investment strategy. The board is of the view that the revised strategy will best utilise Synergy’s dual-class share capital structure, which remains a valuable differentiator in the listed property sector. A high yielding, high growth fund with a dual-class share capital structure will present an exciting proposition for income-focused property investors and it is expected to result in renewed interest in and tradability of both the “A” and “B” shares.

2.3 From an “A” shareholder’s perspective, the transaction will result in a significantly higher cash cover ratio, as well as a potential to enhance the liquidity of “A” shares over time. From a “B” shareholder’s perspective, the transaction will be yield-enhancing and is expected to deliver sector-beating growth in distributions through a targeted acquisition strategy. Synergy’s debt hedging policy, requiring 75% of interest-bearing debt to be hedged, will also mean less interest rate risk.

2.4 The transaction will increase Synergy’s market capitalisation to approximately R3.3 billion, with a value of approximately R451 million and R2.8 billion for the “A” and “B” shares, respectively.

3. STRATEGY AND PROSPECTS

3.1 Post-implementation of the transaction, Synergy will be repositioned itself as a high yielding, high growth income-focused investment vehicle with a property portfolio valued at over R4.3 billion. Importantly, the transaction will re-energise Synergy and differentiate it within the listed property sector, with the company seeking to make only yield-enhancing acquisitions that grow sustainable earnings, thereby providing a platform for growth going forward. In this regard, the new directors and management see significant opportunity in properties valued from R20 million to R75 million; a niche space currently largely ignored by most listed property funds.

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3.2 The transaction will also see Synergy optimising the earnings accretive value of its dual-class share capital structure. The SGA shares offer income-focused investors preferential rights to distributions, capped at 5% growth (or, from the income period ending 30 June 2018 and thereafter, the lesser of 5% and the most recent CPI figure) per annum, representing secure and predictable earnings, while the SGB shares are ideal for investors looking for a higher yielding proposition. This dual-class share capital structure will be fortified by the transaction, with the MoI amendment inter alia ensuring that any conversion of “A” shares to “B” shares, or vice versa, or any redemption of any class of shares in whole or in part, is subject to approval by the holders of both “A” shares and “B” shares by way of a separate special resolution taken at a separate general meeting of each class of shareholder.

3.3 Synergy’s revised strategy will be enhanced by a relative low loan-to-value ratio and the hedging of interest rates on approximately 75% of its total borrowings, up from 66% as at 31 March 2016.

3.4 Synergy’s new board and management team will leverage off Arrowhead’s expertise and experience in actively managing portfolios that are designed for strong growth and higher yields.

4. MECHANICS OF THE TRANSACTION

The transaction will involve a reverse take-over of Synergy, with Synergy’s property portfolio reconstituted to comprise exclusively high yielding assets across the retail, office and industrial sectors, which portfolio will be managed internally with strategic and managerial oversight by Arrowhead. More specifically, the transaction will be implemented as follows:

4.1 the asset and property management function of Synergy will be internalised through the acquisition of the VAM equity in consideration for the issue of SGB shares to Vukile, with Synergy’s property management function subsequently outsourced to JHI in terms of the Arrowhead property management agreement (subject to paragraph 4.8.7);

4.2 Synergy will swap its entire portfolio of retail properties for a portfolio of 29 high yielding Vukile properties;

4.3 Synergy will fix the interest rate on a number of its debt facilities, such that 75% of its total borrowings is hedged;

4.4 Synergy will acquire 100% of the issued share capital of Cumulative, a subsidiary of Arrowhead that will own 100 high yielding retail office and industrial properties, in consideration for the issue of SGB shares to the Cumulative shareholders;

4.5 the name of Synergy will be changed to “Gemgrow Properties Limited”;

4.6 the MoI will be amended; and

4.7 the board of directors will be reconstituted, with the resignation of the current board,

all of which are inter-conditional and form part of the composite transaction, as more fully described below.

4.8 The VAM internalisation

4.8.1 In terms of the VAM internalisation agreement, Synergy will acquire the VAM equity from Vukile, in consideration for which Synergy will issue 22  945  522 “B”  shares to Vukile at a price per share equivalent to the five-day clean VWAP of a “B” share immediately preceding the implementation date. Unless Arrowhead agrees otherwise, Vukile will be required to retain its VAM consideration shares until 30 September 2017.

4.8.2 The pricing of the VAM internalisation has been calculated with reference to the anticipated management fees to be earned and retained by VAM for a forward 12 month period to 31 March 2017, and represents a significant discount to the contractual exit provided for in terms of the VAM asset management agreement, as more fully detailed in Annexure 15.

4.8.3 From an economic perspective, the VAM internalisation will take effect from the effective date, being 1 October 2016. This means that all risk and all benefit attaching to the shares in VAM will be deemed to have passed to Synergy on the effective date, notwithstanding that possession and control of the shares in VAM will only be given to Synergy, and the VAM consideration shares will only be issued to Vukile, on the implementation date.

4.8.4 VAM will declare and pay to Vukile (as a clean out dividend) an amount equal to VAM’s net profits after tax for the period up to the effective date. For the avoidance of doubt, the VAM equity to be acquired by Synergy in terms of the VAM internalisation will be acquired ex-entitlement to such dividend.

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4.8.5 Save that the VAM consideration shares will be issued ex-entitlement to the 30 September 2016 dividend, the VAM consideration shares will rank pari passu with existing “B” shares and will be fully paid up and freely transferable.

4.8.6 Pursuant to the implementation of the VAM internalisation:

4.8.6.1 Synergy’s asset management function will be undertaken internally;

4.8.6.2 Synergy’s property management function will be outsourced to JHI in terms of the Arrowhead property management agreement, subject to paragraph 4.8.7 below;

4.8.6.3 the board of directors of VAM will be reconstituted by directors nominated and appointed by the company; and

4.8.6.4 the name of VAM will be changed to “Gemgrow Asset Management Proprietary Limited”.

4.8.7 Notwithstanding the provisions of 4.8.6 above, for the period from 1 October 2016 to 30 September 2017, management of the Vukile portfolio will be outsourced to Vukile (or its appointed property manager) on the same basis as such properties were managed prior to the implementation date. Asset management functions relating to capital expenditure exceeding the forecast budget in respect of the Vukile portfolio by more than R1 000 000, as well as property sales in respect of the Vukile portfolio, will, however, at all times be evaluated and approved by Synergy. From 1 October 2017, the provisions of paragraph 4.8.6.2 above will apply in respect of the Vukile portfolio, in that the property management in respect thereof will be outsourced to JHI in terms of the Arrowhead property management agreement.

4.8.8 The provisions of the memorandum of incorporation of VAM (the “VAM MoI”) will not frustrate Synergy in any way from compliance with its obligations in terms of the JSE Listings Requirements and nothing contained in the VAM MoI will relieve Synergy from compliance with JSE Listings Requirements.

4.8.9 The VAM internalisation agreement contains warranties standard for a transaction of its nature.

4.8.10 The VAM internalisation constitutes a related party transaction in terms of section 10 of the JSE Listings Requirements, as well as the issue of shares by Synergy to a related or inter-related person, as contemplated in section 41(1)(b) (read with section 2) of the Companies Act.

4.9 The Vukile asset exchange

4.9.1 In terms of the Vukile asset exchange agreement, Synergy will dispose of its current portfolio of retail properties to Vukile, in exchange for which Vukile will transfer a higher yielding portfolio of retail, office and industrial assets to Synergy.

4.9.2 The Vukile asset exchange entails Vukile acquiring the Synergy portfolio for R2 450 000 000, representing a 1% discount to the value of the portfolio. In exchange, Synergy will acquire the Vukile portfolio (externally valued as at 31 July 2016 at R2 431 800 000) plus an amount of R18 200 000 in cash, with interest levied for the period from the effective date to the implementation date. Jhb Isle of Houghton (being the property numbered 7 in Annexure 6) is the subject of a pre-emptive right to acquire the property, in favour of one of its tenants. Insofar as Vukile is not able to obtain a written waiver in respect of such pre-emptive right and such right is then exercised such that Jhb Isle of Houghton is disposed of by Vukile at any time prior to the implementation date, Vukile will transfer the cash amount received from the purchaser of the property to Synergy, in lieu of the rental enterprise conducted in respect of such property, on the implementation date.

4.9.3 The Vukile asset exchange will result in a significant yield enhancement for “B” shareholders and a significant improvement of the “A” share cash cover ratio.

4.9.4 The Vukile asset exchange is an exchange of each relevant portfolio as a going concern. Accordingly, subject to the terms of the Arrowhead property management agreement and paragraphs 4.8.6 and 4.8.7 above, Synergy will continue to conduct the acquired Vukile portfolio as far as possible in the same manner as it was conducted by Vukile, and will to the fullest extent possible be substituted for Vukile in respect of each of the relevant leases and other contracts that may be in place in respect of the Vukile portfolio.

4.9.5 All risk and benefit in respect of the Synergy portfolio will be given to Vukile, and all risk and benefit in respect of the Vukile portfolio will be given to Synergy, on the effective date, being 1 October 2016, from which date:

4.9.5.1 Vukile or Synergy will be entitled to any rentals accruing from the relevant portfolio, as the case may be; and

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4.9.5.2 Vukile or Synergy will be liable for all rates, taxes and other imposts levied on the relevant portfolio, as the case may be.

4.9.6 Notwithstanding the effective date, the delivery and transfer of occupation and control of the Vukile portfolio to Synergy and of occupation and control of the Synergy portfolio to Vukile, as going concerns, will take place on the implementation date. Registration of transfer of the properties forming part of the Synergy and Vukile portfolios, in the name of Vukile and Synergy, respectively, shall occur as soon as reasonably possible following the implementation date.

4.9.7 The Vukile asset exchange agreement contains warranties standard for a transaction of its nature.

4.9.8 The Vukile asset exchange constitutes a related party category one disposal and category one acquisition in terms of sections 9 and 10 of the JSE Listings Requirements, as well as the disposal of all of Synergy’s assets, as contemplated in section 112 of the Companies Act.

4.10 The Cumulative acquisition

4.10.1 Mechanics of the Cumulative acquisition

4.10.1.1 In terms of the Cumulative acquisition agreement, Synergy will acquire the Cumulative equity, in exchange for the issue to the Cumulative shareholders (in proportion to their shareholding in Cumulative as at the implementation date) of 271 412 267 “B” shares at a price per share equivalent to the Cumulative consideration share issue price.

4.10.1.2 Unless Vukile agrees otherwise, Arrowhead and Vividend will be required to retain their Cumulative consideration shares, being, in aggregate, 247  412  267 “B” shares, until 30 September 2017.

4.10.1.3 Cumulative will own the Cumulative portfolio, being a portfolio of 100 exclusively high yielding retail, office and industrial properties across South Africa, externally valued as at 31 July 2016 at R1 893 300 000.

4.10.1.4 Synergy will fix the interest rate on a number of its debt facilities, such that 75% of its total borrowings is hedged. As the Cumulative portfolio is effectively being acquired ungeared, the transaction will result in a reduction of Synergy’s loan-to-value ratio to under 25%.

4.10.1.5 From an economic perspective, the Cumulative acquisition will take effect from the effective date, being 1  October  2016. This means that all risk and all benefit attaching to the Cumulative equity (including the right to rentals accruing from the Cumulative portfolio) will pass to Synergy on the effective date, notwithstanding that possession and control of the Cumulative equity will only be given to Synergy, and the Cumulative consideration shares will only be issued to the Cumulative shareholders, on the implementation date.

4.10.1.6 Cumulative will declare and pay to its shareholders as at the effective date (as a clean out dividend) an amount equal to Cumulative’s net profits after tax for the period up to the effective date. For the avoidance of doubt, the Cumulative equity to be acquired by Synergy in terms of the Cumulative transaction will be acquired ex-entitlement to such dividend.

4.10.1.7 Save that the Cumulative consideration shares will be issued ex-entitlement to the 30 September 2016 dividend, the Cumulative consideration shares will rank pari passu with existing “B” shares and will be fully paid up and freely transferable.

4.10.1.8 The provisions of the memorandum of incorporation of Cumulative (the “Cumulative MoI”) will not frustrate Synergy in any way from compliance with its obligations in terms of the JSE Listings Requirements and nothing contained in the Cumulative MoI will relieve Synergy from compliance with the JSE Listings Requirements.

4.10.1.9 The Cumulative acquisition agreement contains warranties standard for a transaction of its nature.

4.10.1.10 The Cumulative acquisition constitutes a category one acquisition in terms of the JSE Listings Requirements, as well as the issue of shares with a combined voting power that will exceed 30% of the voting power of all “B” shares in issue, as contemplated in section 41(3) of the Companies Act.

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4.10.2 Waiver of mandatory offer

4.10.2.1 Details of waiver of mandatory offer

4.10.2.1.1 The issue of the Cumulative consideration shares to the Cumulative shareholders will result in Arrowhead being able to exercise at least 35% of the total voting rights attached to securities of Synergy.

4.10.2.1.2 Accordingly, in terms of:

• sections 123 of the Companies Act, Arrowhead would, upon the issue of the Cumulative consideration shares, be obliged to make an offer to the remaining “B” shareholders to acquire their “B” shares at the same price at which Arrowhead acquires the Cumulative consideration shares (being the Cumulative consideration share issue price); and

• section 125 of the Companies Act read with Takeover Regulation 87, Arrowhead would be obliged to make an offer to the remaining “A” shareholders to acquire their “A” shares at a price comparable to the Cumulative consideration share issue price (being the five-day clean VWAP of a Synergy “A” share on the implementation date).

4.10.2.1.3 The making of the mandatory offer is not part of Arrowhead’s strategy. The Cumulative acquisition agreement accordingly provides that the Cumulative acquisition is conditional on the mandatory offer being waived as contemplated in Takeover Regulation 86(4) and dispensed with by the TRP. In this regard, shareholders are advised that the independent expert has concluded that the waiver of mandatory offer is fair and reasonable insofar as Synergy shareholders are concerned, with their opinion in this regard set out in Annexure 1.

4.10.2.1.4 The TRP is willing to consider the application to grant an exemption from the obligation to make a mandatory offer if independent Synergy “A” and “B” shareholders waive their entitlement to receive the mandatory offer, by majority vote, in accordance with Takeover Regulation 86(4). It is recorded that independent shareholders, as contemplated in the Takeover Regulations, control more than 50% of the general voting rights of all Synergy shares.

4.10.2.1.5 On this basis, an ordinary resolution for the waiver of the mandatory offer will be put to independent “A” and “B” shareholders for consideration at the general meeting. Arrowhead and any other non-independent shareholders will not be able to vote on these resolutions. If such resolutions are duly passed by a majority of votes exercised by independent shareholders, Synergy will inform the TRP, together with supporting documents, that the resolutions have been passed in terms of Takeover Regulation 86(4). The TRP will then consider the application for the waiver of the mandatory offer and make a ruling.

4.10.2.1.6 Any shareholder who wishes to make representations relating to the exemption shall have 10 business days from the date of the issue of this circular to make such representations to the TRP before the ruling is considered. Representations should be made in writing and emailed, delivered by hand, posted or faxed to:

If emailed admin@trpanel.co.za

If delivered by hand or courier The Executive DirectorTakeover Regulation Panel1st Floor Building, Free Stone Park135 Patricia RoadAtholl, 2196

If posted The Executive DirectorTakeover Regulation PanelPO Box 91833 Auckland Park, 2006

If faxed The Executive DirectorTakeover Regulation Panel+27 11 784 0062

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and should reach the TRP by no later than the close of business on Tuesday, 11 October 2016 in order to be considered. If any representations are made to the TRP within the permitted timeframe, the TRP will consider the merits thereof before making a ruling.

4.10.2.1.7 Synergy will announce the outcome of the TRP’s ruling on SENS on Thursday, 20 October 2016 and remind shareholders that they may request the Takeover Special Committee to review the ruling within five business days of the announcement, being by Thursday, 3 November 2016. After expiry of the five business day notice period, and subject to no Synergy shareholders having requested a review of the TRP ruling, the TRP waiver proceedings will be regarded as complete.

4.10.2.2 Intentions of the incoming majority shareholder

4.10.2.2.1 As most recently announced in its annual report for the year ended 30 September 2015, Arrowhead has for some time intended to transfer the Cumulative portfolio into a separate subsidiary to be listed on the JSE, with its own dedicated management team focused on growing the portfolio on an accretive basis. The Cumulative acquisition, considered within the broader context of the transaction, sees Synergy become the vehicle for the implementation of this strategy.

4.10.2.2.2 By transferring a number of its smaller high yielding assets into Synergy, Arrowhead will effectively create a separately listed high growth subsidiary, benefitting from Synergy’s strategic dual-class “A” and “B” share capital structure. Arrowhead considers there to be significant opportunities for growth within this market and believes that its dedicated and experienced management team can add significant value to the company.

4.10.2.2.3 Further detail as to the prospects of Synergy post-implementation of the transaction are set out in paragraph 3.

4.11 Change of name

4.11.1 With the repositioning of the company as a specialist high yielding, high growth fund, the board proposes that the name of the company be changed from “Synergy Income Fund Limited” to “Gemgrow Properties Limited”, which change has been approved by the Companies and Intellectual Properties Commission. The JSE will implement such name change following the implementation date by:

4.11.1.1 reclassifying the “A” shares under share code “GPA”, short name “GemPropA” and ISIN ZAE0000223269; and

4.11.1.2 reclassifying the “B” shares under share code “GPB”, short name “GemPropB” and ISIN ZAE0000223277.

4.11.2 Should the transaction be implemented, shareholders will have their account held at their CSDP or broker updated to reflect the change of name.

4.11.3 For a period of not less than one year, the company will reflect the former name “Synergy Income Fund Limited” on all documents of title beneath the new name of “Gemgrow Properties Limited”. In addition, for a period of not less than a year, the company will reflect the former name “Synergy Income Fund Limited” on all circulars beneath the new name “Gemgrow Properties Limited” in accordance with the JSE Listings Requirements.

4.11.4 In terms of clause 7.5 of the MoI and section 16 of the Companies Act, a special resolution to approve the amendment of the company’s name as set out above will be put to Synergy shareholders at the general meeting.

4.12 MoI amendment

4.12.1 The board proposes that the MoI be amended as follows:

4.12.1.1 to ensure that any conversion of “A” shares to “B” shares, or vice versa, or any redemption of any class of shares in whole or in part, is subject to approval by the holders of both “A” shares and “B” shares by way of a separate special resolution taken at a separate general meeting of each class of shareholder;

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4.12.1.2 to reflect the change of name, as more fully detailed in paragraph 4.11;

4.12.1.3 to reflect the change in year-end to 30 September 2016; and

4.12.1.4 to provide for the payment of quarterly distributions to “A” and “B” shareholders on the same terms as half-yearly distributions are determined in terms of Synergy’s existing MoI, so as to align the company’s distribution policy with that of Arrowhead.

4.12.2 Save as set out above, the existing MoI will remain unchanged. In particular, the rights of “A” shareholders to distributions on their SGA shares will not be diminished or adversely affected by the MoI amendment (including the change of year-end).

4.12.3 A special resolution to approve the amendment of the MoI as set out above will be put to shareholders at the general meeting.

4.12.4 The salient features of the existing MoI are set out in Annexure 16. The salient features of the MoI (as amended as set out in this paragraph 4.12) are set out in Annexure 5 of the revised listing particulars.

4.13 Reconstitution of the board of directors

4.13.1 The board of directors of the company will be reconstituted on and with effect from the implementation date.

4.13.2 Resolutions to elect the new directors as directors of the company will be put to shareholders at the general meeting. Subject to the approval of shareholders at the general meeting, the new directors will be appointed to the board with effect from the implementation date. Concurrently, Sedise Moseneke, Rob Hawton, Laurence Rapp, Michael Potts, Martin Kuscus, Lizwi Mtumtum, Sean Segar and Ilan Zwarenstein will resign as directors of the company with effect from the implementation date.

4.13.3 A brief CV of each of the new directors is set out is set out in paragraph 3.1 of the revised listing particulars. Annexure 3 of the revised listing particulars contains the terms of appointment of the new directors.

4.13.4 The company is also in advanced negotiations with a new chief operating officer and financial director, to be appointed with effect from the implementation date. Their appointment as directors will be subject to confirmation by shareholders at the first annual general meeting of the company to be held following the implementation date. Until such time as the new financial director has been formally appointed, and notwithstanding that he will resign as a director with effect from the implementation date, Rob Hawton is designated as financial director for purposes of the revised listing particulars.

4.14 Conditions precedent

The implementation of the transaction remains subject to the fulfilment of the following conditions precedent:

4.14.1 the transaction agreements becoming unconditional and of full force and effect in accordance with their terms;

4.14.2 special resolutions 1, 2, 4 and 6 and ordinary resolutions 1 – 12 (each set out in the notice of general meeting) having been passed by the requisite majority of shareholders;

4.14.3 the mortgagees under the current mortgage bonds registered over the properties within the Vukile and Synergy portfolios consenting to the Vukile asset exchange or cancellation or substitution of such mortgage bonds as may be appropriate in the circumstances;

4.14.4 the mortgagees under the current mortgage bonds registered over the properties within the Cumulative portfolio consenting to the cancellation of such mortgage bonds as may be appropriate in the circumstances;

4.14.5 the lenders who are secured by any properties within the Synergy portfolio approving, to the extent necessary, the change of control of Synergy pursuant to the transaction;

4.14.6 shareholders holding in excess of 5% of the total issued share capital of Synergy not validly exercising their rights in terms of section 164 (read with section 112) of the Companies Act;

4.14.7 the TRP exempting Arrowhead from the mandatory offer, on the basis of the waiver;

4.14.8 the TRP issuing a compliance certificate in respect of the Vukile asset exchange; and

4.14.9 all applicable regulatory and statutory approvals for the implementation of the transaction having been obtained from the Competition Authorities, the TRP and the JSE.

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4.15 Approval required

4.15.1 The VAM internalisation, Vukile asset exchange, Cumulative acquisition, change of name, MoI amendment and reconstitution of the board of directors are all inter-conditional and form part of the composite transaction. The following resolutions will be put to shareholders at the general meeting in order to approve the transaction:

4.15.1.1 an ordinary resolution of shareholders to approve the VAM internalisation, in terms of section 10.4(e) of the JSE Listings Requirements;

4.15.1.2 a special resolution of shareholders to approve the issue of the VAM consideration shares to Vukile, in terms of section 41(1)(b) of the Companies Act;

4.15.1.3 an ordinary resolution of shareholders to approve the acquisition by Synergy of the Vukile portfolio, in terms of sections 9.20 and 10.4(e) of the JSE Listings Requirements;

4.15.1.4 an ordinary resolution of shareholders to approve the disposal by Synergy of the Synergy portfolio, in terms of sections 9.20 and 10.4(e) of the JSE Listings Requirements;

4.15.1.5 a special resolution of shareholders to approve the disposal by Synergy of all or the greater part of its assets, in terms of section 115(2) of the Companies Act;

4.15.1.6 an ordinary resolution of shareholders to approve the Cumulative acquisition, in terms of section 9.20 of the JSE Listings Requirements;

4.15.1.7 a special resolution of shareholders to approve the issue of the Cumulative consideration shares, in terms of section 41(3) of the Companies Act;

4.15.1.8 ordinary resolutions of independent “A” shareholders and independent “B” shareholders waiving the mandatory offer in terms of Takeover Regulation 86(4);

4.15.1.9 a special resolution to approve the change of name, in terms of clause 7.5 of the MoI; and

4.15.1.10 ordinary resolutions of shareholders to approve the election of the new directors.

4.15.2 The voting rights controlled by Vukile and its associates will not be taken into account in determining the outcome of the resolutions contemplated in paragraphs 4.15.1.1, 4.15.1.3 and 4.15.1.4 above(although will be taken into account in determining the requisite quorum).

4.15.3 The voting rights controlled by Vukile and its associates, related persons and persons acting in concert with Vukile (as defined in the Companies Act), if any, will be excluded both for purposes of determining the requisite quorum and in determining the number of votes in support of the resolution contemplated in paragraph 4.15.1.5 above.

4.16 Independent expert report

4.16.1 Vukile holds 65.0% of the total voting rights in the company and is a “material shareholder” of Synergy as contemplated in the JSE Listings Requirements. The transaction accordingly constitutes a transaction with a related party in terms of section 10.4 of the JSE Listings Requirements. In addition, the transaction constitutes the disposal of the greater part of Synergy’s assets, as contemplated in section 112 of the Companies Act.

4.16.2 As required in terms of section 10.4(f) of the JSE Listings Requirements and the Takeover Regulations, the independent board has appointed the independent expert to provide an opinion as to both the fairness and reasonableness of the transaction. The report of the independent expert in this regard is set out in Annexure 1.

4.16.3 The independent board, having been so advised by the independent expert and after due consideration of the report by the independent expert, confirms that the transaction is fair and reasonable insofar as Synergy “A” and “B” shareholders are concerned and accordingly recommends that Synergy shareholders vote in favour of the resolutions to be proposed at the general meeting.

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4.17 Affected transaction considerations in respect of the Vukile asset exchange

4.17.1 Disclosure of relevant information relating to Synergy

In accordance with Takeover Regulation 106, the following information relating to Synergy is disclosed:

4.17.1.1 As at the last practicable date, neither Synergy nor any person acting in concert with Synergy has any interest in Vukile shares. Synergy has no option to purchase or acquire any Vukile shares. There have been no changes in such holdings between 12 March 2016 and the last practicable date.

4.17.1.2 Save for the directors’ interests as set out in paragraph 17, no director of Synergy has any direct or indirect beneficial interest in Synergy shares. There have been no changes in such holdings between 12 March 2016 and the last practicable date.

4.17.1.3 Set out below are the interests of directors of Synergy in Vukile shares as at the last practicable date. Direct and indirect beneficial interests are disclosed. In addition, interests of associates of directors, where such director has no beneficial interest, are separately disclosed (this relates principally to the holdings of spouse and minor children).

DirectorDirect

beneficialIndirect

beneficialHeld by

associatesTotal shares

held% of

total shares

Sedise Moseneke 604 352 9 300 606 – 9 904 958 1.43Michael Potts 940 037 – – 940 037 0.14Laurence Rapp 1 536 074 185 000 – 1 721 075 0.25Sean Segar 11 374 – – 11 374 <0.01

Total 3 091 837 9 485 606 – 12 577 444 1.82

4.17.1.4 There have been no changes in the above holdings between 12 March 2016 and the last practicable date, save for as follows:

4.17.1.4.1 on 21 June 2016, Michael Potts acquired a beneficial interest in 78 566 Vukile shares pursuant to an off-market vesting of shares under Vukile’s Conditional Share Plan;

4.17.1.4.2 on 21 June 2016, Michael Potts disposed of 32 201 Vukile shares in an on-market sale to settle tax liability due in respect of shares vested in terms of paragraph 4.17.1.4.1 above;

4.17.1.4.3 on 21 June 2016, Laurence Rapp acquired a beneficial interest in 152 253 Vukile shares pursuant to an off-market vesting of shares under Vukile’s Conditional Share Plan;

4.17.1.4.4 on 21 June 2016, Laurence Rapp disposed of 62 402 Vukile shares in an on-market sale to settle tax liability due in respect of shares vested in terms of paragraph 4.17.1.4.3 above;

4.17.1.4.5 on 14 July 2016, Michael Potts acquired a beneficial interest in 180 902 Vukile shares pursuant to an off-market vesting of shares under Vukile’s Conditional Share Plan;

4.17.1.4.6 on 14 July 2016, Michael Potts disposed of 74 416 Vukile shares in an on-market sale to settle tax liability due in respect of shares vested in terms of paragraph 4.17.1.4.5 above;

4.17.1.4.7 on 14 July 2016, Laurence Rapp acquired a beneficial interest in 194 791 Vukile shares pursuant to an off-market vesting of shares under Vukile’s Conditional Share Plan;

4.17.1.4.8 on 14 July 2016, Laurence Rapp disposed of 80 129 Vukile shares in an on-market sale to settle tax liability due in respect of shares vested in terms of paragraph 4.17.1.4.7 above;

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4.17.1.4.9 on 26 August 2016, Laurence Rapp acquired a beneficial interest in 232 463 Vukile shares pursuant to an off-market vesting of shares under Vukile’s Conditional Share Plan; and

4.17.1.4.10 on 30 August 2016, Laurence Rapp disposed of 93 386 Vukile shares in an on-market sale to settle tax liability due in respect of shares vested in terms of paragraph 4.17.1.4.9 above.

4.17.1.5 Save as set out above, and in respect of the transaction agreements and the VAM asset management agreement, Synergy does not have, and no Synergy director has, any interest in actions to be effected by Vukile.

4.17.1.6 Save for the transaction agreements, no agreement exists between Synergy or any person acting in concert with Synergy, and:

4.17.1.6.1 Vukile;

4.17.1.6.2 any directors of Vukile, or persons who were directors of Vukile within the 12 months preceding the last practicable date; or

4.17.1.6.3 holders of Vukile shares, or persons who held Vukile shares within the 12 months preceding the last practicable date,

which agreement is considered to be material to a decision regarding the Vukile asset exchange.

4.17.1.7 No financing arrangements have been entered into by Synergy in relation to the Vukile asset exchange.

4.17.1.8 As at the last practicable date, and as far as the company is aware, no person was irrevocably committed to vote in favour or against the Vukile asset exchange.

4.17.2 Disclosure of relevant information relating to Vukile

In accordance with Takeover Regulation 106, the following information relating to Vukile is disclosed:

4.17.2.1 As at the last practicable date, Vukile holds 9.9% of Synergy’s issued “A” shares and 89.66% of Synergy’s issued “B” shares, together representing 65.0% of Synergy’s total issued shares. Other than as contemplated by the VAM internalisation, Vukile has no option to purchase or acquire any Synergy shares. There have been no changes in Vukile’s holding of Synergy shares between 12 March 2016 and the last practicable date.

4.17.2.2 Set out below are the interests of directors of Vukile in Vukile shares as at the last practicable date. Direct and indirect beneficial interests are disclosed. In addition, interests of associates of directors, where such director has no beneficial interest, are separately disclosed (this relates principally to the holdings of spouse and minor children).

DirectorDirect

beneficialIndirect

beneficialHeld by

associatesTotal shares

held% of

total shares

Sedise Moseneke 604 352 9 300 606 – 9 904 958 1.43Michael Potts 940 037 – – 940 037 0.14Laurence Rapp 1 536 074 185 000 – 1 721 074 0.25Ina Lopion 349 989 – – 349 989 0.05Mervyn Serebro – 24 558 – 24 558 <0.01

Total 3 430 452 9 510 164 – 12 940 616 1.87

4.17.2.3 There have been no changes in the above holdings between 12 March 2016 and the last practicable date, save for Mervyn Serebro acquiring a beneficial interest in 1 201 Vukile shares on 20 June 2016 pursuant to an off-market reinvestment in terms of the election to reinvest a cash dividend.

4.17.2.4 No director of Vukile has any interest in Synergy “A” shares as at the last practicable date and there have been no changes in such holdings between 12 March 2016 and the last practicable date.

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4.17.2.5 Set out below are the interests of directors of Vukile in Synergy “B” shares as at the last practicable date. Direct and indirect beneficial interests are disclosed. In addition, interests of associates of directors, where such director has no beneficial interest, are separately disclosed (this relates principally to the holdings of spouse and minor children). There have been no changes in such holdings between 12 March 2016 and the last practicable date.

DirectorDirect

beneficialIndirect

beneficialTotal

shares held% of

B shares% of total

shares

Sedise Moseneke 200 – 200 <0.01 <0.01Michael Potts 19 500 – 19 500 0.02 0.01C Potts (associate of Michael Potts) 350 – 350 <0.01 <0.01

Total 20 050 – 20 050 0.02 0.01

4.17.2.6 Save as set out above, and in respect of the transaction agreements and the VAM asset management agreement, Vukile does not have, and no Vukile director has, any interest in actions to be effected by Synergy.

4.17.2.7 Save for the transaction agreements, no agreement exists between Vukile or any person acting in concert with Vukile, and:

4.17.2.7.1 Synergy;

4.17.2.7.2 any directors of Synergy, or persons who were directors of Synergy within the 12 months preceding the last practicable date; or

4.17.2.7.3 holders of Synergy shares, or persons who held Synergy shares within the 12 months preceding the last practicable date,

which agreement is considered to be material to a decision regarding the Vukile asset exchange.

4.17.2.8 No financing arrangements have been entered into by Vukile in relation to the Vukile asset exchange.

4.17.2.9 As at the last practicable date, and as far as Vukile is aware, no person was irrevocably committed to vote in favour or against the Vukile asset exchange.

4.17.2.10 The remuneration of Vukile directors will not be affected by the Vukile asset exchange.

4.17.2.11 The Vukile independent board is of the opinion that the Vukile asset exchange is beneficial to the holders of Vukile shares. Those directors that hold a beneficial interest in Synergy shares intend voting in favour of the transaction and all resolutions to be proposed at the general meeting.

4.17.2.12 The following documents, or copies thereof, will be available for inspection at the registered office of Vukile (One-on-Ninth, corner Glenhove Road and Ninth Street, Melrose Estate, 2196) and the office of the corporate advisor between 09:00 and 17:00 from Monday, 26 September 2016 to Monday, 10 October 2016, both days inclusive:

4.17.2.12.1 the MOI of Vukile; and

4.17.2.12.2 the annual financial statements of Vukile for the financial years ended 31 March 2016, 31 March 2015 and 31 March 2014. Such historical financial information is also available on the Vukile website (www.vukile.co.za).

5. SECTION 164 APPRAISAL RIGHTS

5.1 Shareholders are advised that the Companies Act affords the entitlement to seek relief in terms of section 164 to holders of voting rights in respect of the Vukile asset exchange, being a transaction proposed by a company in terms of section 112 of the Companies Act, provided that the holders take appropriate action as prescribed in section 164 of the Companies Act.

5.2 Section 164 of the Companies Act essentially provides that:

5.2.1 at any time before a resolution to approve a transaction contemplated in section 112 of the Companies Act is to be voted on, a shareholder may give the company a written notice objecting to such resolution;

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5.2.2 within 10 business days after a company has adopted a resolution referred to above, the company must send a notice that such resolution has been adopted to each shareholder who gave the company a written notice of objection and has neither withdrawn that notice nor voted in favour of such resolution;

5.2.3 a shareholder may demand in writing within 20 business days after receipt of the notices from the company referred to above that the company pay the shareholder the fair value for all the shares held by that person if:

5.2.3.1 the shareholder sent the company a notice of objection

5.2.3.2 the company has adopted the resolution referred to above; and

5.2.3.3 the shareholder voted against such resolution and has complied with all of the procedural requirements of section 164 of the Companies Act;

5.2.4 the demand sent by the shareholder to the company as provided above must set out:

5.2.4.1 the shareholder’s name and address;

5.2.4.2 the number of shares in respect of which the shareholder seeks payment; and

5.2.4.3 a demand for payment of the fair value of those shares. The fair value of the shares is determined as at the date on which, and the time immediately before the company adopted the resolution that gave rise to the shareholder’s rights under section 164 of the Companies Act;

5.2.5 a shareholder who has sent a demand has no further rights in respect of those shares, other than to be paid their fair value unless:

5.2.5.1 the shareholder withdraws that demand before the company makes an offer under section  164(11) of the Companies Act or allows an offer by the company to lapse, as contemplated in section 164(12)(b);

5.2.5.2 the company fails to make an offer in accordance with section 164(11) of the Companies Act and the shareholder withdraws the demand; or

5.2.5.3 the company, by a subsequent special resolution, revokes the adopted resolution that gave rise to the shareholders’ rights under section 164 of the Companies Act; and

5.2.6 if any of the events mentioned in paragraph 5.2.5 occur, all of the shareholder’s rights in respect of the shares are reinstated without interruption.

5.3 Before exercising their rights under section 164 of the Companies Act, shareholders should have regard to the following:

5.3.1 having considered the terms and conditions of the transaction, the independent expert has concluded that the transaction is fair and reasonable insofar as Synergy shareholders are concerned. Shareholders are referred to Annexure 1, which sets out the full text of the independent expert’s report in this regard; and

5.3.2 the court is empowered to grant a costs order in favour of, or against, a dissenting shareholder, as may be applicable.

5.4 A complete extract of section 164 of the Companies Act is included in the Appendix to Annexure 1.

5.5 The above summary of the provisions of section 164 of the Companies Act is not intended to provide specific advice and no action should be taken or omitted to be taken in reliance upon it. Shareholders that are in doubt as to what action to take must consult their legal or professional advisor in this regard.

6. SECTION 115 OF THE COMPANIES ACT

6.1 The Vukile asset exchange may only be implemented if the TRP has issued a compliance certificate in terms of sections 115(1)(b) and 121(b) of the Companies Act.

6.2 In addition, and notwithstanding that the special resolution required for the approval of the Vukile asset exchange in terms of section 115(2) of the Companies Act may have been adopted, Synergy may not proceed to implement the Vukile asset exchange without the approval of the court if:

6.2.1 such resolution was opposed by at least 15% of the voting rights that were exercised on that resolution, and within five business days after the vote, any person who voted against that special resolution requires the company to seek court approval; or

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6.2.2 the court, on application within 10 business days after the vote by any person who voted against such special resolution grants that person leave to apply to a court for a review of the Vukile asset exchange.

6.3 If the special resolution approving the Vukile asset exchange requires approval by a court as contemplated in terms of paragraph 6.2.1 above, Synergy must either:

6.3.1 within 10 business days after the vote apply to the court for approval, and bear the costs of that application; or

6.3.2 treat the relevant special resolution as a nullity.

6.4 On application contemplated in paragraph 6.2.2 above, the court may grant leave to that person to apply to court for a review of the Vukile asset exchange only if satisfied that the applicant:

6.4.1 is acting in good faith;

6.4.2 appears prepared and able to sustain the proceedings; and

6.4.3 has alleged facts which if proved would support an order in terms of paragraph 6.5 below.

6.5 On reviewing the special resolution that is the subject of an application contemplated in paragraph 6.3.1, or after granting leave as contemplated in paragraph 6.4, the court may set aside the special resolution only if:

6.5.1 the resolution is manifestly unfair to any class of holders of Synergy’s securities (being the shareholders); or

6.5.2 the vote was materially tainted by conflict of interest, inadequate disclosure, failure to comply with the Companies Act, the MoI or other significant and material procedural irregularity.

6.6 A complete extract of section 115 of the Companies Act is included in the Appendix to Annexure 1.

6.7 The above summary of the provisions of section 115 of the Companies Act is not intended to provide specific advice and no action should be taken or omitted to be taken in reliance upon it. Shareholders that are in doubt as to what action to take must consult their legal or professional advisor in this regard.

7. THE GENERAL MEETING

A general meeting of Synergy shareholders will be held at 10:00 on Tuesday, 25 October 2016, at the company’s registered office (One-on-Ninth, corner Glenhove Road and Ninth Street, Melrose Estate, 2196), for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions required to be approved by shareholders in order to authorise and implement the transaction. The notice of general meeting is attached to and forms part of this circular.

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PART II: PROPERTY INFORMATION THE SYNERGY PORTFOLIO

8. THE SYNERGY PORTFOLIO

8.1 The Synergy portfolio comprises 14 retail properties valued at R2 474 600 000 as at 31 July 2016. Full details of the Synergy portfolio are set out in Annexure 5.

8.2 Analysis of the Synergy portfolio

An analysis of the Synergy portfolio, as at 31 March 2016, in respect of the geographic profile, sectoral profile, tenant profile, vacancy profile, lease expiry profile, weighted average rental per square metre, weighted average rental escalation profile and average annualised property yield is set out below.

8.2.1 Geographic profile

Based onGLA %

Based ongross income %

Western Cape 27.0 33.2KwaZulu-Natal 22.5 21.7Gauteng 12.6 11.2Mpumalanga 12.1 9.4Free State 11.0 12.1Limpopo 9.2 7.6North West 5.6 4.8

Total 100.0 100.0

8.2.2 Sectoral profile

All properties comprising the Synergy portfolio are classified in the retail sector.

8.2.3 Tenant profile

Based onGLA %

Based ongross income %

A 74.4 69.6B 5.4 6.3C 20.2 24.1

Total 100.0 100.0

For the table above, the following key is applicable:

A. Large national tenants, large listed tenants, government and major franchisees, such as Spar, Massmart, Edcon, Absa Bank and Shoprite.

B. National tenants, listed tenants, franchisees, medium to large professional firms, such as Pretoria Society of Advocates, Fashion World, Franco Ceccato, Genesis Analytics and Hi-Q.

C. Other (comprising of 312 tenants).

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8.2.4 Vacancy profile

4.5% (based on GLA) of the Synergy portfolio is vacant.

8.2.5 Lease expiry profile

Based onGLA %

Based ongross income %

Vacant 4.5 –March 2017 23.8 25.2March 2018 14.6 17.7March 2019 19.9 21.1March 2020 18.6 19.4March 2021 10.5 9.7March 2022 and beyond 8.1 6.9

100.0 100.0

8.2.6 The weighted average rental per square metre of the Synergy portfolio is R110.32/m2.

8.2.7 The weighted average rental escalation profile for the Synergy portfolio is 7.5%.

8.2.8 The average annualised property yield for the Synergy portfolio is 8.8%.

8.3 Valuation reports

8.3.1 The properties comprising the Synergy portfolio were valued by either Martin Fitchet of Knight Frank or Peter Parfitt of Quadrant, both independent external registered professional valuers.

8.3.2 Detailed valuation reports have been prepared in respect of each of the properties within the Synergy portfolio and are available for inspection. Summaries of the detailed valuation reports have been included in Annexure 2 and Annexure 3.

9. THE VUKILE PORTFOLIO

9.1 Overview of the Vukile portfolio

The Vukile portfolio comprises 29 high yielding retail, office and industrial properties valued at R2 431 800 000 as at 31 July 2016. Full details of the Vukile portfolio are set out in Annexure 6.

9.2 Analysis of the Vukile portfolio

An analysis of the Vukile portfolio, as at 31 March 2016, in respect of the geographic profile, sectoral profile, tenant profile, vacancy profile, lease expiry profile, weighted average rental per square metre, weighted average rental escalation profile and average annualised property yield is set out below.

9.2.1 Geographic profile

Based onGLA %

Based ongross income %

Western Cape 13.7 15.9KwaZulu-Natal 14.1 8.7Gauteng 69.5 71.0Eastern Cape 2.7 4.4

Total 100.0 100.0

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9.2.2 Sectoral profile

Based onGLA %

Based ongross income %

Retail 1.4 2.8Office 41.2 62.7Industrial 57.4 34.5

Total 100.0 100.0

9.2.3 Tenant profile

Based onGLA %

Based ongross income %

A 36.4 40.8B 7.5 9.8C 56.1 49.4

Total 100.0 100.0

For the table above, the following key is applicable:

A. Large national tenants, large listed tenants, government and major franchisees, such as Government, Sanlam Life Insurance, Pepkor and Massmart.

B. National tenants, listed tenants, franchisees, medium to large professional firms, such as Direct Transact, Bata Shoes, Specsavers and Tekkie Town.

C. Other (comprising of 397 tenants).

9.2.4 Vacancy profile

Based onGLA %

Retail 3.5Office 9.0Industrial 2.1

Total 5.0

9.2.5 Lease expiry profile

Based onGLA %

Based ongross income %

Vacant 5.0 –March 2017 40.5 40.0March 2018 19.7 21.7March 2019 10.3 10.9March 2020 13.2 11.2March 2021 6.8 10.8March 2022 and beyond 4.5 5.4

100.0 100.0

9.2.6 Weighted average rental per square metre by rentable area per sector

Weighted average rental per m2

Retail 118.93Office 95.90Industrial 42.86

Total 65.38

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9.2.7 Weighted average rental escalation profile

%

Retail 6.6Office 7.8Industrial 7.4

Total 7.6

9.2.8 The average annualised property yield for the Vukile portfolio is 10.2%.

9.3 Valuation reports

9.3.1 The properties comprising the Vukile portfolio were valued by either Martin Fitchet of Knight Frank or Peter Parfitt of Quadrant, both independent external registered professional valuers.

9.3.2 Detailed valuation reports have been prepared in respect of each of the properties within the Vukile portfolio and are available for inspection. Summaries of the detailed valuation reports have been included in Annexure 2 and Annexure 3.

10. THE CUMULATIVE PORTFOLIO

10.1 Overview of the Cumulative portfolio

The Cumulative portfolio comprises 100 high yielding retail, office and industrial properties valued at R1 893 300 000 as at 31 July 2016. Full details of the Cumulative portfolio are set out in Annexure 7.

10.2 Analysis of the Cumulative portfolio

An analysis of the Cumulative portfolio, as at 30 September 2016, in respect of the geographic profile, sectoral profile, tenant profile, vacancy profile, lease expiry profile, weighted average rental per square metre, weighted average rental escalation profile and average annualised property yield is set out below.

10.2.1 Geographic profile

Based onGLA %

Based ongross income %

Eastern Cape 4.0 5.3Free State 4.3 2.5Gauteng 53.4 46.4KwaZulu-Natal 11.2 13.6Limpopo 6.7 8.9Mpumalanga 5.8 5.6Northern Cape 4.2 5.6North West 2.2 0.9Western Cape 8.2 11.2

Total 100.0 100.0

10.2.2 Sectoral profile

Based onGLA %

Based ongross income %

Retail 26.0 32.0Office 32.2 44.6Industrial 41.8 23.4

Total 100.0 100.0

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10.2.3 Tenant profile

Based onGLA %

Based ongross income %

A 38.0 43.0B 14.0 17.0C 48.0 40.0

Total 100.0 100.0

For the table above, the following key is applicable:A. Large national tenants, large listed tenants, government and major franchisees, such as the South

African Revenue Services, Virgin Active, Shoprite, DPW and Absa Bank.B. National tenants, listed tenants, franchisees, medium to large professional firms, such as African

Bank, Top Bet/Hollywood Bets, Tekkie Town and Rage.C. Other (comprising of 430 tenants).

10.2.4 Vacancy profile

Based on GLA %

Retail 9.6Office* 17.4Industrial 5.1

Total 10.2

* Vacancies in the office portfolio dropped to 13.9% (based on GLA) as at 30 June 2016.

10.2.5 Lease expiry profile

Based onGLA %

Based ongross income %

Vacant 10.2 –March 2017 26.3 31.4March 2018 20.3 24.0March 2019 18.7 22.0March 2020 10.4 13.3March 2021 6.7 5.3March 2022 and beyond 7.4 4.0

100.0 100.0

10.2.6 Weighted average rental per square metre by rentable area per sector

Weighted averagerental per m2

Retail 77.2Office 94.7Industrial 33.4

Total 63.0

10.2.7 Weighted average rental escalation profile

%

Retail 8.0Office 8.5Industrial 8.3

Total 8.3

10.2.8 The average annualised property yield for the Cumulative portfolio is 11.0%.

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10.3 Valuation reports

10.3.1 The Cumulative portfolio was valued by Theuns Behrens of Real Insight, an independent external registered professional valuer.

10.3.2 Detailed valuation reports have been prepared in respect of each of the properties within the Cumulative portfolio and are available for inspection. A summary of the detailed valuation report in respect of the Cumulative portfolio has been included in Annexure 4.

11. VENDORS

11.1 Details of the vendors of the VAM equity, the Vukile portfolio and the Cumulative equity (collectively, the “vendors”) are set out in Annexure 14.

11.2 No vendor has guaranteed book debts or other assets. The agreements in terms of which the relevant material assets were or are to be acquired (the “vendor agreements”) contain warranties standard for transactions of their nature.

11.3 The vendor agreements do not preclude the vendors from carrying on business in competition with the Synergy group, VAM and/or Cumulative nor do they impose any other similar restrictions on the vendors. No payment in cash or otherwise has been made in this regard.

11.4 There are no liabilities for accrued taxation that are required to be settled in terms of the vendor agreements.

11.5 The purchase consideration for the VAM equity is being settled through an issue by Synergy of the VAM consideration shares at an equivalent price equivalent to the clean VWAP at which “B” shares traded for the five business days preceding the implementation date. The net asset value of VAM was R356 000 as at 31 March 2016. Based on the clean VWAP at which “B” shares traded for the five business days preceding the last practicable date, the current indicative price at which the VAM consideration shares will be issued is R6.77, and accordingly the price being paid by Synergy for the VAM equity is approximately R155 341 184. The difference between the purchase price payable and the net asset value of the VAM equity to be acquired by Synergy will be recognised as goodwill.

11.6 The purchase consideration for the Cumulative equity is being settled through an issue by Synergy of the Cumulative consideration shares at an equivalent price equivalent to the clean VWAP at which “B” shares traded for the five business days preceding the implementation date. The indicative net asset value of Cumulative is R2 055 780 000, being the fair value of the Cumulative portfolio as at 31 July 2016, plus indicative trade and other receivables of R162 480 000 in respect of the executive loans. Based on the clean VWAP at which “B” shares traded for the five business days preceding the last practicable date, the current indicative price at which the Cumulative consideration shares will be issued is R6.77, and accordingly the price being paid by Synergy for the Cumulative equity is approximately R1 837 461 047. The difference between the purchase price payable and the proportionate value of the net asset value acquired by Synergy will be recognised as a gain on bargain purchase, resulting in an increase to retained earnings.

11.7 Save for the directors’ interests as set out in paragraph 4.17.1 and Annexure 3 of the revised listing particulars, no director or promoter of Synergy (or any partnership, syndicate or other association in which a promoter or director had an interest) had any direct or indirect beneficial interest in the acquisition of the material assets from the vendors.

11.8 No cash or securities have been paid or any benefit given within the three years preceding this circular or is proposed to be paid or given to any promoter (not being a director).

11.9 The VAM equity will be transferred to Synergy on the implementation date. All risk and all benefit to such equity will however vest in Synergy on the effective date. The VAM equity has not, to the knowledge of Synergy, been ceded or pledged to any party.

11.10 The properties comprising the Vukile portfolio will be transferred to Synergy as soon as possible after the implementation date. All risk and benefit to such properties will however vest in Synergy on the effective date. The properties comprising the Vukile portfolio have not, to the knowledge of Synergy, been ceded or pledged to any party. However, the properties comprising the Vukile portfolio will, following the implementation of the transaction, be provided as security for borrowings as set out in Annexure 10 of the revised listing particulars.

11.11 The Cumulative equity will be transferred to Synergy on the implementation date. All risk in and all benefit to such equity will however vest in Synergy on the effective date. The Cumulative equity has not, to the knowledge of Synergy, been ceded or pledged to any party.

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PART III: FINANCIAL INFORMATION

12. FORECAST STATEMENTS OF COMPREHENSIVE INCOME IN RESPECT OF SYNERGY

12.1 Forecast statements of comprehensive income in respect of Synergy have been prepared for the six months ending 30 September 2016 and the year ending 30 September 2017 (collectively, the “forecasts”), and are set out in Annexure 8.

12.2 The forecasts have been prepared on the assumption that the effective date of the transaction is 1 October 2016. The forecasts include forecast results for the duration of the forecast periods.

12.3 As the transaction constitutes a disposal by Synergy of its entire portfolio of properties, with the effective acquisition of an entirely new portfolio of properties through the acquisition of the Vukile portfolio and the Cumulative equity, the forecasts represent both a forecast in respect of the assets being acquired pursuant to the transaction and a forecast in respect of Synergy post-implementation of the transaction.

12.4 The forecasts, including the assumptions on which they are based and the financial information from which they are prepared, are the responsibility of the independent board. The forecasts have been prepared in accordance with Synergy’s accounting policies and in compliance with IFRS.

12.5 The forecasts should be read in conjunction with the independent reporting accountants’ assurance report thereon, as contained in Annexure 9.

13. PRO FORMA STATEMENT OF FINANCIAL POSITION IN RESPECT OF SYNERGY

13.1 The pro forma statement of financial position of Synergy, showing the pro forma effects of the transaction, is set out in Annexure 10.

13.2 The pro forma statement of financial position, including the assumptions on which it is based and the financial information from which it has been prepared, is the responsibility of the independent board. The pro forma statement of financial position has been prepared in accordance with Synergy’s accounting policies and in compliance with IFRS.

13.3 The above pro forma financial information should be read in conjunction with the independent reporting accountants’ assurance report thereon, as contained in Annexure 11.

13.4 The independent reporting accountants’ review report on the value and existence of the Cumulative and Vukile portfolios is set out in Annexure 12.

14. HISTORICAL FINANCIAL INFORMATION IN RESPECT OF SYNERGY

14.1 The audited historical financial information for Synergy for the years ended 31 March 2016, 31 March 2015 and 30 June 2014 is set out in Annexure 13.

14.2 The historical financial information is the responsibility of the independent board.

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PART IV: GENERAL

15. STATEMENT AS TO LISTING ON THE JSE

15.1 Subject to shareholders approving the transaction and all other requisite approvals being obtained, such that the transaction becomes unconditional in accordance with its terms, the JSE has approved the transaction and will continue to grant a listing to the company.

15.2 Pursuant to the implementation of the transaction, the JSE will implement the transaction by:

15.2.1 reclassifying the “A” shares under share code “GPA” and short name “GemPropA” and ISIN ZAE0000223269;

15.2.2 reclassifying the “B” shares under share code “GPB” and short name “GemPropB” and ISIN ZAE0000334377; and

15.2.3 moving the company to the “Diversified REITs” sector.

16. DIVIDENDS

16.1 The 30 September 2016 dividend, in respect of the six-month period to 30 September 2016, will be payable to Synergy shareholders on the register as at the designated record date for receipt thereof, to be announced in due course.

16.2 The VAM consideration shares and Cumulative consideration shares will be issued ex-entitlement to the 30 September 2016 dividend.

16.3 Following the implementation of the transaction, and save for the declaration of quarterly distributions (as  opposed to half-yearly) distributions, the rights of shareholders to Synergy’s net income distribution will remain unchanged, and determined in the manner set out in the MoI.

17. DIRECTORS’ INTERESTS

17.1 Directors’ interests in Synergy shares

17.1.1 Set out below are the interests of directors in the company as at 31 March 2016. This includes the interests of persons who are no longer directors, but resigned during the last 18 months. Direct and indirect beneficial interests are disclosed. In addition, interests of associates of directors, where the director has no beneficial interest, are separately disclosed (this relates principally to the holdings of spouse and minor children):

“A” shares

DirectorDirect

beneficialIndirect

beneficialTotal

shares held% of

A shares% of

total shares

Sean Segar 58 706 13 000 71 706 0.15 0.05

Total 58 706 13 000 71 706 0.15 0.05

“B” shares

DirectorDirect

beneficialIndirect

beneficialTotal

shares held% of

B shares% of

total shares

Sean Segar 116 428 – 116 428 0.11 0.08Sedise Moseneke 200 – 200 <0.01 <0.01Michael Potts 19 500 – 19 500 0.02 0.01C Potts (associate of Michael Potts) 350 – 350 <0.01 <0.01Rob Hawton 100 – 100 <0.01 <0.01

Total 136 578 – 136 578 0.13 0.09

17.1.2 There were no changes to the directors’ holdings of Synergy shares between the end of the financial year ended 31 March 2016 and the last practicable date.

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17.1.3 Details of directors’ interests in Synergy shares post the implementation of the transaction are set out in Annexure 3 of the revised listing particulars.

17.2 Directors of VAM’s interests in Synergy shares

17.2.1 Save for Sedise Moseneke and Rob Hawton, whose interests in Synergy shares are set out in paragraph 17.1.1 above, no director of VAM has any beneficial interest, directly or indirectly, in Synergy shares.

17.2.2 Details of the directors of VAM’s interests in Synergy shares post the implementation of the transaction are set out in Annexure 3 of the revised listing particulars.

17.3 Directors’ interests in transactions

Save in respect of the directors’ interests in Synergy shares, as set out in paragraph 17.1.1 above, and the directors’ interests in Vukile shares, as set out in paragraph 4.17.1.3 above:

17.3.1 no director of Synergy will benefit, directly or indirectly, in any manner as a consequence of the implementation of the transaction; and

17.3.2 no director of Synergy has or had any material beneficial interest, direct or indirect, in transactions that were effected by Synergy during the current or immediately preceding financial year or during an earlier financial year and which remain in any respect outstanding or unperformed.

17.4 Directors of VAM’s interests in transactions

Save in respect of Sedise Moseneke and Rob Hawton’s interests in Synergy shares, as set out in paragraph 17.1.1 above, and interests in Vukile shares, as set out in paragraph 4.17.1.3 above:

17.4.1 no director of VAM will benefit, directly or indirectly, in any manner as a consequence of the implementation of the transaction; and

17.4.2 no director of VAM has or had any material beneficial interest, direct or indirect, in transactions that were effected by Synergy during the current or immediately preceding financial year or during an earlier financial year and which remain in any respect outstanding or unperformed.

18. EXECUTIVE SHAREHOLDING

18.1 Prior to the implementation of the transaction, Cumulative will issue to the executives a number of Cumulative ordinary shares representing, in aggregate following their issue, approximately 8% of the issued share capital of Cumulative (the “executive shares”). The acquisition of such shares will be funded in full by way of a loan advanced by Cumulative to the executives (the “executive loans”), on the following terms:

18.1.1 the executive loans will bear interest at a rate equal to the dividend declared by Synergy for the 12 months ending 30 September 2017, with interest due and payable on receipt of any dividends from Synergy;

18.1.2 the executive loans will be settled in part upon disposal of any of the executives shares, or in full after a period of 10 years; and

18.1.3 ownership of the executive shares will vest in the relevant executive, but such shares will be pledged and ceded to Cumulative until such time as the underlying executive loan has been settled in full or on a pro rata basis.

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18.2 Upon implementation of the transaction, and in their capacity as Cumulative shareholders, the executives will receive an aggregate of 24 000 000 SGB shares, representing 5.4% of the total issued share capital of Synergy post implementation of the transaction. More specifically, it is anticipated that, following the issue of the Cumulative consideration shares and implementation of the transaction, the executives’ holdings of SGB shares will be as follows:

ExecutiveNumber of “B” shares

% of“B” shares

% oftotal shares

Gerald Leissner 6 000 000 1.50 1.34Mark Kaplan 6 000 000 1.50 1.34Imraan Suleman 6 000 000 1.50 1.34Chief Operating Officer of Synergy (from the implementation date) 3 000 000 0.75 0.67Financial Director of Synergy (from the implementation date) 3 000 000 0.75 0.67

Total 24 000 000 6.00 5.36

19. DIRECTORS’ EMOLUMENTS

19.1 The remuneration of the directors of Synergy for the year ended 31 March 2016 is as follows:

Directors’fees

R’000

Salary andallowances

R’000

Other benefits andad-hoc payments

R’000

PerformancebonusR’000

TotalR’000

Executive directorsSedise Moseneke – 1 297 – 1 335 2 632Rob Hawton – 1 250 – 58 1 308

Non-executive directorsLaurence Rapp2 264 – – – 264Michael Potts2 144 – – – 144Martin Kuscus 312 – – – 312Lizwi Mtumtum 336 – – – 336Sean Segar 240 – – – 240Ilan Zwarenstein2 80 – – – 80

Total 1 376 2 547 – 1 393 5 316

1. Remuneration paid to executive directors is paid by Vukile, with the costs recovered from Synergy via asset management fees charged.2. Directors’ fees paid to non-independent directors (who are also directors of Vukile) are paid to VAM in respect of services rendered on

its behalf. Remuneration paid by Vukile to Laurence Rapp and Michael Potts in respect of their positions as chief executive officer and financial director of Vukile amounted to R10.75 million and R4.16 million respectively.

3. Four months pro rata.

19.2 Save as set out in the table above, the directors of Synergy did not receive any emoluments for the year ended 31 March 2016 in the form of:

19.2.1 fees for services as a director;

19.2.2 management, consulting, technical or other fees paid for such services rendered, directly or indirectly, including payments to management companies, a part of which is then paid to a director of the company;

19.2.3 basic salaries;

19.2.4 bonuses and performance-related payments;

19.2.5 sums paid by way of expense allowance;

19.2.6 any other material benefits received;

19.2.7 contributions paid under any pension scheme; or

19.2.8 any commission, gain or profit-sharing arrangements.

19.3 No share options or any other right has been given to a director of Synergy in respect of providing a right to subscribe for shares in Synergy.

19.4 No shares or share options have been issued and allotted in terms of a share purchase or option scheme for employees or other share purchase or option scheme.

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19.5 Save as set out in the notes to paragraph 19.1, all directors are remunerated by Synergy. Save as disclosed in this paragraph 19, no director received any remuneration or benefit in any form from any subsidiary, associate, joint venture or other third party management or advisory company. Details as to the remuneration of the directors of the company following the implementation of the transaction are set out in paragraph 3 of Annexure 3 of the revised listing particulars.

19.6 There are no fees payable or accrued as payable by Synergy to a third party in lieu of directors’ fees.

19.7 Synergy has not entered into any contracts relating to the directors’ and managerial remuneration, secretarial and technical fees and restraint payments.

19.8 The board of directors will be reconstituted following the implementation of the transaction. Details of the directors’ emoluments post-implementation of the transaction are set out in Annexure 3 of the revised listing particulars.

20. MAJOR AND CONTROLLING SHAREHOLDERS

20.1 Set out below are the names of Synergy shareholders, other than directors, that, directly or indirectly, were beneficially interested in 5% or more of the issued “A” shares, as at 31 March 2016.

ShareholderNumber of“A” shares

% of“A” shares

% oftotal shares

Investment Solutions Limited 9 811 617 20.72 6.38Coronation Fund Managers 9 189 264 19.41 5.98Vukile 4 691 084 9.91 3.05Golden Hind Partnership 3 247 247 6.86 2.11Old Mutual Group 2 969 471 6.27 1.93

Total 29 908 683 63.17 19.45

20.2 Set out below are the names of Synergy shareholders, other than directors, that, directly or indirectly, were beneficially interested in 5% or more of the issued “B” shares, 31 March 2016.

ShareholderNumber of“B” shares

% of“B” shares

% oftotal shares

Vukile 95 241 591 89.55 61.96Coronation Fund Managers 6 580 495 6.19 4.28

Total 101 822 086 95.74 66.24

20.3 Set out below are the names of Synergy shareholders, other than directors, that, directly or indirectly, are expected to be beneficially interested in 5% or more of the issued “A” shares post the implementation of the transaction.

ShareholderNumber of“A” shares

% of“A” shares

% oftotal shares

Investment Solutions Limited 9 811 617 20.72 2.20Coronation Fund Managers 9 189 264 19.41 2.06Vukile 4 691 084 9.91 1.05Golden Hind Partnership 3 247 247 6.86 0.73Old Mutual Group 2 969 471 6.27 0.66

Total 29 908 683 63.17 6.70

20.4 Set out below are the names of Synergy shareholders, other than directors, that, directly or indirectly, are expected to be beneficially interested in 5% or more of the issued “B” shares post the implementation of the transaction.

ShareholderNumber of“B” shares

% of“B” shares

% oftotal shares

Arrowhead 247 412 267 61.74 55.22Vukile 118 187 113 29.49 27.42

Total 365 599 380 91.24 82.64

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20.5 As at the last practicable date, Vukile held 65.0% of Synergy’s total issued shares and is the controlling shareholder of Synergy. Post-implementation of the transaction, Arrowhead will hold 55.2% of Synergy’s total issued shares and will be the controlling shareholder of Synergy.

21. RELATIONSHIP INFORMATION

21.1 Vukile holds 65.0% of the issued share capital of Synergy, and 100% of the issued share capital of VAM. Laurence Rapp, Michael Potts and Sedise Moseneke are executive directors of Vukile. Sedise Moseneke and Rob Hawton are directors of VAM.

21.2 Details of the asset manager and property managers are set out in Annexure 15.

21.3 No director, promoter, asset manager or property manager of Synergy has any beneficial interest, direct or indirect, in relation to any property held or property to be acquired by the company nor are they contracted to become a tenant of any part of the property of the company.

21.4 Save as set in this paragraph 21, there is no relationship between any director, promoter, asset manager or property manager of Synergy and another person that may conflict with a duty to Synergy.

21.5 Neither VAM nor its directors have any beneficial interest, direct or indirect, in any securities or participatory interests to be issued by Synergy in order to finance the acquisition of any properties acquired or to be acquired.

21.6 Neither Broll nor its directors have any beneficial interest, direct or indirect, in any securities or participatory interests to be issued by Synergy in order to finance the acquisition of any properties acquired or to be acquired.

21.7 Neither JHI nor its directors have any beneficial interest, direct or indirect, in any securities or participatory interests to be issued by Synergy in order to finance the acquisition of any properties acquired or to be acquired.

21.8 The vendors did not have any beneficial interest, direct or indirect, in any securities or participatory interests to be issued by Synergy in order to finance the acquisition of any properties acquired or to be acquired.

21.9 No director of Synergy, VAM, Broll or JHI, or any promoter, had a material beneficial interest, whether directly or indirectly, in the acquisition or disposal of any properties in the Synergy group during the preceding two years.

22. MATERIAL BORROWINGS AND LOANS RECEIVABLE

22.1 Details of material borrowings advanced to Synergy as at the last practicable date are set out in paragraph 16 and Annexure 10 of the revised listing particulars.

22.2 None of the material borrowings listed in Annexure 10 of the revised listing particulars have any redemption or conversion rights attaching to them.

22.3 There are no material borrowings advanced to Cumulative as at the last practicable date.

22.4 There are no loans receivable by either Synergy or Cumulative as at the last practicable date. The executive loans, as further detailed in paragraph 18, will be advanced by Cumulative to the executives prior to the implementation date and will, as such, be reflected as loans receivable by Cumulative as at the implementation date.

23. MATERIAL CONTRACTS

Save for:

23.1 the transaction agreements, the salient features of which are set out in paragraph 4;

23.2 the VAM asset management agreement, the salient features of which are set out in Annexure 15; and

23.3 the loan agreements detailed in in Annexure 10 of the revised listing particulars,

the Synergy group has not entered into any material contracts, being restrictive funding arrangements or contracts entered into otherwise than in the ordinary course of business, within the two years prior to the last practicable date or at any time containing an obligation or settlement that is material to the Synergy group at the last practicable date, whether verbally or in writing.

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24. MATERIAL CHANGES

24.1 Synergy was listed on the Main Board of the JSE, under the “Real Estate – Real Estate Holdings and Development” section, on 14 December 2011, with an initial portfolio of three small shopping centres valued at approximately R280 million. Its current property portfolio comprise 14 retail properties.

24.2 In the period to February 2015, Vukile acquired 65.0% of Synergy’s issued share capital, subsequently also assuming the property and asset management function in respect of Synergy’s portfolio of properties through the acquisition of 100% of the issued share capital in VAM.

24.3 Synergy’s linked unit capital structure was converted to its current all share structure on and with effect from 27 July 2015, as more fully described in the circular to Synergy linked unitholders dated 20 May 2015.

24.4 Save as set out above, the change of year-end detailed in paragraph 1.6 and the transaction:

24.4.1 there have been no material changes in the financial or trading position of Synergy since it published its results for the year ended 31 March 2016 and the last practicable date;

24.4.2 there has been no change in the business or trading objects of Synergy during the past five years;

24.4.3 there has been no major change in the nature of property, plant and equipment and in the policy regarding the use thereof;

24.4.4 there has been no material change in the nature of business of Synergy; and

24.4.5 there has been no material fact or circumstance that has occurred between 31 March 2016, being the latest financial year-end, and the last practicable date, other than as disclosed in this circular and the revised listing particulars.

24.5 VAM was incorporated on 21 June 2007. Vukile acquired 100% of the issued share capital of VAM in February 2015. Save for the transaction and as set out in this paragraph 24, there have been no material changes in the financial or trading position of VAM since incorporation.

24.6 Cumulative was incorporated on 21 September 2015. Cumulative acquired the Cumulative portfolio from Arrowhead and Vividend with effect from 1 April 2016. Save for such acquisition and the transaction, there have been no material changes in the financial or trading position of Cumulative since incorporation.

24.7 Following the implementation of the transaction, Synergy will continue to operate its business as a REIT listed on the JSE, however, it will shift from a retail-focused fund of community and small regional shopping centres to a specialist high yielding, high growth fund with a portfolio comprising retail, office and industrial assets. The trading objects of the company following the implementation of the transaction are set out in paragraphs 2 and 3, and more generally throughout this circular and the revised listing particulars.

25. ADEQUACY OF CAPITAL

The board has considered the effects of the transaction and are of the opinion that the working capital available to Synergy, as enlarged by the transaction, is sufficient for the group’s present requirements, that is, the enlarged group post-implementation of the transaction and for at least the next 12 months from the date of issue of this circular.

26. LITIGATION STATEMENT

26.1 Synergy is currently party to ongoing litigation with The Spar Group Limited, regarding a lease in respect of Ulundi King Senzangakona Shopping Centre (being the property numbered 13 in Annexure 5). Ulundi King Senzangakona Shopping Centre forms part of the Synergy portfolio and will (along with Synergy’s rights and obligations in terms of the relevant lease) be sold to Vukile in terms of the Vukile asset exchange. Irrespective, the outcome of the matter is not anticipated to have a material effect on the financial position of the Synergy group.

26.2 The independent board has ascertained that there are no legal or arbitration proceedings which may have, or have during the 12 months preceding the date of this circular, had a material effect on the financial position of Cumulative. The independent board has also ascertained that Cumulative is not aware of any other proceedings that would have a material effect on its financial position or which are pending or threatened against Cumulative.

26.3 There are no legal or arbitration proceedings which may have, or have during the 12 months preceding the date of this circular, had a material effect on the financial position of the Synergy group. Save as set out in paragraph 26.1 above, Synergy is not aware of any other proceedings that would have a material effect on the financial position of the Synergy group or which are pending or threatened against the Synergy group.

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27. DIRECTORS’ RESPONSIBILITY STATEMENT

27.1 The members of the independent board, whose names are given on page 13 of this circular, collectively and individually, and in respect of all information included in this circular, save for that included in paragraph 4.17.2, accept responsibility for such information, certify that to the best of their knowledge and belief the information contained in the circular is true and that the circular does not omit anything likely to affect the importance of the information contained herein.

27.2 Furthermore, the members of the board, whose names are given on page 13 of this circular, collectively and individually, and in respect of all information included in this circular, save for that included in paragraph 4.17.2, accept full responsibility for the accuracy of the information given and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the circular contains all information required by the JSE Listings Requirements.

27.3 The Vukile independent board, whose names are given on page 12 of this circular, collectively and individually, and in respect of only the information included in paragraph 4.17.2:

27.3.1 accept full responsibility for the accuracy of the information given and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made; and

27.3.2 certify further that to the best of their knowledge and belief the information is true and does not omit anything likely to affect the importance of the information,

and have signed a written board resolution to this effect (the “Vukile responsibility statement”), which is available for inspection as detailed in paragraph 32 below.

28. OPINION AND RECOMMENDATION

28.1 The independent board, following due consideration of inter alia the report of the independent expert set out in Annexure 1, is of the opinion that the transaction is beneficial to Synergy shareholders and, accordingly, recommends that Synergy shareholders vote in favour of the resolutions to be proposed at the general meeting. The independent board is not aware of any factors that are difficult to quantify, or that are unquantifiable, and accordingly no such factors have been taken into account in forming its opinion.

28.2 Those members of the independent board that hold a beneficial interest in Synergy shares intend voting in favour of the transaction and all resolutions to be proposed at the general meeting.

29. CONSENTS

29.1 Each of Synergy’s advisors, being the corporate advisor, sponsor, attorneys and competition law advisors, independent reporting accountants, independent property valuers, independent expert, company secretary, and the transfer secretaries have consented in writing to act in the capacities stated and to their names appearing in this circular and have not withdrawn such consent prior to the publication of this circular.

29.2 The independent reporting accountants, independent property valuers and independent expert have each consented to the inclusion of their reports in the form and context in which they are included in the circular, which consents have not been withdrawn prior to the publication of this circular. The independent reporting accountants have confirmed that the contents of the circular are not contradictory to the information contained in their reports.

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30. ESTIMATED EXPENSES

30.1 The estimated expenses (excluding VAT) relating to the transaction which have been incurred by Synergy, VAM and/or Cumulative, or that are expected to be incurred, are presented in the table below.

Fees incurred by Synergy Recipient Rand

Corporate advisor and sponsor fees Java Capital 7 500 000Legal advisory fee Cliffe Dekker 1 300 000Competition legal advisory fee Cliffe Dekker 320 000Competition Commission filing fee Competition Commission 350 000Independent reporting accountants fees Grant Thornton 680 000Independent property valuation fees Knight Frank 61 387Independent property valuation fees Real Insight 370 000Independent property valuation fees Quadrant 87 100Independent expert fees PSG 295 000Lease audit Tenurey 83 375Lease audit Level Heads 115 425Preparation of adjustment accounts Martin Wenhold 250 000Printing and other costs Ince 100 000TRP fees TRP 403 000JSE documentation fees JSE 129 500JSE listing fees JSE 391 833

Total 12 436 620

30.2 In terms of the cost sharing agreement, should all transaction agreements become unconditional in accordance with their terms, all costs and disbursements paid by either Synergy, Vukile or Arrowhead in association with the transaction will be borne by Synergy. Should the transaction agreements fail to become unconditional in accordance with their terms, all such costs will be borne by Vukile and Arrowhead in equal shares. Synergy will bear and pay the conveyancing costs associated with transfer of the Vukile portfolio and Vukile will bear and pay the conveyancing costs associated with transfer of the Synergy portfolio.

31. CONFLICTS OF INTEREST

31.1 Java Capital is acting in the capacities of corporate advisor and sponsor to Synergy. As required in terms of the JSE Listings Requirements, it is confirmed that in order to manage any potential or perceived conflicts of interest that might arise as a result of Java Capital acting in these roles, Java Capital has in place appropriate checks and balances, including procedures to assess the independence of Java Capital in respect of the transaction (and, should it be determined that Java Capital is not independent, the appointment of an independent transaction sponsor) and divisions of responsibility amongst the persons involved in fulfilling these various functions.

31.2 Java Capital is in addition acting as corporate advisor and sponsor to each of Arrowhead and Vukile in relation to the transaction. Any potential or perceived conflicts of interest that might arise as a result of Java Capital acting as such is mitigated by the appointment of the independent expert to provide external advice to the independent board and Synergy shareholders in relation to the transaction.

32. DOCUMENTS AVAILABLE FOR INSPECTION

The list of the documents that will be available for inspection at the company’s registered office is set out in paragraph 29 of the revised listing particulars.

Signed on behalf of the independent board

Ilan ZwarensteinIndependent non-executive director

15 September 2016

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Annexure 1

INDEPENDENT EXPERT’S FAIR AND REASONABLE OPINION IN RESPECT OF THE TRANSACTION, INCLUDING THE WAIVER OF MANDATORY OFFER

15 September 2016

The DirectorsSynergy Income Fund LimitedOne-on-NinthCnr Glenhove Road and Ninth StreetMelrose Estate, 2196

Dear Sirs,

INDEPENDENT EXPERT REPORT IN RESPECT OF THE PROPOSED STRATEGIC REPOSITIONING OF SYNERGY INCOME FUND LIMITED

1. INTRODUCTION

In terms of a joint SENS announcement release by Synergy Income Fund Limited (“Synergy” or the “Company”), Vukile Property Fund Limited (“Vukile”) and Arrowhead Properties Limited (“Arrowhead”) on 29 August 2016, shareholders were advised of an indivisible proposed transaction in terms of which, inter alia:

i) Synergy would acquire 100% of the issued ordinary share capital in Vukile Asset Management Proprietary Limited (“VAM”) from Vukile, to be settled through the issue of 22 945 522 Synergy B shares (“B Shares”) (the “VAM Internalisation”);

ii) Synergy would exchange its entire portfolio of retail properties, valued at R2.475 billion, for a portfolio of high yielding retail, office and industrial assets of Vukile valued at R2.431 billion, plus a cash consideration of R18.2 million (the “Vukile Transaction”); and

iii) Synergy would acquire 100% of the issued shares in Cumulative Properties Limited (“Cumulative”), a wholly-owned subsidiary of Arrowhead, in return for the issue to shareholders of Cumulative of 271 412 267 B Shares (the “Cumulative Acquisition”),

(together the “Proposed Transaction”).

From a Synergy perspective, the Proposed Transaction:

• constitutes a related party transaction in terms of section 10.4 of the JSE Listings Requirements (“Listings Requirements”), in respect of the VAM Internalisation;

• constitutes a category 1 related party acquisition and disposal in terms of section 10.4 of the JSE Listings Requirements and affected transaction in terms of section 112 of the Companies Act 2008 (the “Companies Act”) (“Section 112 Disposal”), in respect of the Vukile Transaction; and

• triggers a mandatory offer by Arrowhead (the “Mandatory Offer”) to remaining Synergy A and B shareholders due to Arrowhead acquiring a shareholding in excess of 35% in Synergy, in terms of section 125 and 123 respectively of the Companies Act.

Accordingly, the Synergy board of independent directors (the “Independent Board”), must retain an independent expert to compile a report on the terms and conditions of the inter-conditional Proposed Transaction and opine as follows:

• As to the fairness of the VAM Internalisation and Vukile Transaction in terms of section 10.4(f) of the Listings Requirements;• As to the fairness and reasonableness in respect of the Vukile Transaction as a section 112 Disposal, in terms of

Regulation 90 of the Companies Regulations (the “Regulations”), and• As to the fairness and reasonableness of the waiver of the Mandatory Offer (the “Waiver”), which waiver will be

sought as part of the Proposed Transaction, in terms of Regulation 86(4) of the Regulations.

(together the “Opinion”).

Full particulars of the Proposed Transaction are contained in the circular to Synergy shareholders (the “Circular”) to be dated on or about 21 September 2016, of which this opinion forms part.

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2. SCOPE

PSG Capital Proprietary Limited (“PSG Capital”) has been appointed by the Independent Board as the independent expert to advise, in accordance with the Companies Act and Listings Requirements on whether the terms and conditions of the VAM Internalisation, the Vukile Transaction and the Cumulative Acquisition, are fair and reasonable as far as Synergy shareholders are concerned.

Due to transaction steps on which PSG Capital are required to opine being conditional on the implementation of the Proposed Transaction, the terms of the Proposed Transaction in its entirety were considered to determine the fairness and reasonableness of the said steps.

3. RESPONSIBILITY

Compliance with the Companies Act is the responsibility of the Independent Board. PSG Capital’s responsibility is to report on the terms and conditions of the Proposed Transaction as they relate to Synergy shareholders.

We confirm that our Opinion has been provided to the Independent Board, and that it will be distributed to shareholders in connection with the Proposed Transaction. We understand that the results of our work will be used by the Independent Board to satisfy the requirements of the Companies Act and the Listings Requirements.

4. DEFINITION OF THE TERMS “FAIR” AND “REASONABLE”

A transaction will generally be considered fair to a company’s shareholders if the benefits received by shareholders, as a result of a corporate action, are equal to or greater than the value surrendered by a company.

The assessment of fairness is primarily based on quantitative considerations. The Proposed Transaction may be considered fair if the per share value attributable to Synergy shareholders post the Proposed Transaction is considered to be equal to or more than the attributable value per share prior to the Proposed Transaction.

In terms of the Companies Regulations, a transaction will be considered reasonable if the value received by the shareholders in terms of the corporate action is higher than the market price of the company’s securities at the time that the corporate action was announced, if same is applicable. In addition, the assessment of reasonableness is also based on qualitative considerations surrounding a transaction. Even though the consideration may differ from the market value of the assets being acquired, a transaction may still be reasonable after considering other significant qualitative factors.

We have applied the aforementioned principles in preparing our opinion. This fair and reasonable opinion does not purport to cater for an individual shareholder’s position but rather the general body of shareholders subject to the Proposed Transaction. A shareholder’s decision regarding fair and reasonableness of the terms of the Proposed Transaction may be influenced by their particular circumstances (for example taxation and the original price paid for the shares).

5. SOURCES OF INFORMATION

In the course of our valuation analysis, we relied upon financial and other information, including prospective financial information, obtained from Synergy management (“Management”), its advisors and from various public, financial and industry sources. Our conclusion is dependent on such information being complete and accurate in all material respects.

The principal sources of information used in formalising our opinion include:

• A draft of the Circular to be sent to Synergy shareholders;• The audited annual financial statements of Synergy for the financial years ended 31 March 2014, 31 March 2015

and 31 March 2016;• The Synergy distribution forecasts for the year ending 31 March 2017 and 31 March 2018, with and without the

effects of the implementation of the Proposed Transaction;• Independent property valuers report on the value of the Synergy, Vukile (“Vukile Portfolio”) and Cumulative

(“Cumulative Portfolio”) property portfolios as at 31 July 2016 (“Property Valuation Reports”);• The Proposed Transaction agreements entered into between the various parties (“Transaction Agreements”);• Other financial and non-financial information and assumptions made by Management;• Discussions with Management regarding the financial information relating to prevailing market, economic, legal

and other conditions which may affect the underlying value and the rationale for the Proposed Transaction;• Publicly available information relating to Synergy, the Vukile Portfolio and the Cumulative Portfolio that we

deemed to be relevant; and• Publicly available information relating to the industry in which Synergy, Vukile and Cumulative operates that we

deemed relevant, including company announcements, analysts’ reports and media articles.

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6. ASSUMPTIONS

We have arrived at our opinion based on the following assumptions:

• That the terms, conditions and structure of the Proposed Transaction are legally enforceable and suspensive conditions to the Proposed Transaction, as set out in the Transaction Agreements will be duly fulfilled;

• That reliance can be placed on the Property Valuation Reports;• That the steps forming part of the Proposed Transaction are inter-conditional;• The current economic, regulatory and market conditions will not change materially;• The company is not involved in any material legal proceedings;• The company has no outstanding disputes with any regulatory body, including the South African Revenue Service;• There are no undisclosed contingencies that could affect the value of the relevant securities;• The final agreed terms of the Proposed Transaction shall not materially adversely differ from the steps, and values

as presented in the draft agreements;• The structure of the Proposed Transaction will not give rise to any undisclosed tax liabilities; and• Reliance can be placed on the representations made by Management and the advisors during the course of forming

this opinion.

7. APPROPRIATENESS AND REASONABLENESS OF UNDERLYING INFORMATION AND ASSUMPTIONS

We satisfied ourselves as to the appropriateness and reasonableness of the information and assumptions employed in arriving at our opinion by:

• Considering the historical trends of provided information and assumptions;• Comparing and corroborating such information and assumptions with external sources of information, if such

information is available; and• Determining the extent to which representations from Management and other industry experts were confirmed by

documentary evidence as well as our understanding of Synergy and the economic environment in which it operates.

8. PROCEDURES

In arriving at our opinion, we relied upon financial and other information, obtained from Management and the advisors together with industry-related and other information in the public domain. Our conclusion is dependent on such information being accurate in all material respects.

In arriving at our opinion we have, inter alia, undertaken the following procedures in evaluating the fair and reasonableness of the Proposed Transaction:

• Reviewed and analysed the financial information and the terms and conditions as stipulated in the Transaction Agreements;• Reviewed the reasonableness of the information made available by and from discussions held with Management and

the advisors, such as, inter alia: – the rationale for the Proposed Transaction; – the events leading up to the Proposed Transaction; – such other matters as we considered necessary; – a comparison of the forecast financial information for Synergy to forecasted financial information as per analyst

reports; and – the current market conditions relating to the Synergy and its underlying operations.

• Where relevant, corroborated representations made by Management to source documents;• Reviewed certain publicly available information relating to Synergy that we have deemed relevant;• Determined the expected impact of the Proposed Transaction on future distributions to Synergy shareholders;• Calculated the current clean market price of Synergy A and B shares;• Obtained comfort to place reliance on the Property Valuation Reports by reviewing selective valuations performed

on Synergy, Vukile and Cumulative’s current property portfolios by comparing the inputs applied in the valuations to PSG Capital’s best estimate of inputs. Procedures performed by PSG Capital in deriving its best estimate of inputs applied included analysis of independent comparable properties valuations, extensive market research and discussions with a reputable third party property valuation expert;

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• Determined the internal rate of return (“IRR”) for Synergy shareholders before and after the Proposed Transaction. The IRR calculation factors in the differing growth profiles of Synergy before and after the Proposed Transaction and takes into consideration the medium-term outlook for shareholders. The expected IRR’s for shareholders before and after the Proposed Transaction were calculated with reference to the current market price of Synergy A and B shares, the forecast distributions for Synergy and an exit price based on forecast distributions for 2019 and the current one-year forward clean yield;

• Obtained letters of representation from Management and the advisors asserting that we have been provided with all relevant information and that no material information was omitted and that all such information provided to us is accurate in all respects; and

• Considered other relevant facts and information relevant to concluding this opinion.

9. VALUATION APPROACH

In considering the Proposed Transaction, PSG Capital performed an independent valuation of Synergy.

The valuation methodology applied in our valuation included:

• applying the income approach, as determined by the Discounted Cash Flow valuation approach on Synergy prior to and assuming the Proposed Transaction is effected;

• performing an accretion/dilution cash flow analysis by calculating the cash flow forecasted to be earned by a Synergy A and B shareholder pre- and post-implementation of the Proposed Transaction;

• determining the fair value per Synergy A and B share pre- and post-implementation of the Proposed Transaction based on a net asset value basis; and

• applying the distribution yield to determine the intrinsic value of a security based on the current calculated return on equity and distribution to Synergy shareholders.

Key external and internal value drivers identified include:

• the forward distribution and the forecasted distribution growth for Synergy. Any increase in the forecasted distribution would result in an increase in the value of the Synergy A and B share value and vice versa; and

• the distribution yield for Synergy. Any increase in the distribution yield would result in a decrease in the value of Synergy A and B share value and vice versa.

The key value drivers as set out above are influenced by various internal and external factors, including, inter alia:

• the quality of the property portfolio;• the lease expiry profile, vacancy levels and rent escalations of the property portfolio; and• forecasted interest rates and the entities relationships to bond yields.

Sensitivity analyses were conducted, where practical, utilising key value drivers, which included, inter alia, a variance range of 1.0% in the projected distribution yield for Synergy, which analysis resulted in a variation range on the calculated value of Synergy of 10.7%.

10. OPINION

We have considered the terms and conditions of the inter-conditional transactions forming part of the Proposed Transaction as set out above and based on the aforementioned, we are of the opinion, subject to the limiting conditions as set out below, that the indicative market value of:

• A Synergy B ordinary share, prior to Proposed Transaction amounts to between R6.37 and R7.45 with a likely core value of R6.91, being the midpoint of the value range;

• A Synergy B ordinary share, post the Proposed Transaction amounts to between R6.74 and R7.55 with a likely core value of R7.15, being the midpoint of the value range; and

• A Synergy A ordinary share, prior to Proposed Transaction amounts to between R9.90 and R11.37 with a likely core value of R10.64, being the midpoint of the value range and will not differ materially after the Proposed Transaction is completed.

We considered the terms of conditions of the Waiver and, based upon and subject to the conditions set out herein, are of the opinion that the Waiver is fair and reasonable to Synergy shareholders.

We considered the terms of conditions of the section 112 Disposal and, based upon and subject to the conditions set out herein, are of the opinion that the section 112 Disposal is fair and reasonable to Synergy shareholders.

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In considering the values listed above, Synergy shareholders should take particular notice of the following factors:

The actual market value achieved in a specific transaction may be higher or lower than our estimate of the market value depending upon the circumstances of the transaction (for example strategic considerations of the purchaser) and the nature of the business (for example the purchaser’s perception of potential synergies); and

The above market value represents a standalone valuation of Synergy under current management, strategies and business plans.

The Proposed Transaction does not have any material adverse effect on Synergy or the rights and interests of the holders of the relevant classes of shares in Synergy as, the value per Synergy A share does not change due to the Proposed Transaction and the value range per Synergy B share is higher post the Proposed Transaction.

Subject to the aforegoing assumptions, based on our analysis and after taking into account all financial and non-financial considerations, we are of the opinion that the Proposed Transaction is fair and reasonable to the Synergy A and Synergy B shareholders.

11. LIMITING CONDITIONS

This opinion is provided to the Independent Board in connection with and for the purpose of the Proposed Transaction, for the sole purpose of assisting the Independent Board in forming and expressing an opinion for the benefit of Synergy shareholders. This opinion is prepared solely for the Independent Board and therefore should not be regarded as suitable for use by any other party or give rise to third party rights.

The forecasted probabilities relate to future events and are based on assumptions, which may not remain valid for the whole of the relevant period. Consequently, this information cannot be relied upon to the same extent as that derived from audited financial statements for completed accounting periods. We express no opinion as to how closely actual results will correspond to those forecasts by management.

We relied upon the accuracy of the information used by us in deriving our opinion, albeit that, where practicable, we have corroborated the reasonableness of such information and assumptions through, amongst other things, reference to historic precedent and our knowledge and understanding. Whilst our work has involved an analysis of the annual financial statements and other information provided to us, our engagement does not constitute nor does it include an audit conducted in accordance with applicable auditing standards. Accordingly, we assume no responsibility and make no representations with respect to the accuracy or completeness of any information provided to us in respect of the Proposed Transaction.

The opinion expressed is necessarily based upon information available to us, the financial, regulatory, securities market and other conditions and circumstances existing and disclosed to us as at the date hereof. We have furthermore assumed that all conditions precedent, including any material regulatory and other approvals required in connection with the Proposed Transaction have been or will be properly fulfilled. Subsequent developments may affect our opinion, however, we are under no obligation to update, revise or re-affirm such.

12. SECTIONS 115 AND 164 OF THE COMPANIES ACT

Sections 115 and 164 of the Companies Act have been included as an appendix to this opinion.

13. INTEREST OF SYNERGY DIRECTORS

The effective interests of Synergy directors, who hold Synergy shares before the Proposed Transaction are set out in paragraph 17 of the Circular.

14. INDEPENDENCE AND ADDITIONAL REGULATORY DISCLOSURES

We confirm that PSG Capital holds no shares in Synergy, directly or indirectly. We have no interest, direct or indirect, beneficial or non-beneficial, and to the best of our knowledge, we are not related to a person who has or has had such interest in Synergy within the immediately preceding two years or in the outcome of the Proposed Transaction.

The directors, partners, officers and employees of PSG Capital allocated to this assignment have the necessary qualifications, expertise and competencies to (i) understand the Proposed Transaction; (ii) evaluate the consequences of the Proposed Transaction; and (iii) assess the effect of the Proposed Transaction on the value of the shares and on the rights and interests of Synergy shareholders, or a creditor of Synergy and are able to express opinions, exercise judgement and make decisions impartially in carrying out this assignment. We are not aware of any unquantifiable factors or factors that are difficult to determine, that have not been taken into account in forming our opinion.

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Furthermore, we confirm that our professional fee for the opinion together is R295 000 (excluding VAT), payable in cash, and is not contingent on the outcome of the Proposed Transaction.

15. CONSENT

We hereby consent to the inclusion of this opinion and references thereto, in whole or in part, in the form and context in which they appear to be included in any required regulatory announcement or documentation regarding the Proposed Transaction.

Yours faithfully

RIAAN VAN HEERDEN

PSG CAPITAL PROPRIETARY LIMITED

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Appendix

SECTIONS 115 AND 164 OF THE COMPANIES ACT

115. Required approval for transactions contemplated in Part.

(1) Despite section 65, and any provision of a company’s Memorandum of Incorporation, or any resolution adopted by its board or holders of its securities, to the contrary, a company may not dispose of, or give effect to an agreement or series of agreements to dispose of, all or the greater part of its assets or undertaking, implement an amalgamation or a merger, or implement a scheme of arrangement, unless—

(a) the disposal, amalgamation or merger, or scheme of arrangement—(i) has been approved in terms of this section; or(ii) is pursuant to or contemplated in an approved business rescue plan for that company, in terms of Chapter 6; and

(b) to the extent that Parts B and C of this Chapter, and the Takeover Regulations, apply to a company that proposes to:(i) dispose of all or the greater part of its assets or undertaking;(ii) amalgamate or merge with another company; or(iii) implement a scheme of arrangement,

the Panel has issued a compliance certificate in respect of the transaction, in terms of section 119 (4) (b), or exempted the transaction in terms of section 119 (6).

(2) A proposed transaction contemplated in subsection (1) must be approved —

(a) by a special resolution adopted by persons entitled to exercise voting rights on such a matter, at a meeting called for that purpose and at which sufficient persons are present to exercise, in aggregate, at least 25% of all of the voting rights that are entitled to be exercised on that matter, or any higher percentage as may be required by the company’s Memorandum of Incorporation, as contemplated in section 64 (2); and

(b) by a special resolution, also adopted in the manner required by paragraph (a), by the shareholders of the company’s holding company if any, if—(i) the holding company is a company or an external company;(ii) the proposed transaction concerns a disposal of all or the greater part of the assets or undertaking of the

subsidiary; and(iii) having regard to the consolidated financial statements of the holding company, the disposal by the subsidiary

constitutes a disposal of all or the greater part of the assets or undertaking of the holding company; and

(c) by the court, to the extent required in the circumstances and manner contemplated in subsections (3) to (6).

(3) Despite a resolution having been adopted as contemplated in subsections (2) (a) and (b), a company may not proceed to implement that resolution without the approval of a court if—

(a) the resolution was opposed by at least 15% of the voting rights that were exercised on that resolution and, within five business days after the vote, any person who voted against the resolution requires the company to seek court approval; or

(b) the court, on an application within 10 business days after the vote by any person who voted against the resolution, grants that person leave, in terms of subsection (6), to apply to a court for a review of the transaction in accordance with subsection (7).

(4) For the purposes of subsections (2) and (3), any voting rights controlled by an acquiring party, a person related to an acquiring party, or a person acting in concert with either of them, must not be included in calculating the percentage of voting rights—

(a) required to be present, or actually present, in determining whether the applicable quorum requirements are satisfied; or

(b) required to be voted in support of a resolution, or actually voted in support of the resolution.

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(4A) In subsection (4), ‘act in concert’ has the meaning set out in section 117(1)(b).

(5) If a resolution requires approval by a court as contemplated in terms of subsection (3) (a), the company must either—

(a) within 10 business days after the vote, apply to the court for approval, and bear the costs of that application; or

(b) treat the resolution as a nullity.

(6) On an application contemplated in subsection (3) (b), the court may grant leave only if it is satisfied that the applicant—

(a) is acting in good faith;

(b) appears prepared and able to sustain the proceedings; and

(c) has alleged facts which, if proved, would support an order in terms of subsection (7).

(7) On reviewing a resolution that is the subject of an application in terms of subsection (5) (a), or after granting leave in terms of subsection (6), the court may set aside the resolution only if—

(a) the resolution is manifestly unfair to any class of holders of the company’s securities; or

(b) the vote was materially tainted by conflict of interest, inadequate disclosure, failure to comply with the Act, the Memorandum of Incorporation or any applicable rules of the company, or other significant and material procedural irregularity.

(8) The holder of any voting rights in a company is entitled to seek relief in terms of section 164 if that person—

(a) notified the company in advance of the intention to oppose a special resolution contemplated in this section; and

(b) was present at the meeting and voted against that special resolution.

(9) If a transaction contemplated in this Part has been approved, any person to whom assets are, or an undertaking is, to be transferred, may apply to a court for an order to effect—

(a) the transfer of the whole or any part of the undertaking, assets and liabilities of a company contemplated in that transaction;

(b) the allotment and appropriation of any shares or similar interests to be allotted or appropriated as a consequence of the transaction;

(c) the transfer of shares from one person to another;

(d) the dissolution, without winding-up, of a company, as contemplated in the transaction;

(e) incidental, consequential and supplemental matters that are necessary for the effectiveness and completion of the transaction; or

(f ) any other relief that may be necessary or appropriate to give effect to, and properly implement, the amalgamation or merger.

164. Dissenting shareholders appraisal rights

(1) This section does not apply in any circumstances relating to a transaction, agreement or offer pursuant to a business rescue plan that was approved by shareholders of a company, in terms of section 152.

(2) If a company has given notice to shareholders of a meeting to consider adopting a resolution to—

(a) amend its Memorandum of Incorporation by altering the preferences, rights, limitations or other terms of any class of its shares in any manner materially adverse to the rights or interests of holders of that class of shares, as contemplated in section 37 (8); or

(b) enter into a transaction contemplated in section 112, 113, or 114, that notice must include a statement informing shareholders of their rights under this section.

(3) At any time before a resolution referred to in subsection (2) is to be voted on, a dissenting shareholder may give the company a written notice objecting to the resolution.

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(4) Within 10 business days after a company has adopted a resolution contemplated in this section, the company must send a notice that the resolution has been adopted to each shareholder who—

(a) gave the company a written notice of objection in terms of subsection (3); and

(b) has neither—

(i) withdrawn that notice; or(ii) voted in support of the resolution.

(5) A shareholder may demand that the company pay the shareholder the fair value for all of the shares of the company held by that person if—

(a) the shareholder—

(i) sent the company a notice of objection, subject to subsection (6); and(ii) in the case of an amendment to the company’s Memorandum of Incorporation, holds shares of a class that is

materially and adversely affected by the amendment;(b) the company has adopted the resolution contemplated in subsection (2); and

(c) the shareholder—

(i) voted against that resolution; and(ii) has complied with all of the procedural requirements of this section.

(6) The requirement of subsection (5) (a) (i) does not apply if the company failed to give notice of the meeting, or failed to include in that notice a statement of the shareholders rights under this section.

(7) A shareholder who satisfies the requirements of subsection (5) may make a demand contemplated in that subsection by delivering a written notice to the company within—

(a) 20 business days after receiving a notice under subsection (4); or

(b) if the shareholder does not receive a notice under subsection (4), within 20 business days after learning that the resolution has been adopted.

(8) A demand delivered in terms of subsections (5) to (7) must also be delivered to the Panel, and must state—

(a) the shareholder’s name and address;

(b) the number and class of shares in respect of which the shareholder seeks payment; and

(c) a demand for payment of the fair value of those shares.

(9) A shareholder who has sent a demand in terms of subsections (5) to (8) has no further rights in respect of those shares, other than to be paid their fair value, unless—

(a) the shareholder withdraws that demand before the company makes an offer under subsection (11), or allows an offer made by the company to lapse, as contemplated in subsection (12) (b);

(b) the company fails to make an offer in accordance with subsection (11) and the shareholder withdraws the demand; or

(c) the company, by a subsequent special resolution, revokes the adopted resolution that gave rise to the shareholder’s rights under this section.

(10) If any of the events contemplated in subsection (9) occur, all of the shareholder’s rights in respect of the shares are reinstated without interruption.

(11) Within five business days after the later of—

(a) the day on which the action approved by the resolution is effective;

(b) the last day for the receipt of demands in terms of subsection (7) (a); or

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(c) the day the company received a demand as contemplated in subsection (7) (b), if applicable, the company must send to each shareholder who has sent such a demand a written offer to pay an amount considered by the company’s directors to be the fair value of the relevant shares, subject to subsection (16), accompanied by a statement showing how that value was determined.

(12) Every offer made under subsection (11)—

(a) in respect of shares of the same class or series must be on the same terms; and

(b) lapses if it has not been accepted within 30 business days after it was made.

(13) If a shareholder accepts an offer made under subsection (12)—

(a) the shareholder must either in the case of—

(i) shares evidenced by certificates, tender the relevant share certificates to the company or the company’s transfer agent; or

(ii) uncertificated shares, take the steps required in terms of section 53 to direct the transfer of those shares to the company or the company’s transfer agent; and

(b) the company must pay that shareholder the agreed amount within 10 business days after the shareholder accepted the offer and—

(i) tendered the share certificates; or(ii) directed the transfer to the company of uncertificated shares.

(14) A shareholder who has made a demand in terms of subsections (5) to (8) may apply to a court to determine a fair value in respect of the shares that were the subject of that demand, and an order requiring the company to pay the shareholder the fair value so determined, if the company has—

(a) failed to make an offer under subsection (11); or

(b) made an offer that the shareholder considers to be inadequate, and that offer has not lapsed.

(15) On an application to the court under subsection (14)—

(a) all dissenting shareholders who have not accepted an offer from the company as at the date of the application must be joined as parties and are bound by the decision of the court;

(b) the company must notify each affected dissenting shareholder of the date, place and consequences of the application and of their right to participate in the court proceedings; and

(c) the court—

(i) may determine whether any other person is a dissenting shareholder who should be joined as a party;(ii) must determine a fair value in respect of the shares of all dissenting shareholders, subject to subsection (16);(iii) in its discretion may—

(aa) appoint one or more appraisers to assist it in determining the fair value in respect of the shares; or(bb) allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date

the action approved by the resolution is effective, until the date of payment;(iv) may make an appropriate order of costs, having regard to any offer made by the company, and the final

determination of the fair value by the court; and(v) must make an order requiring—

(aa) the dissenting shareholders to either withdraw their respective demands or to comply with subsection (13) (a); and

(bb) the company to pay the fair value in respect of their shares to each dissenting shareholder who complies with subsection (13) (a), subject to any conditions the court considers necessary to ensure that the company fulfils its obligations under this section.

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(15A) At any time before the court has made an order contemplated in subsection (15) (c) (v), a dissenting shareholder may accept the offer made by the company in terms of subsection (11), in which case—

(a) that shareholder must comply with the requirements of subsection 13 (a); and

(b) the company must comply with the requirements of subsection 13 (b).

(16) The fair value in respect of any shares must be determined as at the date on which, and time immediately before, the company adopted the resolution that gave rise to a shareholder’s rights under this section.

(17) If there are reasonable grounds to believe that compliance by a company with subsection (13) (b), or with a court order in terms of subsection (15) (c) (v) (bb), would result in the company being unable to pays its debts as they fall due and payable for the ensuing 12 months—

(a) the company may apply to a court for an order varying the company’s obligations in terms of the relevant subsection; and

(b) the court may make an order that—

(i) is just and equitable, having regard to the financial circumstances of the company; and(ii) ensures that the person to whom the company owes money in terms of this section is paid at the earliest

possible date compatible with the company satisfying its other financial obligations as they fall due and payable.

(18) If the resolution that gave rise to a shareholder’s rights under this section authorised the company to amalgamate or merge with one or more other companies, such that the company whose shares are the subject of a demand in terms of this section has ceased to exist, the obligations of that company under this section are obligations of the successor to that company resulting from the amalgamation or merger.

(19) For greater certainty, the making of a demand, tendering of shares and payment by a company to a shareholder in terms of this section do not constitute a distribution by the company, or an acquisition of its shares by the company within the meaning of section 48, and therefore are not subject to—

(a) the provisions of that section; or

(b) the application by the company of the solvency and liquidity test set out in section 4.

(20) Except to the extent—

(a) expressly provided in this section; or

(b) that the Panel rules otherwise in a particular case, a payment by a company to a shareholder in terms of this section does not obligate any person to make a comparable offer under section 125 to any other person.

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Annexure 2

KNIGHT FRANK SUMMARY VALUATION REPORT IN RESPECT OF THE PROPERTIES COMPRISING THE SYNERGY AND VUKILE PORTFOLIOS

The DirectorsSynergy Income Fund LimitedGround Floor, One-on-NinthCorner Glenhove Road and Ninth StreetMelrose Estate2196

15 September 2016

Dear Sirs

RE: INDEPENDENT PROPERTY VALUERS’ REPORT OF THE PROPERTY PORTFOLIO FOR SYNERGY INCOME FUND LIMITED (“SYNERGY”) AS DETAILED IN THE SUMMARY SCHEDULE ATTACHED AND FOR WHICH THERE ARE DETAILED VALUATION REPORTS HELD BY SYNERGY

In accordance with your instruction of 1 March 2016, I confirm that we have visited and inspected the 21 properties listed in the attached schedule (“the properties”) during March and April 2016 (Section 13.23 (a) (iii)) and have received all necessary details required to perform a valuation in order to provide you with my opinion of the properties’ market values as at 31 July 2016 (Section 13.23 (c)).

1. INTRODUCTION

The valuation of the properties has been carried out by the valuer who has carefully considered all aspects of all the properties. These properties each have a detailed valuation report which has been given to the management of Synergy. The detailed reports include commentary on the current economy, nature of the properties, locality, tenancy, risk profile, forward rent and earning capability and exposure to future expenses and property risk. All these aspects have been considered in the individual valuation reports of the properties. The detailed reports have further addressed the tenancy income capability and expenditure for each property and tenant. Historic expenditure profile as well as future expenditure increases have been considered. The value thus indicates the fair market value for each property which is detailed in the detailed report and which has been summarised on a summary schedule, attached hereto, for each property. There are 21 properties and the important aspects of the detailed valuation report including the property market value for all of the properties have been summarised in the attached schedule.

2. BASIS OF VALUATION

The valuation is based on market value. Market value means the best price, at which the sale of an interest in a property may reasonably be expected to have been completed, unconditionally for a cash consideration on the date of valuation, assuming:

2.1 a willing seller and a willing buyer in a market;

2.2 that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the property, for the agreement of price and terms and for the completion of the sale; and

2.3 that the state of the market, level of values and other circumstances are, on any earlier assumed date of exchange of contracts, the same as on the date of the valuation.

3. VALUE CALCULATION

The calculation of the market value of these properties has been based on the discounted Cashflow of contracted income and the income capitalisation of reversionary market rentals.

This is the fundamental basis on which commercial income-producing properties are traded on the market in South Africa. This is also due to there being supporting evidence of open market rental rates and capitalisation rates which are evidenced by sales in the market.

Properties traded in the current market reflect a yield-rate relationship between revenue and capital value. This rate is an accurate determinant of the capitalisation rate.

54

The income capitalisation has, however, also been calculated for each property as a check to ensure that the discounted Cashflow value calculated is consistent with market norms and expectations.

The considerations for the valuations are as follows:

3.1 calculating the forward cash flow of all contractual and other income from the properties;

3.2 calculating the forward contractual and other expenditure as well as provisions for various expenses in order to provide for void or future capital expenditure to which the property may be exposed;

3.3 the current area vacancy as a percentage of the properties is approximately 2.8%. In order to apply a conservative approach, I have deducted approximately 3.47% of the net income as a provision for rental that may not be collected as a consequence of vacancy, tenant failure or tenant refitting during the course of the coming year. The current vacancy is market-related. The void provision used in the valuation is therefore adequate. (Section 13.23 (f) (i));

3.4 there is no loss of rental due to renovations or refurbishments currently being carried out on the buildings. There is, however, ongoing external maintenance work and some tenant installation fitting that is currently in progress. There is no loss of rental as a result of these activities.

3.5 generally the rentals are market-related. This has been determined by comparing similar buildings in comparable areas to the properties valued, in terms of rental per square metre. The rental rate has also been checked against various published indices including the Rode Report. There are two properties, namely Cape Town Belville Suntyger and Roodepoort Robertville Industrial Park, that are slightly over-rented by a measured 4.3% and 7.3% against current market rentals. These are, however, considered to be within tolerable levels for renewal by sitting tenants and are not seen to be a significant reversionary downside risk to the investments. There is therefore minimal potential for rental flow reversion. There is, however, a positive upside potential for real growth in rental, given the low base off which the average rentals flow. This is provided that the economy remains in a slow recovery pattern as currently being experienced as that there are no major economic fluctuations which may upset the economy;

3.6 capitalising the net contractual income derived from the properties for a period of 1 year in advance, calculated from 1 August 2016;

3.7 the valuation has considered published market statistics regarding rental rates and expenditure for the different types of properties. It has also considered numerous other portfolios of similar properties in order to determine if any properties are over-rented or have excessive expenditure; and

3.8 various provisions for capital contingencies were deducted from the capitalised value.

4. SPARE LAND

There are no properties with large tracts of vacant zoned and serviced spare land.

5. BRIEF DESCRIPTION

The properties have been well constructed, have good architectural merit, aesthetic appeal, sufficient parking facilities and are virtually fully tenanted. The leases tend to be of a general contractual rental nature with provision for the recovery of services consumed by the lessee’s and turnover rental from various retail outlets. Escalations are market-related but are high enough to ensure a more than positive growth rate is ensured without creating an over-rent potential in the medium-term. The properties are generally highly visible and dominate their environment.

In respect of the properties, the current net annual rental and the estimated future net annual rentals at specified dates and for specified periods are included in each individual detailed property valuation report.

6. VALUATION QUALIFICATIONS

Qualifications are usually detailed as a consequence of: leases under negotiation that have not yet been formalised; leases of a large nature where the premises are difficult to re-let; specialised properties; large exposure to a single tenant; potential tenant failure due to over-rent; expenses required for major repairs; maintenance or other exposure to maintain the lettability of the building; contingent expropriations or servitudes that may be enforced; poor lease recordals whereby the lease may be disputed or rendered invalid.

I have, to the best of my knowledge, considered all of these aspects in the valuation of all the properties. There are no properties that are prejudiced in value by the influence of the above factors.

55

The valuer is, however, not responsible for the competent daily management of these properties that will ensure that this status is maintained, or for the change of any laws, services by local authority or economic circumstances that may adversely impact on the integrity of the buildings or the tenant profile.

7. OPTIONS OR BENEFIT DETRIMENT OF CONTRACTUAL ARRANGEMENTS

To my knowledge there are no contractual arrangements on the properties other than the leases as detailed in the report that have a major benefit or are detrimental to the fundamental value base of the properties. (Section 13.23 (g)).

To the best of my knowledge, there are no options in favour of any parties for any purchase of any of the properties. (Section 13.23 (h)).

8. INTRA-GROUP OR RELATED-PARTY LEASES

Having inspected all the tenant schedules and leases it is noted that there are no intra-group or related party leases.

9. CURRENT STATE OF DEVELOPMENT

There are no properties which are currently being developed.

10. RENTALS USED IN VALUATIONS

Note that all these properties are all rented out. The current annual rental and future annual rentals have been calculated in a separate discounted cash flow check schedule. It is noted that there are no material rental reversions and that the rentals for all the properties increase on average by approximately 8%, compounding per annum.

11. EXTERNAL PROPERTY

None of the properties are situated outside the Republic of South Africa.

12. OTHER GENERAL MATTERS AND VALUATION SUMMARY (SECTIONS 13.30 AND 13.31)

A full valuation report is available on a property-by-property basis. These have been given to the directors of Synergy. Full tenancy details, with budgeted income and expenditure schedules for 2016 have been disclosed to us by the property managers.

13. ALTERNATIVE USE FOR A PROPERTY

The properties have been valued in accordance with their existing use which represents their market value. No alternative use for the properties have been considered in determining their value.

14. OTHER COMMENTS

Our valuation excludes any amounts of value-added tax, transfer duty, or securities transfer duty.

15. CAVEATS

15.1 Source of information and verification

Information on the properties regarding rental income, recoveries, turnovers and other income detail has been provided to me by the current owners and their managing agents.

We have carried out a representative sampling of lease documents for each of the 22 properties. This sampling has been determined by the valuer and covers the major tenant leases of the property as well as the full range of shop uses (supermarket anchor; department stores; food and restaurant; furniture; clothing; apparel; banks/ATM’s; specialty stores; pharmacy and office suites (private and public entities)). The leases have been read to check against management detail, in order to ensure that management has correctly captured tenant information as per contractual agreement. This has been done to test management information against the underlying agreements.

I have further compared certain expenditures given to me, to the market norms of similar properties.

56

This has also been compared to historic expenditure levels of the properties themselves. Historical contractual expenditures and municipal utility services were compared to the past performance of the properties in order to assess potential expenditure going forward. The municipal values on the properties are very low. At the current transaction values there is some potential for the municipal value to increase by a considerable amount, should the municipality revalue these properties, in which event the rates could increase to three or four times their current amount.

15.2 Full disclosure

This valuation has been prepared on the basis that full disclosures of all information and factors that may affect the valuation have been made to myself.

I have, to the best of my ability, researched the market as well as taken the steps detailed in paragraph 15.3 below.

15.3 Leases

Our valuation has been based on a review of actual tenants’ leases (which includes material terms such as repairing obligations, escalations and break options) and other pertinent details supplied to us by the managing agents and by Vukile and Synergy. All recovery details in respect of the existing leases e.g. utility cost and other recoveries as provided for in the leases have been disclosed by way of the forward monthly summary schedule supplied to us. Option terms and other lease information have been supplied to us by the owners and managing agents.

15.4 Mortgage bonds, loans, etc.

The properties have been valued as if wholly-owned with no account being taken of any outstanding monies due in respect of mortgage bonds, loans and other charges. No deductions have been made in our valuation for costs of acquisition.

The valuation is detailed in a completed state and no deductions have been made for retention or any other set-off or deduction for any purposes which may be made at the discretion of the purchaser when purchasing the properties.

15.5 Calculation of areas

All areas quoted within the detailed valuation reports are those stated in the information furnished and verified where plans were available. To the extent that plans were not available, reliance was placed on the information submitted by the managing agents, together with our own on-site verification of occupancies and tenant placements within each property.

Updated plans were not available for all the properties in respect of internal configuration. The properties generally appear to have the stated square meterage which could only be more accurately determined if re-measured by a professional.

15.6 Structural condition

The properties have been valued in their existing state. I have not carried out any structural surveys, nor inspected those areas that are unexposed or inaccessible, neither have I arranged for the testing of any electrical or other services.

15.7 Contamination

The valuation assumes that a formal environmental assessment is not required and further that none of the properties are environmentally impaired or contaminated, unless otherwise stated in our report.

15.8 Town planning

Full town planning details and title deeds have been supplied in the detailed valuation reports including conditions and restrictions and the properties have been checked against such conditions. This is to ensure that they comply with town planning regulations and title deeds. There do not appear to be any infringements of local authority regulations or deeds by any of the property.

The valuation has further assumed that the improvements have been erected in accordance with the relevant Building and Town Planning Regulations and on inspection it would appear that the improvements are in accordance with the relevant town planning regulations for these properties.

There is no contravention of any statutory regulation, or town planning local authority regulation or contravention of title deed relating to any of the properties which infringement could decrease the value of the properties as stated.

57

16. MARKET VALUE

I am of the opinion that the aggregate market value of the properties as at 31 July 2016 is ZAR2 481 800.00 (excluding VAT), with the market value of the properties comprising the Synergy portfolio and Vukile portfolio being R1 428 800 000 (excluding VAT) and R1 053 000 000 (excluding VAT), respectively. A summary of the individual valuations and details of each of the properties is attached.

To the best of our knowledge and belief there have been no material changes in circumstances between the date of the valuation and the date of the valuation report which would affect the valuation.

I have more than 25 years’ experience in the valuation of all nature of property and I am qualified to express an opinion on the fair market value of the properties.

I trust that I have carried out all instructions to your satisfaction and thank you for the opportunity of undertaking this valuation on your behalf.

Yours faithfully,

for Knight Frank Gauteng Proprietary LtdRoger Martin FitchetMRICS FIV(SA)Registered Professional Valuer SACPVP 1373

58

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60

Annexure 3

QUADRANT SUMMARY VALUATION REPORT IN RESPECT OF THE PROPERTIES COMPRISING THE SYNERGY AND VUKILE PORTFOLIOS

The DirectorsSynergy Income Fund LtdOne-on-Ninth Building,Cnr Glenhove Road and Ninth Street,Melrose Estate

15 September 2016

Dear Sirs

RE: INDEPENDENT PROPERTY VALUERS’ REPORT OF THE PROPERTY PORTFOLIO FOR SYNERGY INCOME FUND LIMITED AS DETAILED IN THE SUMMARY SCHEDULE ATTACHED AND FOR WHICH THERE ARE DETAILED VALUATION REPORTS HELD BY SYNERGY INCOME FUND LIMITED

In accordance with your instruction of 10 March 2016, I confirm that I have visited and inspected the 22 properties listed in the attached schedule (“the properties”) during April and May 2016 and have received all necessary details required to perform a valuation in order to provide you with my opinion of the properties’ market values as at 31 July 2016.

1. INTRODUCTION

The valuation of the properties has been carried out by the valuer who has carefully considered all aspects of all the properties. These properties each have a detailed valuation report which has been given to the management of Vukile and Synergy funds. The detailed reports include commentary on the current economy, nature of the properties, locality, tenancy, risk profile, forward rent and earning capability and exposure to future expenses and property risk.

All these aspects have been considered in the individual valuation reports of the properties. The detailed reports have further addressed the tenancy income capability and expenditure for each property and tenant. Historic expenditure profile as well as future expenditure increases have been considered. The value therefore indicates the fair market value for each property which is detailed in the attached report and which has been summarised on a schedule as attached hereto, for each property. There are 22 properties in total comprising the portfolio. All essential aspects of information of the properties have been summarised in the attached schedule.

2. BASIS OF VALUATION

The valuation is based on market value.

Market value is “The estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction, after proper marketing and wherein the parties had each acted knowledgeably, prudently and without compulsion.” (IVS 7th edition).

Furthermore the principles of fair value measurement have been applied in the determination of value which is defined as “The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” (IFRS 13).

Note that the values and calculation methodology have been sensitivity tested by way of quantitative analysis by analysing the capitalisation rates, discount rates, rental growth potential, expenditure increase, risk consideration and other inputs in various discounted cash flow models.

3. VALUE CALCULATION

The calculation of the market value of these properties has mainly been based on a discounted cash flow basis which considers the present value of the properties which are calculated from the forward income flow potential.

This is the fundamental basis on which the value of larger multi-tenanted investment properties are calculated. Investment properties produce a perpetual income stream, and the discounted cash flow of such revenue stream is an accurate means of determining the market value.

61

Properties traded in the current market reflect a yield, discount and growth expectation rate relationship between the revenue potential and the properties’ capital value. This rate is an accurate determinant of the discount rate and forward yield potential.

The capitalised value has also been calculated for each property as a check to ensure that the discounted cash flow value calculated is consistent with market norms and expectations. Where there is additional revenue from property as a result of rentalisations or other specialised rental, these incomes have then been regarded as finite income streams and the cashflow has been discounted at an appropriate rate.

The considerations for the valuations are as follows:

3.1 Calculating the forward cash flow of all contractual and other income derived from the properties.

3.2 Calculating the forward contractual and other expenditure as well as provisions for various expenses in order to provide for void or future capital expenditure to which the property may be exposed.

3.3 The current area vacancy as a percentage of the properties is approximately 5.28%. Industrial has a 2.89% vacancy rate, retail has a 3.66% vacancy rate, and offices have a 9.55% vacancy rate. The current vacancy is lower than the weighted average at approximately 3.4% for industrial properties – SAPOA December 2015, Retail 4.5 % SAPOA June 2016 and 10.9% for offices 1st quarter 2016) for this nature of property type.

3.4 In the cash flow calculation I have provided for non-recovery of income due to vacancy or other reason. Approximately 1.88% of the net rental income (R4 298 347.76 ) has been deducted as a provision for rental that may not be collected as a consequence of vacancy, tenant failure or tenant refitting cost, i.e. voids. This has penalised the property in perpetuity. Management should be able to improve on this aspect in future, indicating good internal growth potential from the properties themselves, if managed aggressively.

3.5 Other cash flow expenditure has been raised as a provision for tenant installation of R756 607.83, for general repairs and maintenance of R1 351 594.28 and agents commission of R720 620.08.

3.6 There is no loss of rental due to renovations or refurbishments currently being carried out on the buildings. There is some external maintenance work on various buildings and some tenant installation fitting that is currently in progress. There is no loss of rental as a result of these activities.

3.7 Generally the rentals are market-related. Some rentals are marginally lower than market. The portfolio is a mix of developments and a mix of property grades. There is one building with rentals that are marginally higher than market – it is: Pretoria Lynnwood Sanlynn. The rental relationships have been determined by comparing similar buildings in comparable areas to the properties valued, in terms of rental per square metre. The rental rate has also been checked against various published indices including the South African Property Owners Association (SAPOA) index. There are no properties that are highly over-rented, or that cannot be re-rented at the same or higher rental rate should such property become vacant. There is therefore average potential for rental flow reversion. This is provided that the economy remains in a slow growth pattern as currently being experienced and that there are no major economic fluctuations which may upset the economy. Current growth rate projected at approximately 1.1% for 2016.

3.8 Values have been determined by discounting the forward cash flows at a rate of approximately 15.3% per annum which represents a market-related yield and reasonable growth potential of 6% from the properties at this level. The cash flows have been calculated for five years in advance, with due consideration to the high increases in property-related expenditure which tends to be in the range of 6% up to 7.48%, excluding electricity, which is generally fully recoverable.

3.9 The valuation has considered published market statistics regarding rental rates and expenditure for the different types of properties. It has also considered numerous other portfolios of similar properties in order to benchmark and determine if any properties are over-rented or have excessive expenditure.

3.10 Various capital provisions for repairs and commissions were calculated. These provisions amount to R10 726 877.03 for repairs and R1 735 000.00 for commissions which were deducted from the capital value of the properties.

3.11 Other capital contingency expenditure has been deducted from the capital value for tenant installation of R6 395 767.00 loss of rental for vacant space is R4 643 692.63 and upgrades to retain tenant R2 780 000.00.

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4. SPARE LAND

The portfolio comprises numerous properties which are of a commercial industrial or retail nature. There may be some additional bulk available for development on the properties, however such spare land is not material enough to impact on the valuation of the relevant properties. None of this future potential development has been considered and no value has been attributed for such potential.

5. BRIEF DESCRIPTION

Pretoria Silverton 34 Bearing Crescent – This is an A-Grade Industrial warehouse with offices. Footprint is a basic rectangle configuration for the warehouse, with an adjoining high-quality double storey office. High-grade development. The office block is a rectangular building configured on the edge of the building. Building is generally a decentralised suburban modern office and warehouse facility fronting hard-topped parking yardage and driveway.

Pretoria Silverton 294 Battery Street, Pretoria Silverton 330 Alwyn Street, Pretoria Silverton 22 Axle Street, Pretoria Silverton 301 Battery Street, Pretoria Silverton 309 Battery Street, Durban Valley View Industrial Park and Randburg Trevallyn Industrial Park – These are all B-Grade Industrial warehouse with offices. Footprint is basically a long rectangular steel structure. The buildings are constructed using a steel framework on concrete foundation work. There are mainly two levels of office at the front of the buildings, being, ground floor offices on the same level as the warehouse and first floor offices.

Pretoria Lynnwood Sunwood Park, Pretoria Hatfield Festival Street Offices, Sandton Sunninghill Place, Cape Town Bellville Tijger Park, Pretoria Lynnwood Sanlynn and Jhb Isle of Houghton – These are all A-grade office blocks. All the buildings are multi-storey with basement parking with service utility rooms, ground floor offices with some storage and upper floor office levels.

Pretoria Lynnwood Excel Park and Sandton Rivonia 36 Homestead Road – These are B-Grade office buildings. The buildings are multi-storey with basement parking with service utility rooms, ground floor offices with some storage and upper floor office levels.

Randburg Tungsten Industrial Park – This is a B-Grade Industrial Park with mini units. The foot print is five individual buildings of various shapes. The units all differ in size from between 230m² – 830m² but construction is similar across all units. There are three levels of building, being lower ground floor, middle floor and upper ground floor. The buildings comprise mainly ground floor entrances into the factory space from the yard/ driveway area. Double storey offices are generally accessed from next to the roller shutter door. Eave height differs from unit to unit, but are generally around 5.75 meters in height.

Elim Hubyeni Shopping Centre – This is a B-Grade Neighbourhood Shopping Centre. Footprint has no general definition other than being a relatively rectangular L-shape building built on split level. There are several angular projections constructed. The construction is generally retail-orientated on the facade, fronting hard-topped parking yardage and driveway. There are covered walkways. There is a taxi rank on the eastern side of the property.

Ermelo Game Centre – This is a B-Grade Neighbourhood Shopping Centre. Footprint is a basic long rectangle L-shape with diagonal configurations positioned on two street frontages. Main industrial style of development. The main centre is a rectangle, the main retailer (Game) being alongside a rectangular strip of smaller shops. There is a covered walkway along all shop fronts. The general height is approximately 5.5 metres at roof appex and 4.5 metres surround height.

Gugulethu Square – This is a B-Grade Community Shopping Centre. Footprint is a square shape with parking on the roof and surround. There is one level of building, being ground floor with restaurants and shops, alongside ramp access points for parking. Adjoining taxi rank covered area and building supply stand-alone property. Square turret nature of building finished in plaster and paint.

Hartbeespoort Sediba Shopping Centre – This is a B-Grade Neighbourhood Shopping Centre. Footprint is a basic rectangular design built in a C-shape configuration. Simple industrial style construction. There is one level of building along the entire footprint. The shopfront interface with the parking is all covered walkway of approximately 2.75 metres wide, a green IBR sheeting covers the roofing on the walkways. Above the walkway there is brick panel facia of different heights.

Phuthaditjhaba Setsing Crescent – This is a B-Grade Community Shopping Centre. Footprint has no general definition other than being a relatively rectangular C-shape building built on split level between some shops due to slope of the land and other stand-alone structures on the site, e.g. KFC and stage concert area. Large covered walkways including a part mall section of double volume with wooden trusses.

63

6. VALUATION QUALIFICATIONS

Qualifications are usually detailed as a consequence of:

Leases under negotiation that have not yet been formalised; leases of a large nature where the premises are difficult to re-let; specialised properties; large exposure to a single tenant; potential tenant failure due to over-rent; expenses required for major repairs; maintenance or other exposure to maintain the lettability of the building; contingent expropriations or servitudes that may be enforced; poor lease recordals whereby the lease may be disputed or rendered invalid.

I have, to the best of my knowledge, considered all of these aspects in the valuation of all the properties. There are no properties that are prejudiced in value by the influence of the above factors.

I am, however, not responsible for the competent daily management of these properties that will ensure that this status is maintained, or for the change of any laws, services by local authority or economic circumstances that may adversely impact on the integrity of the buildings or the tenant profile, or legal dispute which may result in any cash flow hiatus.

7. OPTIONS OR BENEFIT DETRIMENT OF CONTRACTUAL ARRANGEMENTS

To my knowledge there are no contractual arrangements on the properties other than the leases as detailed in the report that have a major benefit or are detrimental to the fundamental value base of the properties.

To the best of my knowledge, there are no options in favour of any parties for any purchase arrangement on any of the properties.

8. INTRA-GROUP OR RELATED-PARTY LEASES

Having inspected all the tenant schedules and leases it is noted that there are no intra-group or related party leases.

9. CURRENT STATE OF DEVELOPMENT

There are no properties which are currently under development.

10. EXTERNAL PROPERTY

None of the properties are situated outside the Republic of South Africa.

11. RENTALS USED IN VALUATIONS

Note that all these properties are generally rented out. The current annual rental and future annual rentals have been calculated in a separate discounted cash flow schedule. It is noted that there are no material rental reversions and that the rentals for all the properties increase on average by approximately 7.31%, compounding per annum.

12. OTHER GENERAL MATTERS AND VALUATION SUMMARY

A full valuation report is available on a property-by-property basis detailing tenancy, town planning, valuer’s commentary, expenditure and other details. This has been given to the directors of Vukile and Synergy funds.

13. ALTERNATIVE USE FOR A PROPERTY

The properties have all been valued in accordance with their existing use which represents their best use and market value. No alternative uses for the properties have been considered in determination of their value.

14. OTHER COMMENTS

Our valuation excludes any amounts of value-added tax, transfer duty, or securities transfer duty.

64

15. CAVEATS

15.1 Source of information and verification

Information on the properties regarding rental income, recoveries, turnovers and other income detail has been provided to me by the current owners and their managing agents.

I have received copies of all of the leases of the existing properties where such leases are the major tenant or tenants comprising anything higher than 5% occupancy of the property. The leases have been read to check against management detail records, in order to ensure that management has correctly captured tenant information as per the contractual agreements. This has been done to test management information accuracy against the underlying lease agreements.

I have further compared certain expenditures given to me, to the market norms of similar properties. This has also been compared to historical expenditure levels of the properties themselves. Historical contractual expenditures and municipal utility services were compared to the past performance of the properties in order to assess potential expenditure going forward. The municipal values on the properties are generally market-related and reasonable with little potential to increase dramatically.

15.2 Full disclosure

This valuation has been prepared on the basis that full disclosure of all revenue and expenditure information and factors that may affect the valuation have been made to myself.

I have, to the best of my ability, researched the market as well as taken the steps detailed in paragraph 15.3 below.

15.3 Leases

Our valuation has been based on a review of actual tenants’ leases (which includes material terms such as repair obligations, escalations, break options etc.) and other pertinent details which have been supplied to us by the managing agents and by Vukile and Synergy funds. These have been detailed in the tenant schedules attached to each individual valuation report.

All recovery details in respect of the existing leases, e.g. utility cost and other recoveries as provided for in the leases, have been disclosed by way of the monthly tenant invoices and summary schedule supplied to us. Option terms and other lease information have been supplied to us by the owners and managing agents and we are familiar with such documents.

15.4 Lessee’s credibility

In arriving at our valuation, cognisance has been taken of the lessee’s security and rating. In some cases this has influenced the capitalisation rate by way of a risk consideration. The current portfolio is 53% occupied by national or international tenant base.

15.5 Mortgage bonds, loans, etc.

The properties have been valued as if wholly-owned with no account being taken of any outstanding monies due in respect of mortgage bonds, loans and other charges. No deductions have been made in our valuation for costs of acquisition. Proportionate shareholding has been detailed.

The valuation is detailed in a completed state and no deductions have been made for retention or any other set-off or deduction for any purposes which may be made at the discretion of the purchaser when purchasing the properties.

15.6 Calculation of areas

All areas quoted within the detailed valuation reports are those stated in the information furnished and verified from leases and where plans were available. To the extent that plans were not available, reliance was placed on the information submitted by the managing agents and lease information.

Updated plans were not available for all the properties in respect of internal configuration. The properties generally appear to have the stated square meterage as per lease, which could only be more accurately determined if remeasured by a professional.

65

15.7 Structural condition

The properties have been valued in their existing state. I have not carried out any structural surveys, nor inspected those areas that are unexposed or inaccessible, neither have I arranged for the testing of any electrical or other services.

15.8 Contamination

The valuation assumes that a formal environmental assessment is not required, and further that none of the properties are environmentally impaired or contaminated, unless otherwise stated in our report.

15.9 Town planning

Full town planning details and title deeds have been noted in the detailed valuation reports including conditions and restrictions and the properties have been checked against such conditions. This is to ensure that they comply with town planning regulations and title deeds. There do not appear to be any infringements of local authority regulations or deeds by any of the properties.

The valuation has further assumed that the improvements have been erected in accordance with the relevant Building and Town Planning Regulations and on inspection it would appear that the improvements are in accordance with the relevant town planning regulations for these properties. Certificates of occupation are available and on file for each building.

There is no contravention of any statutory regulation, or town planning local authority regulation or contravention of title deed relating to any of the properties which infringement could decrease the value of the properties as stated as at current date of local authority legislation.

16. MARKET VALUE

I am of the opinion that the aggregate market value of the property portfolio value as at 31 July 2016 is R2 424 600 000.00 (excluding VAT) with the market value of the properties comprising the Synergy portfolio and Vukile portfolio being R1 045 800 000 (excluding VAT) and R1 378 800 000 (excluding VAT), respectively. A summary of the individual valuations and details of each of the properties is attached.

To the best of my knowledge and belief there have been no material changes in circumstances between the date of the valuation and the date of the valuation report which would affect the valuation.

I have more than 30 years’ experience in the valuation of all nature of property and I am qualified to express an opinion on the fair market value of the properties.

I trust that I have carried out all instructions to your satisfaction and thank you for the opportunity of undertaking this valuation on your behalf.

Yours faithfully,

Peter ParfittQuadrant Properties Proprietary LtdDunkeld Court16 North Road, corner Jan Smuts AvenueDunkeld West, 2196Professional Associated ValuerDip. Val. MIV(SA)Registered Professional Property Valuer (no. 2712/2)(Registered without restriction in terms of the Property Valuers Act, No. 47 of 2000)

66

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68

Annexure 4

REAL INSIGHT SUMMARY VALUATION REPORT IN RESPECT OF THE PROPERTIES COMPRISING THE CUMULATIVE PORTFOLIO

The DirectorsSynergy Income Fund Limited2nd Floor, 18 Melrose BoulevardMelrose ArchJohannesburg

15 September 2016

Dear Sirs

RE: INDEPENDENT PROPERTY VALUERS’ REPORT OF THE PROPERTY PORTFOLIO FOR SYNERGY INCOME FUND LIMITED AS DETAILED IN THE SUMMARY SCHEDULE ATTACHED AND FOR WHICH THERE ARE DETAILED VALUATION REPORTS HELD BY SYNERGY INCOME FUND LIMITED

In accordance with your instruction of 9 May 2016, I confirm that we have visited and inspected the 100 properties listed in the attached schedule (“the properties”) during May and June 2016 (Section 13.23 (a) (iii)) and have received all necessary details required to perform a valuation in order to provide you with my opinion of the properties’ market values as at 31 July 2016.

1. INTRODUCTION

The valuation of the properties has been carried out by the valuer who has carefully considered all aspects of all the properties. These properties each have a detailed valuation report which has been given to the management of Synergy Income Fund Limited. The detailed reports include commentary on the current economy, nature of the properties, locality, tenancy, risk profile, forward rent and earning capability and exposure to future expenses and property risk. All these aspects have been considered in the individual valuation reports of the properties. The detailed reports have further addressed the tenancy income capability and expenditure for each property and tenant. Historic expenditure profile as well as future expenditure increases have been considered. The value thus indicates the fair market value for each property which is detailed in the detailed report and which has been summarised on a summary schedule, attached hereto, for each property. There are 100 properties and the important aspects of the detailed valuation report, including the property market value for all of the properties, have been summarised in the attached schedule.

2. BASIS OF VALUATION

The valuation is based on market value.

Market value means the best price, at which the sale of an interest in a property may reasonably be expected to have been completed, unconditionally for a cash consideration on the date of valuation, assuming:

2.1 a willing seller and a willing buyer in a market;

2.2 that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the property, for the agreement of price and terms and for the completion of the sale; and

2.3 that the state of the market, level of values and other circumstances are, on any earlier assumed date of exchange of contracts, the same as on the date of the valuation.

3. VALUE CALCULATION

The calculation of the market value of these properties has been based on income capitalisation. This is the fundamental basis on which commercial income-producing properties are traded on the market in South Africa. This is also due to there being strong supporting evidence of open market rental rates and capitalisation rates which are evidenced by sales in the market.

Properties traded in the current market reflect a yield-rate relationship between revenue and capital value. This rate is an accurate determinant of the capitalisation rate.

69

The considerations for the capitalised valuations are as follows:

3.1 Calculating the forward cash flow of all contractual and other income from the properties.

3.2 Calculating the forward contractual and other expenditure as well as provisions for various expenses in order to provide for void or future capital expenditure to which the property may be exposed.

3.3 The current area vacancy as a percentage of the property portfolio is approximately 9.51%. In order to apply a conservative approach, we have deducted approximately 9.51% of the gross income as a provision for rental that may not be collected as a consequence of vacancy, tenant failure or tenant refitting during the course of the coming year. The current vacancy is market-related. The void provision used in the valuation is therefore adequate.

3.4 There is no loss of rental due to renovations or refurbishments currently being carried out on the buildings. There is, however, ongoing external and internal maintenance work and some tenant installation fitting out that is currently in progress. There is no loss of rental as a result of these activities.

3.5 Generally, the rentals are market-related. This has been determined by comparing similar buildings in comparable areas to the properties valued, in terms of rental per square metre. The rental rate has also been checked against various published indices, including the Rode Report. There are no properties that are over-rented, or that cannot be re-rented at the same or higher rental rate should such property become vacant. There is therefore minimal potential for rental flow reversion. There is however, a positive upside potential for real growth in rental, given the low base of which the average rentals flow. This is provided that the economy remains in a slow recovery pattern as currently being experienced as that there are no major economic fluctuations which may upset the economy.

3.6 Capitalising the net contractual income derived from the properties for a period of one year in advance, calculated from 1 August 2016.

3.7 The valuation has considered published market statistics regarding rental rates and expenditure for the different types of properties. It has also considered numerous other portfolios of similar properties in order to determine if any properties are over-rented or have excessive expenditure.

3.8 Various provisions for capital contingencies were deducted from the capitalised value.

4. SPARE LAND

As far as could be established, there are no properties with large tracts of vacant zoned and serviced spare land.

5. BRIEF DESCRIPTION

The properties comprise of retail, office and industrial accommodation. Please refer to the summary of properties below:

Building name AddressesRentable area

(GLA) (m2) Property use

101 Dorp Street GVT 101 Dorp Street 5 093 Office105 Landdros Mare Street &106 Mark Street

105 Landdros Mare Street &106 Mark Street 571 Retail

106 Landdros Mare Street 106 Landdros Mare Street 1 200 Retail135 Pietermaritz Street 135 Pietermaritz Street 2 198 Office137 Sivewright 131 Sivewright Avenue 4 518 Office151/155 Juniper Road 151 – 155 Juniper Road 1 561 Office16/18 Forge Rd 16 & 18 Forge Road 3 166 Industrial21 Dartfield (Omlap) 21 Dartfield Field 1 016 Industrial249 Commissioner 141 Albertina Sisulu 1 120 Industrial38 Derrick Road 38 Derrick Road 3 846 Industrial38 Prospecton Road 38 Prospection Road 1 528 Mixed Use4 Weightman Avenue 4 Weightman Avenue 4 171 Retail46 Steel Road 46 Steel Road 3 790 Industrial9 Montague Drive 9 Montague Drive 2 649 IndustrialAbsa Gezina 840 Steve Biko Road, Gezina 2 053 RetailAbsa Heidelberg 42 Ueckermann, Heidelberg 777 Retail

70

Building name AddressesRentable area

(GLA) (m2) Property use

Absa Nigel Cnr Hendrik Verwoerd & 2nd Ave 961 RetailABSA Randburg 308 Oak Avenue 1 533 RetailBedford 4 – 6 Skeen Boulevard 9 095 OfficeBeka Bloemfontein Total 82 Long Street, Hilton 400 IndustrialBeka Durban 17 Cordova Place, Briardene Industrial Park 490 IndustrialCitizens Building Kimberley 8 – 14 Jones Road 840 RetailCitizens Cape Town 177 Main Road 1 798 RetailCMH Spartan 60 Steel Road 2 467 IndustrialCorpgro Welkom Cnr 2nd & 3rd Streets 4 401 IndustrialCreston 49 – 51 Forge Road 6 546 IndustrialDept. of Forestry & Water 2 Hargreaves Avenue 3 790 OfficeDiesel Road 12 – 14 Diesel Road 7 923 Industrial

Dikai Shopping CentreMain Road, Hazyview (R40 National Highway Cnr R536) 2 923 Retail

Edufin PE 3 Sommers Road 3 500 OfficeEllerines Dundee Cnr Wilson, King Edward & Victoria Streets 3 518 RetailEllerines Thohoyandou Thohoyandou Shopping Centre 829 RetailEmpire Place 106 Hans van Rensburg Street 1 066 OfficeF B Motors 105 & 107 Hans van Rensburg Street 4 217 OfficeFederal Mogul 41 Anderson Street 900 OfficeGreytown Shopping Centre Cnr Sergeant & Oakes Streets 5 373 RetailGroblersdal Fruit & Veg City 2 Van Riebeeck Street 3 980 RetailHerfred Pietersburg 52 Bok Street 2 250 RetailHi Tech Mini Factories 14 – 16 Gerhardus 2 719 IndustrialJet Industrial Park 7 Harold Flight Street 10 209 IndustrialJM Investments 1321 Spyker Crescent 2 700 IndustrialKaroo Junction C/O Donkin St & Danie Theron, Beaufort West 6 899 RetailKimberley Building 41 du Toitspan Way 1 689 RetailKimberley Printing 13 Woodley Street 1 193 ParkingKimberly Clark Bevan Road 6 817 IndustrialKlein Brothers 52 – 62 George Street 915 RetailKolbenco 6 Liebenberg Ave Alrode 10 824 IndustrialLa Rocca 14 Petunia Street cnr Main Road 2 935 OfficeLea Glen 3 Amanda Ave, Lea Glen 3 411 IndustrialLongmarket Street Branch 188 Longmarket Street 3 890 Mixed UseLynwood Botco Place 61 Kasteel Road, Lynwood Glen 493 OfficeLynwood Wapadrant 64 Lynwood Road, Lynwood Glen 1 304 OfficeMaverick Corner 65 Betty Street 866 Mixed UseMcCarthy Centre – Turffontein 3 End Street 5 935 IndustrialMedia Shop 138 Kelvin Shop, Morningside Manor 2 522 OfficeMelville Properties Cnr 7th Street & 2nd Avenue 1 094 RetailMetcash Welkom 4th 11th Street 6 812 IndustrialMiddelburg SAP 37 SADC Vos Street 3 400 OfficeMotswedi House 495 Summit Road 1 630 OfficeNedbank Kimberley 37 Chapel Street 1 252 OfficeNelspruit Centre Cnr Henshall & Anderson Streets 1 060 RetailNelspruit Ellerines 1 20 Bester Street 1 147 RetailNu – Payment 8 Kingfisher Avenue 1 408 OfficeOakhill Fourways Golf Park, Roos Street 1 361 OfficeOdendaalsrus Shopping Centre 66 Waterkant Street, Odendaalsrus 3 863 RetailOK Klerksdorp Cnr Delver, Laesk & Oliver Tambo Streets 7 931 RetailOudehuis Centre 122 Main Road 4 182 Mixed Use

71

Building name AddressesRentable area

(GLA) (m2) Property use

Parc Du Bel 19 Strand Street 2 299 Mixed UseParmac 24 Park Street 4 155 IndustrialPerm – Smith Street 343 Smith Street 10 177 OfficePerm Building Pietermaritzburg 234 Church Street 2 726 OfficePerm Kimberley 33 du Toitspan Way 4 967 OfficePhilippi Court Cnr New Eisleben & Lansdown Roads 1 357 OfficePlantation Road 18 18 Plantation Road 3 954 IndustrialPlantation Road 20 20 Plantation Road 4 209 IndustrialPropstars 127 Doornfontein & 6 Davies Street 6 080 IndustrialProvence House Witbank 12 Kruger Street, Witbank 5 866 OfficeRivonia Boulevard 354 Rivonia Boulevard 3 708 OfficeRonsyn Building 26 Devonshire Hill Road 2 391 RetailRoyal Palm Umgeni Road 893 RetailSanlam Centre Vryburg 70 Market Street 1 905 RetailSAPS – Mitchell’s Plain Alpha Street 3 416 OfficeSAPS Worcester Fairbairn Street 3 848 OfficeSasol Gas Total 272 Kent, Ferndale, Randburg 2 526 OfficeShoprite Boksburg 262 Commissioner Street 3 034 RetailSimgold Bunsen Road, Industria 15 484 IndustrialStandard Bank Blackheath 288 Weltevreden Road 2 880 OfficeStar Foods 2 Cardiff Road 3 114 IndustrialTarry’s Head Office Cnr La Rochelle & Crystal Roads 10 824 IndustrialThe Arches 7 Taylor Street 2 707 Mixed UseThe Main Change 22 Kruger Street 4 072 Mixed UseThe Pond Shopping Centre 561 James Crescent, Cnr Old Pretoria Road 5 501 RetailThohoyandou Centre Thohoyandou Centre 4 006 RetailThohoyandou Shopping Centre Thohoyandou Shopping Centre 4 359 RetailTown Centre Boksburg 95 Leeupoort Street 6 883 Mixed UseTown Talk Nelspruit 17 Andrew Street 1 082 RetailTruworths Corner Cnr Symphony Way & Minuet Lane 520 RetailTsolo Main Road, Tsolo 4 097 RetailVirgin Active Benoni Cnr Woburn Avenue & Pioneer Drive 3 154 RetailWilcon House 22 Fabricia Street, Kimberly 2 659 Office

The properties have been well constructed and generally have acceptable architectural merit, aesthetic appeal and sufficient parking facilities and are virtually fully tenanted. The leases tend to be of a general short-to-medium-term contractual rental nature with provision for the recovery of utility services consumed by the lessees. Escalations are market-related, but are high enough to ensure a more than positive growth rate is ensured without creating an over-rent potential in the medium-term. The properties are generally highly visible and dominate their environment.

In respect of the properties, the current net annual rental and the estimated future net annual rentals at specified dates and for specified periods are included in each individual detailed property valuation report.

6. VALUATION QUALIFICATIONS

Qualifications are usually detailed as a consequence of: leases under negotiation that have not yet been formalised; leases of a large nature where the premises are difficult to re-let; specialised properties; large exposure to a single tenant; potential tenant failure due to over-rent; expenses required for major repairs; maintenance or other exposure to maintain the lettability of the building; contingent expropriations or servitudes that may be enforced; poor lease records whereby the lease may be disputed or rendered invalid.

We have, to the best of our knowledge, considered all of these aspects in the valuation of all the properties. There are no properties that are prejudiced in value by the influence of the above factors.

72

The valuer is, however, not responsible for the competent daily management of these properties that will ensure that this status is maintained, or for the change of any laws, services by local authority or economic circumstances that may adversely impact on the integrity of the buildings or the tenant profile.

7. OPTIONS OR BENEFIT DETRIMENT OF CONTRACTUAL ARRANGEMENTS

To my knowledge there are no contractual arrangements on the properties other than the leases as detailed in the report that have a major benefit or are detrimental to the fundamental value base of the properties.

To the best of my knowledge, there are no options in favour of any parties for any purchase of any of the properties.

8. INTRA-GROUP OR RELATED-PARTY LEASES

Having inspected all the tenant schedules and leases it is noted that there are no intra-group or related party leases.

9. CURRENT STATE OF DEVELOPMENT

There is no property which is currently being re-developed. Note, however, that there is spare land capacity for expansion on certain properties, subject to current usage, soil conditions, zoning and road reserves.

10. RENTALS USED IN VALUATIONS

Note that all these properties are all generally rented out. The current annual rental and future annual rentals have been calculated in a separate discounted cash flow check schedule. It is noted that there are no material rental reversions and that the rentals for all the properties increase on average by approximately 7 – 9 %, compounding per annum.

11. EXTERNAL PROPERTY

None of the properties are situated outside the Republic of South Africa.

12. OTHER GENERAL MATTERS AND VALUATION SUMMARY

A full valuation report is available on a property-by-property basis, detailing tenancy, town planning, valuer’s commentary, expenditure and other details. This has been given to the directors of Synergy Income Fund Limited.

13. ALTERNATIVE USE FOR A PROPERTY

The properties have been valued in accordance with their existing use, which represents their market value. No alternative use for the properties has been considered in determining their value.

14. OTHER COMMENTS

Our valuation excludes any amounts of value-added tax, transfer duty, or securities transfer duty.

15. CAVEATS

15.1 Source of information and verification

Information on the properties regarding rental income, recoveries and other income detail has been provided to us by the current owners and their managing agents.

We have received copies of all of the leases of the existing properties where such leases are the major tenant or tenants comprising anything higher than 10% occupancy of the property. The leases have been read to check against management detail, in order to ensure that management has correctly captured tenant information as per contractual agreement. This has been done to test management information against the underlying agreements.

We have further compared certain expenditures given to us to the market norms of similar properties. This has also been compared to historic expenditure levels of the properties themselves. Historical contractual expenditures and municipal utility services were compared to the past performance of the properties in order to assess potential expenditure going forward.

73

The municipal values on the properties are very low. At the current transaction values there is some potential for the municipal value to increase by a considerable amount, should the municipality revalue these properties, in which event the rates could increase to three or four times their current amount.

15.2 Full disclosure

This valuation has been prepared on the basis that full disclosures of all information and factors that may affect the valuation have been made to me.

We have, to the best of our ability, researched the market as well as taken the steps detailed in paragraph 15.3 below.

15.3 Leases

Our valuation has been based on a review of actual tenants’ leases (which includes material terms such as repairing obligations, escalations and break options) and other pertinent details supplied to us by the managing agents and by Synergy Income Fund Limited. All recovery details in respect of the existing leases, e.g. utility costs and other recoveries as provided for in the leases, have been disclosed by way of the monthly tenant invoices and the summary schedule supplied to us. Option terms and other lease information have been supplied to us by the owners and managing agents and we are familiar with such documents.

15.4 Lessees credibility

In arriving at our valuation, cognisance has been taken of the lessee’s security and rating. In some cases this has influenced the capitalisation rate by way of a risk consideration.

15.5 Mortgage bonds, loans, etc.

The properties have been valued as if wholly-owned, with no account being taken of any outstanding monies due in respect of mortgage bonds, loans and other charges. No deductions have been made in our valuation for costs of acquisition.

The valuation is detailed in a completed state and no deductions have been made for retention or any other set-off or deduction for any purposes which may be made at the discretion of the purchaser when purchasing the properties.

15.6 Calculation of areas

All areas quoted within the detailed valuation reports are those stated in the information furnished and verified where plans were available. To the extent that plans were not available, reliance was placed on the information submitted by the managing agents. Updated plans were not available for all the properties in respect of internal configuration. The properties generally appear to have the stated square meterage which could only be more accurately determined if remeasured by a professional. The reported square meterage is therefore considered as correct as possible without a full re-measurement exercise being undertaken.

15.7 Structural condition

The properties have been valued in their existing state. We have not carried out any structural surveys, nor inspected those areas that are unexposed or inaccessible, neither have we arranged for the testing of any electrical or other services.

15.8 Contamination

The valuation assumes that a formal environmental assessment is not required, and further that none of the properties are environmentally impaired or contaminated, unless otherwise stated in our report.

15.9 Town planning

Full town planning details and title deeds have been supplied in the detailed valuation reports, including conditions and restrictions, and the properties have been checked against such conditions. This is to ensure that they comply with town planning regulations and title deeds. There do not appear to be any infringements of local authority regulations or deeds in respect of the properties.

The valuation has further assumed that the improvements have been erected in accordance with the relevant Building and Town Planning Regulations and on inspection it would appear that the improvements are in accordance with the relevant town planning regulations for these properties.

There is no contravention of any statutory regulation, or town planning local authority regulation or contravention of title deed relating to any of the properties, where infringement could decrease the value of the properties as stated.

74

16. MARKET VALUE

I am of the opinion that the aggregate market value of the properties as at 31 July 2016 is R1 893 300 000 (excluding VAT). A summary of the individual valuations and details of each of the properties are attached.

To the best of our knowledge and belief there have been no material changes in circumstances between the date of the valuation and the date of the valuation report which would affect the valuation.

I have more than 25 years’ experience in the valuation of all nature of property and I am qualified to express an opinion on the fair market value of the properties.

I trust that I have carried out all instructions to your satisfaction and thank you for the opportunity of undertaking this valuation on your behalf.

Yours faithfully,for Real Insight Proprietary Ltd

Theunis Lodewyk Johannes Behrens

National Diploma Property ValuationRegistered Professional Associated Valuer (No. 3206)(Registered without restriction in terms of the Property Valuers Act, No. 47 of 2000)

5th Floor, North WingHyde Park CornerHyde ParkSandton2196

75

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3 Am

anda

Ave

, Lea

Glen

Er

f 66,

Lea

Glen

Indu

strial

19 M

ay 2

016

Free

hold

N/A

3 41

1±

20 Y

ears

BIn

dustr

ial 3

5.00

%R1

314

150

R12

600

000

50Lo

ngm

arke

t Stre

et B

ranc

h18

8 Lo

ngm

arke

t Stre

etRe

main

ing

Exte

nt o

f Erf

2658

, Piet

erm

aritz

burg

Mix

ed U

se30

May

201

6Fr

eeho

ldN

/A3

890

± 20

Yea

rsC

Gen

eral

Busin

ess 1

20.0

0%R3

357

241

R28

800

000

51Ly

nwoo

d Bo

tco

Plac

e61

Kas

teel

Road

, Lyn

woo

d G

lenEr

f 224

, Lyn

nwoo

d G

lenO

ffice

25 M

ay 2

016

Free

hold

N/A

493

± 25

Yea

rsC

Spec

ial

5.00

%R8

82 7

05R7

700

000

52Ly

nwoo

d W

apad

rant

64 L

ynw

ood

Road

, Lyn

woo

d G

lenEr

f 227

, Lyn

nwoo

d G

lenO

ffice

25 M

ay 2

016

Free

hold

N/A

1 30

4±

25 Y

ears

CSp

ecial

5.

00%

R1 9

57 4

92R1

8 00

0 00

0

77

No

Prop

erty

nam

ePh

ysic

al a

ddre

ssR

egis

tere

d le

gal d

escr

iptio

n(E

rf n

umbe

r)Pr

oper

ty u

seVa

luer

’sin

spec

tion

date

Free

hold

/ Le

aseh

old

Tenu

re o

f le

aseh

old

Ren

tabl

e ar

ea(G

LA)

(m²)

Appr

oxim

ate

age

of b

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ing

Bui

ldin

g gr

ade

Zoni

ng, t

own

plan

ning

and

st

atut

ory

cont

rave

ntio

n (if

any

)

Ass

umed

pe

rpet

ual

void

/vac

ancy

Inco

me

proj

ectio

n fo

rth

e pe

riod

1 Au

gust

201

6to

31

July

201

7 (R)

Valu

atio

n as

at

31 Ju

ly 2

016 (R

)

53M

aver

ick C

orne

r65

Bet

ty S

treet

Er

f 286

1, Je

ppes

tow

nM

ixed

Use

18 M

ay 2

016

Free

hold

N/A

866

± 10

Yea

rsB

Gen

eral

10.0

0%R1

271

965

R13

000

000

54M

cCar

thy

Cen

tre –

Tu

rffon

tein

3 En

d St

reet

Er

ven

1106

, 110

7, 1

108,

City

and

Subu

rban

X2

& E

rven

111

3 &

111

4, C

ity &

Sub

urba

n X3

Indu

strial

18 M

ay 2

016

Free

hold

N/A

5 93

5±

20 Y

ears

BIn

dustr

ial 1

10.0

0%R2

850

000

R26

700

000

55M

edia

Shop

138

Kelv

in S

hop,

Mor

ning

side M

anor

Erf 4

87, M

orni

ngsid

e Man

or E

xt 3

Offi

ce17

May

201

6Fr

eeho

ldN

/A2

522

± 20

Yea

rsB

Busin

ess 4

5.00

%R5

646

577

R49

300

000

56M

elvill

e Pro

perti

esC

nr 7

th S

treet

& 2

nd A

venu

eEr

ven

155

and

245,

Melv

ille

Reta

il19

May

201

6Fr

eeho

ldN

/A1

094

± 30

Yea

rsB

Busin

ess 1

10.0

0%R1

358

398

R13

600

000

57M

etca

sh W

elkom

4th

11th

Stre

etEr

f 913

5, W

elkom

Ext

24

(Voo

rspoe

d O

os)

Indu

strial

27 M

ay 2

016

Free

hold

N/A

6 81

2±

20 Y

ears

BG

ener

al In

dustr

ial7.

50%

R1 5

98 0

06R1

4 60

0 00

0

58M

idde

lbur

g SA

P37

SAD

C V

os S

treet

Erf 1

24, M

idde

lbur

gO

ffice

27 M

ay 2

016

Free

hold

N/A

3 40

0±

20 Y

ears

CBu

sines

s 115

.00%

R1 0

89 2

65R1

1 40

0 00

0

59M

otsw

edi H

ouse

495

Sum

mit

Road

Erf 1

351,

Mor

ning

side E

xt 1

47O

ffice

17 M

ay 2

016

Free

hold

N/A

1 63

0±

20 Y

ears

BBu

sines

s 47.

50%

R1 5

42 8

06R1

8 50

0 00

0

60N

edba

nk K

imbe

rley

37 C

hape

l Stre

etEr

f 105

07, K

imbe

rley

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ce2

June

201

6Fr

eeho

ldN

/A1

252

± 30

Yea

rsC

Gen

eral

Busin

ess

25.0

0%R6

65 7

21R7

000

000

61N

elspr

uit C

entre

Cnr

Hen

shall

& A

nder

son

Stre

ets

Erf 1

8, N

elspr

uit

Reta

il7

May

201

6Fr

eeho

ldN

/A1

060

± 30

Yea

rsC

Busin

ess 1

5.00

%R1

607

548

R14

600

000

62N

elspr

uit E

llerin

es 1

20 B

este

r Stre

etEr

f 39,

Nels

prui

tRe

tail

7 M

ay 2

016

Free

hold

N/A

1 14

7±

30 Y

ears

CBu

sines

s 15.

00%

R1 0

68 6

54R1

1 10

0 00

0

63N

u –

Paym

ent

8 K

ingf

isher

Ave

nue

Erf 2

174,

Mey

ersd

alO

ffice

17 M

ay 2

016

Free

hold

N/A

1 40

8±

20 Y

ears

BSp

ecial

5.00

%R2

422

789

R21

700

000

64O

akhi

llFo

urw

ays G

olf P

ark,

Roo

s Stre

etPo

rtion

2 o

f Erf

1213

, Witk

oppe

n Ex

t 54

Offi

ce23

May

201

6Fr

eeho

ldN

/A1

361

± 20

Yea

rsB

Spec

ial5.

00%

R1 6

04 0

39R1

5 90

0 00

0

65O

dend

aalsr

us S

hopp

ing

Cen

tre66

Wat

erka

nt S

treet

, Ode

ndaa

lrus

Erf 3

406,

Ode

ndaa

lrus

Reta

il27

May

201

6Fr

eeho

ldN

/A3

863

± 30

Yea

rsC

Gen

eral

Busin

ess

3.00

%R2

818

612

R31

100

000

66O

K K

lerks

dorp

Cnr

Delv

er, L

aesk

& O

liver

Tam

bo S

treet

sEr

ven

891,

892

, 893

, 894

, 895

, 896

, 897

, 900

and

901,

Kler

ksdo

rpRe

tail

2 Ju

ne 2

016

Free

hold

N/A

7 93

1±

30 Y

ears

CBu

sines

s 110

.00%

R2 3

96 5

37R2

2 40

0 00

0

67O

udeh

uis C

entre

122

Main

Roa

dEr

f 305

7, S

omer

set W

est

Mix

ed U

se22

June

201

6Fr

eeho

ldN

/A4

182

± 30

yea

rsC

Gen

eral

Busin

ess

5.00

%R2

852

289

R28

200

000

68Pa

rc D

u Be

l19

Stra

nd S

treet

Erve

n 69

02 an

d 69

04, B

ellvi

lleM

ixed

Use

25 M

ay 2

046

Free

hold

N/A

2 29

9±

20 Y

ears

CO

ffice

Par

k5.

00%

R1 4

49 0

30R1

1 80

0 00

0

69Pa

rmac

24 P

ark

Stre

et

Erve

n 23

6 –

238,

Jepp

esto

wn

Indu

strial

31 M

ay 2

016

Free

hold

N/A

4 15

5±

30 y

ears

BIn

dustr

ial 1

15.0

0%R7

82 8

63R7

700

000

70Pe

rm –

Sm

ith S

treet

343

Smith

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etRe

m E

xt o

f Ptn

3 o

f Erf

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8, D

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n, R

em E

xt

of E

rf 10

657

and

1065

8, D

urba

n, P

ortio

n 3

of

Erf 1

0657

, Dur

ban

and

Ptn

7 of

Erf

1065

8,

Dur

ban

Offi

ce25

May

201

6Fr

eeho

ldN

/A10

177

± 40

yea

rsC

Gen

eral

Busin

ess

15.0

0%R6

222

833

R57

600

000

71Pe

rm B

uild

ing

Piet

erm

aritz

burg

234

Chu

rch

Stre

etPo

rtion

36

of E

rf 25

23, P

ieter

mar

itzbu

rgO

ffice

30 M

ay 2

016

Free

hold

N/A

2 72

6±

40 y

ears

CLa

nes A

rea S

ub

Zone

15.0

0%R1

279

743

R11

800

000

72Pe

rm K

imbe

rley

33 D

u To

itspa

n W

ayEr

ven

1031

2, R

emain

der o

f 103

31 an

d Er

f 103

38,

Kim

berle

yO

ffice

27 M

ay 2

016

Free

hold

N/A

4 96

7±

30 y

ears

CG

ener

al Bu

sines

s10

.00%

R2 0

97 8

41R2

3 00

0 00

0

73Ph

ilipp

i Cou

rtC

nr N

ew E

isleb

en &

Lan

sdow

n Ro

ads

Uni

ts 1

& 2

, Nya

nga C

ourt

Offi

ce30

May

201

6Se

ctio

nal T

itle

N/A

1 35

7±

10 Y

ear

CC

omm

ercia

l5.

00%

R1 7

44 4

43R1

3 50

0 00

0

74Pl

anta

tion

Road

18

18 P

lanta

tion

Road

Erf 3

35, E

astle

igh

Indu

strial

17 M

ay 2

016

Free

hold

N/A

3 95

4±

20 y

ears

CIn

dustr

ial 3

5.00

%R1

206

225

R13

600

000

75Pl

anta

tion

Road

20

20 P

lanta

tion

Road

Erf 3

34, E

astle

igh

Indu

strial

17 M

ay 2

016

Free

hold

N/A

4 20

9±

20 y

ears

CIn

dustr

ial 3

5.00

%R1

540

542

R15

200

000

76Pr

opsta

rs12

7 D

oorn

font

ein &

6 D

avies

Stre

et

Erve

n 12

7 –

129,

New

Doo

rnfo

ntein

Indu

strial

18 M

ay 2

016

Free

hold

N/A

6 08

0±

50 y

ears

CG

ener

al10

.00%

R1 7

08 5

92R1

6 20

0 00

0

77Pr

oven

ce H

ouse

Witb

ank

12 K

ruge

r Stre

et, W

itban

k Er

f 90,

Witb

ank

Offi

ce27

May

201

6Fr

eeho

ldN

/A5

866

± 20

yea

rsC

Busin

ess 1

10.0

0%R4

263

732

R47

000

000

78Ri

voni

a Bou

levar

d35

4 Ri

voni

a Bou

levar

dPo

rtion

3 o

f Erf

71, E

denb

urg

Offi

ce2

June

201

6Fr

eeho

ldN

/A3

708

± 20

yea

rsC

Busin

ess 3

10.0

0%R9

59 4

83R1

8 20

0 00

0

78

No

Prop

erty

nam

ePh

ysic

al a

ddre

ssR

egis

tere

d le

gal d

escr

iptio

n(E

rf n

umbe

r)Pr

oper

ty u

seVa

luer

’sin

spec

tion

date

Free

hold

/ Le

aseh

old

Tenu

re o

f le

aseh

old

Ren

tabl

e ar

ea(G

LA)

(m²)

Appr

oxim

ate

age

of b

uild

ing

Bui

ldin

g gr

ade

Zoni

ng, t

own

plan

ning

and

st

atut

ory

cont

rave

ntio

n (if

any

)

Ass

umed

pe

rpet

ual

void

/vac

ancy

Inco

me

proj

ectio

n fo

rth

e pe

riod

1 Au

gust

201

6to

31

July

201

7 (R)

Valu

atio

n as

at

31 Ju

ly 2

016 (R

)

79Ro

nsyn

Bui

ldin

g26

Dev

onsh

ire H

ill R

oad

Erve

n 15

3536

and

1174

31, C

ape T

own

Reta

il31

May

201

6Fr

eeho

ldN

/A2

391

± 20

yea

rsC

Gen

eral

Busin

ess B

14.

00%

R2 9

07 0

09R3

1 00

0 00

0

80Ro

yal P

almU

mge

ni R

oad

Erve

n 47

1 &

472

, Spr

ingf

ield

Reta

il25

May

201

6Fr

eeho

ldN

/A89

3±

10 y

ears

ASp

ecial

Zon

e N

o. 6

35.

00%

R1 6

26 0

64R1

6 30

0 00

0

81Sa

nlam

Cen

tre V

rybu

rg70

Mar

ket S

treet

Erf 1

24, V

rybu

rgRe

tail

27 M

ay 2

016

Free

hold

N/A

1 90

5±

20 y

ears

CBu

sines

s 110

.00%

R2 1

57 5

67R1

8 90

0 00

0

82SA

PS –

Mitc

hell’s

Plai

nAl

pha S

treet

Erf 5

0764

, Mitc

hells

Plai

nO

ffice

30 M

ay 2

016

Free

hold

N/A

3 41

6±

20 Y

ears

BG

ener

al C

omm

ercia

l C

1

5.00

%R1

093

712

R12

500

000

83SA

PS W

orce

ster

Fairb

airn

Stre

etEr

f 868

, Wor

ceste

rO

ffice

30 M

ay 2

016

Free

hold

N/A

3 84

8±

20 Y

ears

BBu

sines

s Zon

e 1

4.00

%R3

254

151

R27

200

000

84Sa

sol G

as

272

Ken

t Fer

ndale

Ran

dbur

gEr

f 107

0, F

ernd

aleO

ffice

23 M

ay 2

016

Free

hold

N/A

2 52

6±

20 y

ears

BSp

ecial

5.00

%R2

220

956

R23

300

000

85Sh

oprit

e Bok

sbur

g26

2 C

omm

issio

ner S

treet

Erve

n 51

8 –

522,

596

– 5

98, B

oksb

urg

Reta

il25

May

201

6Fr

eeho

ldN

/A3

034

± 30

Yea

rsC

Busin

ess 1

5.00

%R2

283

153

R21

800

000

86Si

mgo

ld

Buns

en R

oad,

Indu

stria

Er

ven

69 –

81,

Indu

stria

Indu

strial

19 M

ay 2

016

Free

hold

N/A

15 4

84±

40 Y

ears

CIn

dustr

ial 2

10.0

0%R3

714

303

R39

400

000

87St

anda

rd B

ank

Blac

khea

th28

8 W

eltev

rede

n Ro

adEr

f 38,

Blac

khea

thO

ffice

23 M

ay 2

016

Free

hold

N/A

2 88

0±

30 Y

ears

CBu

sines

s 45.

00%

R2 5

11 0

71R2

0 40

0 00

0

88St

ar F

oods

2 C

ardi

ff Ro

adEr

f 315

2, P

ieter

mar

itzbu

rgIn

dustr

ial25

May

201

6Fr

eeho

ldN

/A3

114

± 20

Yea

rsC

Gen

eral

Indu

strial

7.50

%R1

509

431

R15

200

000

89Ta

rry’s

Hea

d O

ffice

Cnr

La R

oche

lle &

Cry

stal R

oads

Re

main

der E

xten

t of E

rf 19

, Sta

fford

Indu

strial

20 M

ay 2

016

Free

hold

N/A

10 8

24±

50 Y

ears

CIn

dustr

ial 3

15.0

0%R1

083

038

R8 5

00 0

00

90T

he A

rche

s7

Tayl

or S

treet

Erf 4

156,

Kin

g W

illiam

’s Tow

nM

ixed

Use

20 M

ay 2

016

Free

hold

N/A

2 70

7±

30 Y

ears

CBu

sines

s 25.

00%

R2 6

61 3

95R2

1 40

0 00

0

91T

he M

ain C

hang

e 22

Kru

ger S

treet

Erf 1

258,

City

and

Subu

rban

Mix

ed U

se18

May

201

6Fr

eeho

ldN

/A4

072

± 10

Yea

rsB

Educ

atio

nal

10.0

0%R4

363

976

R44

300

000

92T

he P

ond

Shop

ping

Cen

tre56

1 Ja

mes

Cre

scen

t, C

nr O

ld P

reto

ria R

oad

Erf

346,

Half

way

Hou

se E

xt 1

7Re

tail

25 M

ay 2

016

Free

hold

N/A

5 50

1±

20 Y

ears

CSp

ecial

(Offi

ce

& R

etail

)5.

00%

R2 9

15 7

53R3

0 60

0 00

0

93T

hoho

yand

ou C

entre

Tho

hoya

ndou

Cen

trePo

rtion

3 o

f Erf

29, T

hoho

yand

ou B

ARe

tail

6 Ju

ne 2

016

Leas

ehol

d50

yea

rs4

006

± 15

Yea

rsB

Busin

ess 1

5.00

%R3

301

093

R27

500

000

94T

hoho

yand

ou S

hopp

ing

Cen

treT

hoho

yand

ou S

hopp

ing

Cen

treEr

f 72,

Tho

hoya

ndou

BA

Reta

il6

June

201

6Le

aseh

old

50 y

ears

4 35

9±

15 Y

ears

BBu

sines

s 15.

00%

R3 1

45 7

28R2

6 00

0 00

0

95To

wn

Cen

tre B

oksb

urg

95 L

eeup

oort

Stre

etEr

ven

1544

– 1

547,

334

– 3

38, 4

19 –

423

, Bo

ksbu

rgM

ixed

Use

25 M

ay 2

016

Free

hold

N/A

6 88

3±

30 Y

ears

CBu

sines

s 110

.00%

R2 1

40 1

79R2

2 90

0 00

0

96To

wn

Talk

Nels

prui

t17

And

rew

Stre

etEr

f 406

, Nels

prui

tRe

tail

7 M

ay 2

016

Free

hold

N/A

1 08

2±

20 Y

ears

CBu

sines

s 15.

00%

R485

216

R5 9

00 0

00

97Tr

uwor

ths C

orne

rC

nr S

ymph

ony W

ay &

Min

uet L

ane

Erf 2

9412

, Mitc

hells

Plai

nRe

tail

30 M

ay 2

016

Free

hold

N/A

520

± 20

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es:

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Vuki

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cqui

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k an

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war

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pect

of

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Syne

rgy

port

folio

with

effe

ct f

rom

1 O

ctob

er 2

016.

The

del

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d tr

ansfe

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occ

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ion

and

cont

rol o

f th

e Sy

nerg

y po

rtfo

lio t

o Vu

kile

will

tak

e pl

ace

on t

he

impl

emen

tatio

n da

te. R

egist

ratio

n of

tran

sfer o

f the

pro

pert

ies f

orm

ing

part

of t

he S

yner

gy p

ortfo

lio, i

n th

e na

me

of V

ukile

, sha

ll oc

cur a

s soo

n as

reas

onab

ly p

ossib

le fo

llow

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impl

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2.

The

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of i

n ex

chan

ge fo

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acq

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The

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acqu

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gotia

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exch

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Pr

oper

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ndic

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eing

val

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by K

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valu

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y M

artin

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n in

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f the

Pro

pert

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Not

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all

risk

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rew

ard

in r

espe

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f th

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kile

por

tfolio

with

effe

ct f

rom

1 O

ctob

er 2

016.

The

del

iver

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d tr

ansfe

r of

occ

upat

ion

and

cont

rol o

f th

e Vu

kile

por

tfolio

to

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rgy

will

tak

e pl

ace

on t

he

impl

emen

tatio

n da

te. R

egist

ratio

n of

tran

sfer o

f the

pro

pert

ies f

orm

ing

part

of t

he V

ukile

por

tfolio

, in

the

nam

e of

Syn

ergy

, sha

ll oc

cur a

s soo

n as

reas

onab

ly p

ossib

le fo

llow

ing

the

impl

emen

tatio

n da

te.

2.

The

Vuk

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ortfo

lio (v

alue

d at

R2 

431 

800

000)

will

be d

ispos

ed o

f in

exch

ange

for t

he a

cqui

sitio

n of

the S

yner

gy p

ortfo

lio (v

alue

d at

R2 

474 

600 

000)

, plu

s a ca

sh p

aym

ent b

y Vu

kile

to S

yner

gy o

f R18

.2 m

illio

n, w

ith in

tere

st ac

crue

d fro

m th

e effe

ctiv

e dat

e to

the i

mpl

emen

tatio

n da

te. N

o pu

rcha

se p

rice p

er p

rope

rty

is di

sclo

sed.

The

diff

eren

ce b

etw

een

the v

alua

tion

and

the e

ffect

ive a

cqui

sitio

n co

st is

due t

o th

e ind

epen

dent

pro

pert

y va

luat

ion

bein

g an

ope

n m

arke

t val

ue w

hile

the

acqu

isitio

n co

st is

a ne

gotia

ted

exch

ange

.3.

As

at th

e las

t pra

ctic

able

dat

e, R

andb

urg T

ungs

ten

Indu

stria

l Par

k an

d Ro

odep

oort

Rob

ertv

ille I

ndus

tria

l Par

k ar

e ow

ned

by M

ICC

Pro

pert

ies P

ropr

ieta

ry L

imite

d (“

MIC

C”)

, a w

holly

-ow

ned

subs

idia

ry o

f Vuk

ile. S

uch

prop

ertie

s w

ill b

e so

ld b

y M

ICC

to V

ukile

on

a ba

ck-to

-bac

k ba

sis w

ith th

e Vuk

ile a

sset

exc

hang

e, su

ch th

at th

ey fo

rm p

art o

f the

Vuk

ile p

ortfo

lio to

be

acqu

ired

by S

yner

gy p

ursu

ant t

o th

e tr

ansa

ctio

n.4.

Pr

oper

ties i

ndic

ated

as b

eing

val

ued

by K

nigh

t Fra

nk w

ere

valu

ed b

y M

artin

Fitc

het,

who

is a

n in

depe

nden

t ext

erna

l val

uer r

egist

ered

in te

rms o

f the

Pro

pert

y Va

luer

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fess

ion

Act 4

7 of

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icat

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ng

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uadr

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ere

valu

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ter P

arfit

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ho is

an

inde

pend

ent e

xter

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r reg

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86

Annexure 8

FORECAST STATEMENTS OF COMPREHENSIVE INCOME IN RESPECT OF SYNERGY

Set out below are the forecast statements of comprehensive income in respect of Synergy (“forecasts”) for the six months ending 30 September 2016 and year ending 30 September 2017 (“forecast periods”), prepared on the basis that the forecasts include forecast results for the duration of the forecast periods.

The forecasts, including the assumptions on which they are based and the financial information from which they are prepared, are the responsibility of the directors. The forecasts must be read in conjunction with the independent reporting accountants’ assurance report which is presented in Annexure 9.

As the transaction constitutes a disposal by Synergy of its entire portfolio of property, with the effective acquisition of an entirely new portfolio of properties through the acquisition of the Vukile portfolio and the Cumulative equity, the forecasts represent both a forecast in respect of the assets being acquired pursuant to the transaction and a forecast in respect of Synergy post-implementation of the transaction.

The forecasts have been prepared in compliance with IFRS and in accordance with Synergy’s accounting policies.

FORECAST STATEMENTS OF COMPREHENSIVE INCOME OF SYNERGY

R’000

Forecast for the six months to

30 September 2016

Forecast for the year ending

30 September 2017

Propery rental revenue and recoveries 178 396 702 054Straight-line rental income accrual (426) 3 174Gross property revenue 177 970 705 228Property expenses (77 935) (274 007)

Net profit from property operations 100 035 431 222Corporate administrative expenses (1 647) (10 283)Gain on bargain purchase – 218 319Finance income 466 18 148

Operating profit before finance costs 98 854 657 405Finance charges (46 018) (93 705)

Profit before taxation 52 836 563 700Taxation – –

Profit for the period/year 52 836 563 700

OTHER COMPREHENSIVE INCOMEItems that are or may be classified to profit and loss: Cash flow hedges – current period gains (net of taxation) – –

Total comprehensive income for the period/year 52 836 563 700

87

Reconciliation between earnings and headline earnings

Forecast for the six months to

30 September 2016

Forecast for the year ending

30 September 2017

Profit for the year/period 52 836 563 700– Gain on bargain purchase – (218 319)

Headline earnings 52 836 345 381Adjusted for:– Straight-line rental income accrual 426 (3 174)

Profit available for distribution for the period/year 53 262 342 207

Number of shares in issueA shares in issue 47 352 203 47 352 203B shares in issue 106 352 670 400 710 459Total weighted average number of shares in issue 153 704 873 448 062 662Earnings and diluted earnings per combined share (cents) 34.37 125.81Earnings and diluted earnings per A share (cents) 34.37 125.81Earnings and diluted earnings per B share (cents) 34.37 125.81Headline and diluted headline earnings per combined share (cents) 34.37 77.08Headline and diluted headline earnings per A share (cents) 34.37 77.08Headline and diluted headline earnings per B share (cents) 34.37 77.08Distributable income per A share (cents) 49.69 101.87Distributable income per B share (cents) 27.96 73.36

An analysis of revenue is set out below:

Forecast for the six months to

30 September 2016

Forecast for the year ending

30 September 2017 (%) (%)

Contractual/uncontractual revenue split by rental income:% contracted rental revenue 93.1 74.3% short-term rental revenue 0.6 1.9% near-contracted revenue 6.0 21.6% uncontracted rental revenue 0.3 2.3

100.0 100.0

Notes and assumptions:

The forecasts incorporate the following material assumptions in respect of revenue and expenses that can be influenced by the directors:

1. The forecasts for the six months ending 30 September 2016 and year ending 30 September 2017 are based on information derived from the property manager and historic information.

2. Synergy will not acquire or dispose of any properties during the forecast periods other than acquisitions and disposals contemplated as part of the transaction.

3. Contracted revenue is based on existing lease agreements including stipulated increases, all of which are valid and enforceable. Contractual rental income amounts to 93.1% plus 0.6% short-term rental revenue and 74.3% plus 1.9% short-term rental revenue of rental income and recoveries for the six months ending 30 September 2016 and the year ending 30 September 2017 respectively. Short-term rental income relates to contracted rental revenue where the period specified in the legally binding agreement, excluding automatic renewals, is for a period of less than 18 months.

4. Turnover rental (rental income based on the actual turnover of the tenant) has not been included in the forecast.

88

5. Current vacant space has been forecast on a property-by-property basis and has been assumed to remain vacant for the duration of the forecast period unless a tenant has been identified and a legally binding agreement is being finalised or a warranty/guarantee has been agreed in respect of such premises, in which case the rental income has been included as uncontracted rental income comprising 0.3% and 2.3% of rental income for the six months ending 30 September 2016 and the year ending 30 September 2017 respectively.

6. Leases expiring during the forecast periods have been forecast on a lease-by-lease basis, and have been assumed to renew at current market rates unless the lessee has indicated its intention to terminate the lease. This comprises near-contracted rental income and amounts to 6.0% and 21.6% of rental income for the six months ending 30 September 2016 and the year ending 30 September 2017 respectively.

7. Property operating expenditure has been forecast on a line-by-line basis for each property based on management’s review of historic expenditure and discussion with the property manager.

8. No fair value adjustments to investment properties, other than the adjustment as a result of straight-line rental accrual have been provided for.

9. A gain on bargain purchase has been recognised in respect of the Cumulative acquisition for the year ended 30 September 2017 as the resultant difference between the fair value of the acquisition, being R2.056 billion and the Cumulative consideration shares as determined by the Cumulative consideration share issue price.

10. The effective date of the transaction is 1 October 2016, with all property transfers being implemented from the implementation date.

The forecasts incorporate the following material assumptions in respect of revenue and expenses that cannot be influenced by the directors:

11. There will be no unforeseen economic factors that will affect the lessees’ abilities to meet their commitments in terms of existing lease agreements.

12. Consumption based recoveries are consistent with the independent property valuers’ property income statements.

13. The only item of expenditure forecast to increase by greater than 15% is electricity.

14. Material items of expenditure are in respect of rates and taxes and municipal expenses.

89

Annexure 9

INDEPENDENT REPORTING ACCOUNTANTS’ LIMITED ASSURANCE REPORT ON THE FORECAST STATEMENTS OF COMPREHENSIVE INCOME IN RESPECT OF SYNERGY

The board of directorsSynergy Income Fund LimitedOne-on-NinthCorner Glenhove Road and Ninth StreetMelrose Estate2196

16 September 2016

Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS’ REPORT ON THE FORECAST STATEMENT OF COMPREHENSIVE INCOME OF SYNERGY INCOME FUND LIMITED (“SYNERGY”)

Report on the identified property forecast information

We have undertaken a reasonable assurance engagement in respect of the accompanying property forecast of Synergy for the years ending 30 September 2016 and 30 September 2017 set out in Annexure 8 of the Synergy circular to be issued on or about 23 September 2016 (“the circular”), comprising the forecast statement of profit or loss and other comprehensive income and the vacancy and lease expiry profile of the property portfolio as a whole during the forecast periods(“the forecast information”), as required by paragraph 13.15 of the JSE Limited (“JSE”) Listings Requirements.

We have also undertaken a limited assurance engagement in respect of the directors’ assumptions used to prepare and present the forecast information, disclosed in Annexure 8 of the circular to the forecast information, as required by paragraph 13.15 of the JSE Listings Requirements.

Directors’ responsibility for the forecast information and for the assumptions used to prepare the forecast information

The directors are responsible for the preparation and presentation of the forecast information and for the reasonableness of the assumptions used to prepare the forecast information as set out in the notes to Annexure 8 of the circular to the forecast information in accordance with paragraphs 13.12 – 13.14 of the JSE Listings Requirements (JSE Listings Requirements for forecast information). This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the forecast information on the basis of those assumptions that is free from material misstatement, whether due to fraud or error.

Inherent limitations

Actual results are likely to be different from the forecast information since anticipated events frequently do not occur as expected and the variation may be material. Consequently, readers are cautioned that this forecast may not be appropriate for purposes other than described in the purpose of the report paragraph below.

Our independence and quality control

We have complied with the independence and other ethical requirements of the Code of Professional Conduct for Registered Auditors issued by the Independent Regulatory Board for Auditors (IRBA Code), which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. The IRBA Code is consistent with the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants (Part A and B).

The firm applies International Standard on Quality Control 1 and, accordingly, maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Limited assurance engagement on the reasonableness of the directors’ assumptions

Reporting accountant’s responsibility

Our responsibility is to express a limited assurance conclusion on whether anything has come to our attention that causes us to believe that the assumptions do not provide a reasonable basis for the preparation and presentation of the forecast information in accordance with the JSE Listings Requirements for forecast information, based on the procedures we have performed and the evidence we have obtained. We conducted our limited assurance engagement in accordance with International Standard

90

on Assurance Engagements (ISAE) 3400, The Examination of Prospective Financial Information (ISAE 3400), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain limited assurance about whether the directors’ assumptions provide a reasonable basis for the preparation and presentation of the forecast information.

A limited assurance engagement undertaken in accordance with ISAE 3400 involves assessing the source and reliability of the evidence supporting the directors’ assumptions. Sufficient appropriate evidence supporting such assumptions would be obtained from internal and external sources including consideration of the assumptions in the light of historical information and an evaluation of whether they are based on plans that are within the entity’s capacity. A limited assurance engagement is substantially less in scope than a reasonable assurance engagement in relation to both the risk assessment procedures, including an understanding of internal control, and the procedures performed in response to the assessed risks.

The procedures we performed were based on our professional judgement and included inquiries, observations of processes performed, inspection of documents, analytical procedures, evaluating the reasonableness of best-estimate assumptions and agreeing or reconciling with underlying records.

Our procedures included evaluating the directors’ best-estimate assumptions on which the forecast information is based for reasonableness.

The procedures performed in a limited assurance engagement vary in nature from, and are less in extent than for, a reasonable assurance engagement. As a result, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had we performed a reasonable assurance engagement. Accordingly, we do not express a reasonable assurance opinion about whether the directors’ assumptions provide a reasonable basis for the preparation and presentation of the forecast information.

Limited assurance conclusion on the reasonableness of the directors’ assumptions

Based on the procedures we have performed and evidence we have obtained, nothing has come to our attention that causes us to believe that the directors’ assumptions do not provide a reasonable basis for the preparation and presentation of the forecast information for the years ending 30 September 2016 and 30 September 2017.

Reasonable assurance engagement on the forecast information

Reporting accountant’s responsibility

Our responsibility is to express an opinion based on the evidence we have obtained about whether the forecast information is properly prepared and presented on the basis of the directors’ assumptions disclosed in the notes to the forecast information (the assumptions) and in accordance with the JSE Listings Requirements for forecast information. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements (ISAE) 3400, The Examination of Prospective Financial Information (ISAE 3400), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether such forecast information is properly prepared and presented on the basis of the directors’ assumptions disclosed in the notes to the forecast information and in accordance with the JSE Listings Requirements for forecast information.

A reasonable assurance engagement in accordance with ISAE 3400 involves performing procedures to obtain evidence that the forecast information is properly prepared and presented on the basis of the assumptions and in accordance with the JSE Listings Requirements for forecast information. The nature, timing and extent of procedures selected depend on the reporting accountant’s judgement, including the assessment of the risks of material misstatement, whether due to fraud or error, of the forecast information. In making those risk assessments, we considered internal control relevant to Synergy’s preparation and presentation of the forecast information.

Our procedures included:

• inspecting whether the forecast information is properly prepared on the basis of the assumptions;

• inspecting whether the forecast information is properly presented and all material assumptions are adequately disclosed, including a clear indication as to whether they are best-estimate assumptions; and

• inspecting whether the forecast statement of profit or loss and other comprehensive income is prepared on a consistent basis with the historical financial statements, using appropriate accounting policies.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion on the forecast information

In our opinion, the forecast information is properly prepared and presented on the basis of the assumptions and in accordance with the JSE Listings Requirements for forecast information for the years ending 30 September 2016 and the 30 September 2017.

91

Purpose of the report

This report has been prepared for the purpose of satisfying the requirements of paragraph 13.15 of the JSE Listings Requirements and for no other purpose.

Report on other legal and regulatory requirements

In accordance with our responsibilities set out in the JSE Listings Requirements, paragraph 13.15(b), we have performed the procedures set out therein. If, based on the procedures performed, we detect any exceptions; we are required to report those exceptions. We have nothing to report in this regard.

Grant Thornton Johannesburg

Ryan StolerDirector

Practice number 903485ERegistered AuditorsChartered Accountants (SA)Wanderers Office Park52 Corlett DriveIllovo, 2196

92

Ann

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94

Notes and assumptions:

1. Extracted, without adjustment, from the Synergy annual financial statements for the year ended 31 March 2016, which were audited by Grant Thornton who issued an unqualified audit opinion on the financial statements.

2. Represents the fair value adjustment to the Synergy portfolio to reflect the fair value as at 31 July 2016 of R2.475 billion as reported on by the independent property valuers report’s contained in Annexures 2 and 3, which further portfolio details are set out in Annexure 5.

3. Represents the disposal of the entire Synergy retail portfolio, with a fair value as at 31 July 2016 of R2.475 billion as reported on by the independent property valuer’s report’s contained in Annexures 2 and 3, which further details are set out in Annexure 5.

4. Represents the acquisition of the Vukile portfolio and cash received in exchange for the Synergy disposal. The fair value of the Vukile portfolio as at 31 July 2016 is R2.432 billion as reported on by the independent property valuer’s report’s contained in Annexure’s 2 and 3, which further details are set out in Annexure 6.

5. Represents the adjustment for the Cumulative acquisition, with a net asset value of R2.056 billion, comprises of a property portfolio with fair value of R1.893 billion at 31 July 2016, as determined by the independent property valuer which details are set out in Annexure 4 and loans receivable in respect of executive loans. The Cumulative acquisition was settled via the Cumulative consideration shares as determined by the Cumulative consideration share issue price, with the difference between the net asset value received and purchase consideration being recognised in reserves. The executive loans do not fall within the scope of IFRS 2: Share Based Payments and accordingly has not been treated as such.

6. Represents the acquisition of VAM, extracted without adjustment from the financial statements for the year ended 31  March 2016. The acquisition is accounted for in terms of IFRS 3: Business Combinations with the resultant recognition of goodwill of R155.0 million, the difference in the aggregate purchase consideration of R155.3 million and management’s current estimate of the fair value of assets and liabilities of R0.4 million. Finalisation of the purchase price allocation will be performed within the time period allowed for in IFRS 3: Business Combinations, being 12 months from the acquisition date.

7. Transaction costs amounting to R12.4 million have been capitalised to stated capital.

8. The net asset value per Synergy A share has been calculated based on the 60-day volume weighted average trading price at 31 March 2016 limited to the combined net asset value in accordance with the provisions of Synergy’s Memorandum of Incorporation.

9. The effective date of the disposal to Vukile, acquisition of Vukile portfolio and VAM are all assumed to be 1 October 2016.

10. Save for the adjustments set out above, there are no other material events requiring adjustments to the pro forma statement of financial position.

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Annexure 11

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF THE PRO FORMA FINANCIAL INFORMATION OF SYNERGY

The Board of DirectorsSynergy Income Fund LimitedOne-on-NinthCorner Glenhove Road and Ninth StreetMelrose Estate2196 16 September 2016

Dear Sirs

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF THE  PRO  FORMA FINANCIAL INFORMATION OF SYNERGY INCOME FUND LIMITED (“SYNERGY” OR “THE COMPANY”)

We have completed our assurance engagement to report on the compilation of pro forma financial information of Synergy by the directors. The pro forma financial information, in Annexure 10 of the circular, consists of the pro forma statement of financial position and related notes. The pro forma financial information has been compiled on the basis of the applicable criteria specified in the JSE Limited (“JSE”) Listings Requirements.

The pro forma financial information has been compiled by the directors to illustrate the impact of the corporate action or event, described in Annexure 10, on the company’s financial position as at 31 March 2016 as if the corporate action or event had taken place at 31 March 2016. As part of this process, information about the company’s financial position has been extracted by the directors from the company’s financial statements for the year ended 31 March 2016.

Directors’ Responsibility for the Pro Forma Financial Information

The directors are responsible for compiling the pro forma financial information on the basis of the applicable criteria specified in the JSE Listings Requirements and described in Annexure 10 and as described in the notes to the consolidated pro forma statement of financial position.

Our Independence and quality Control

We have complied with the independence and other ethical requirement of the Code of Ethics for Profession Accountants issued by the international Ethics Standards Board for Accountants, which is founded on fundamental principle of integrity, objectively, professional competence and due care, confidentiality and professional behaviour.

The firm applies International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

Reporting Accountants’ Responsibility

Our responsibility is to express an opinion about whether the pro forma financial information has been compiled, in all material respects, by the directors on the basis specified in the JSE Listings Requirements based on our procedures performed. We conducted our engagement in accordance with the International Standard on Assurance Engagements (“ISAE”) 3420: Assurance Engagements to Report on the Compilation of Pro Forma Financial Information Included in a Prospectus. This standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance about whether the pro forma financial information has been compiled, in all material respects, on the basis specified in the JSE Listings Requirements.

For purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used in compiling the pro forma financial information, nor have we, in the course of this engagement, performed an audit or review of the financial information used in compiling the pro forma financial information.

As the purpose of pro forma financial information included in a prospectus is solely to illustrate the impact of a significant corporate action or event on unadjusted financial information of the entity as if the corporate action or event had occurred or had been undertaken at an earlier date selected for purposes of the illustration, we do not provide any assurance that the actual outcome of the event or transaction would have been as presented.

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A reasonable assurance engagement to report on whether the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria involves performing procedures to assess whether the applicable criteria used in the compilation of the pro forma financial information provides a reasonable basis for presenting the significant effects directly attributable to the corporate action or event, and to obtain sufficient appropriate evidence about whether:

• the related pro forma adjustments give appropriate effect to those criteria; and

• the pro forma financial information reflects the proper application of those adjustments to the unadjusted financial information.

Our procedures selected depend on our judgment, having regard to our understanding of the nature of the company, the corporate action or event in respect of which the pro forma financial information has been compiled, and other relevant engagement circumstances.

Our engagement also involves evaluating the overall presentation of the pro forma financial information.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion

In our opinion, the pro forma financial information has been compiled, in all material respects, on the basis of the applicable criteria specified by the JSE Listings Requirements and described in Annexure 10.

Consent

This report on the pro forma statement of financial position is included solely for the information of the Synergy shareholders. We consent to the inclusion of our report on the pro forma statement of financial position and the references thereto, in the form and context in which they appear.

Grant Thornton Johannesburg

Ryan StolerDirector

Practice number 903485ERegistered AuditorsChartered Accountants (SA)Wanderers Office Park52 Corlett DriveIllovo, 2196

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Annexure 12

INDEPENDENT REPORTING ACCOUNTANTS’ REVIEW REPORT ON THE VALUE AND EXISTENCE OF THE CUMULATIVE AND VUKILE PORTFOLIOS

The Board of DirectorsSynergy Income Fund LimitedOne-on-NinthCorner Glenhove Road and Ninth StreetMelrose Estate2196 16 September 2016

Dear Sirs

REVIEW CONCLUSION ON THE VALUATION AND EXISTENCE OF THE ASSETS AND LIABILITIES ACQUIRED BY SYNERGY INCOME FUND LIMITED (“SYNERGY”)

Introduction

We have reviewed the assets and liabilities acquired by Synergy reflected in the “Acquisition of Vukile portfolio” and the “acquisition of Cumulative portfolio” adjustment columns (“the adjustment columns”) of the pro forma statement of financial position included in Annexure 10 of the circular to be issued on or about 23 September 2016 (“the circular”) as required by paragraph 13.16(e) of the JSE Limited (“JSE”) Listings Requirements.

Directors’ responsibility for the pro forma statement of financial position

The directors are responsible for the preparation and presentation of the financial information in accordance with paragraph 13.16 (a)-(d) of the JSE Listing Requirements (the JSE Listings Requirements for the adjustment columns of the pro forma statement of financial position), as set out in Note 4 and 5 of the pro forma statement of financial position, and for such internal controls as the directors determine is necessary to enable the preparation of the financial information that is free from material misstatement, whether due to fraud or error.

Independent reviewers’ responsibility

Our responsibility is to express a conclusion on the financial information. We conducted our review in accordance with the International Standard on Review Engagements (ISRE) 2400 (Revised), Engagements to Review Historical Financial Statements (ISRE 2400 (Revised). ISRE 2400 (Revised) requires us to conclude whether anything has come to our attention that causes us to believe that the financial information, taken as a whole, is not prepared in all material respects in accordance with JSE Listings Requirements for the adjustment columns of the pro forma statement of financial position. This Standard also requires us to comply with relevant ethical requirements.

A review of financial information in accordance with ISRE 2400 (Revised) is a limited assurance engagement. The reporting accountant performs procedures, primarily consisting of making inquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluates the evidence obtained.

The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on this financial information.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the financial information is not prepared, in all material respects, in accordance with the JSE Listings Requirements for the adjustment columns of the pro forma statement of financial position, as set out in Note 4 and 5 to the pro forma statement of financial position.

Purpose of the report

This report has been prepared for the purpose of satisfying the requirement of paragraph 13.16(e) of the JSE Limited Listing Requirements, and for no other purpose.

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Yours faithfully

Grant Thornton Johannesburg

Ryan StolerDirector

Practice number 903485ERegistered AuditorsChartered Accountants (SA)Wanderers Office Park52 Corlett DriveIllovo, 2196

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Annexure 13

HISTORICAL FINANCIAL INFORMATION OF SYNERGY

STATEMENT OF FINANCIAL POSITION

Note31 March 2016

R00031 March 2015

R00030 June 2014

R000

AssetsNon-current assets 2 442 539 2 422 182 2 422 322

Investment properties and related receivables 3 2 441 574 2 421 900 2 422 100

Investment properties 2 371 602 2 403 773 2 403 467Straight-line rental income adjustment 3.3 69 972 18 127 18 633

Derivative financial instruments 9 622 – 137Deferred tax asset 4 343 282 85

Current assets 53 055 27 642 25 546

Trade and other receivables 5 27 298 21 622 21 324Derivative financial instruments 9 141 –Cash and cash equivalents 6 25 616 6 020 4 222

Total assets 2 495 594 2 449 824 2 447 868

Equity and liabilitiesShareholders’ interest 1 463 357 460 591 496 205

Stated capital 7 953 410 1 537 1 537Retained earnings 42 021 459 054 494 668Non-distributable reserves 467 926 –

Non-current liabilities 976 954 1 922 555 1 862 455

Borrowings 8 976 016 968 658 909 044Linked debentures – 952 971 952 971Derivative financial instruments 9 938 926 440

Current liabilities 55 283 66 678 89 207

Trade and other payables 10 55 283 41 288 36 217Debenture interest payable – 25 307 52 990Derivative financial instruments 9 – 83 –

Total equity and liabilities 2 495 594 2 449 824 2 447 868

Total number of shares in issue at 31 March 153 704 873 153 704 873 153 704 873A shares 47 352 203 47 352 203 47 352 203B shares 106 352 670 106 352 670 106 352 670Net asset value per combined share/linked unit (cents)* 952 920 9.43Net asset value per A share/linked unit (cents)*^ 1 169 1 193 10.99Net asset value per B share/linked unit (cents)* 855 798 8.73Fair value per share represented by the market price at 31 March (cents)Fair value of A share/linked unit* 1 180 1 210 1 100Fair value of B share/linked unit* 700 750 745

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STATEMENTS OF PROFIT/(LOSS) AND OTHER COMPREHENSIVE INCOME

Note

201612 months

R000

2015*

9 monthsR000

201412 months

R000Property revenue 347 654 241 830 303 111Straight-line rental income accrual 51 845 (505) 560

Gross property revenue 399 499 241 325 303 670Property expenses (148 380) (93 693) (115 265)Administration costs – – (14 300)

Net profit from property operations 251 119 147 632 174 105Corporate administrative expenses (3 210) (14 515) –Finance income 12 1 628 915 –

Operating profit before finance costs 249 537 134 032 174 105Finance costs 13 (84 908) (58 761) (71 812)

Operating profit after finance costs 164 629 75 271 102 293Debenture interest – (76 332) (102 322)

Profit/(loss) before capital items 164 629 (1 061) (29)Other capital items – (168) –Profit/(loss) before fair value adjustments 164 629 (1 229) (29Gain on the ineffective portion of fair value of derivative financial instruments 225 – 1 731Gross change in fair value of swaps – (705) –Net change in fair value of investment properties (57 699) (33 878) –– Fair value adjustments (5 854) (34 383) 195 582– Straight-line adjustments (51 845) 505 (560)

Profit/(loss) before taxation 11 107 155 (35 812) 196 718Taxation 14 61 197 (294)

Profit/(loss) for the year/period 107 216 (35 615) 196 424Other comprehensive incomeCash flow hedges – current period gains (net of taxation) 609 –

Total comprehensive income/(loss) for the year/period 107 825 (35 615) 196 424Earnings/(loss) and diluted earnings/(loss) per combined share (cents)^ 69.75 (23.17) 127.79Earnings/(loss) and diluted earnings/(loss) per A share (cents)^ 69.75 (23.17) 127.79Earnings/(loss) and diluted earnings/(loss) per B share (cents)^ 69.75 (23.17) 127.79Headline earnings per combined share (cents)^ 107.29 (1.13) 0.91Headline earnings per A share (cents)^ 107.29 66.53 87.70Headline earnings per B share (cents)^ 107.29 40.52 58.48Total weighted average number of shares in issue at 31 March^ 153 704 873 153 704 873 153 704 873A shares in issue^ 47 352 203 47 352 203 47 352 703B shares in issue^ 106 352 670 106 352 670 106 352 670

* Prior period information is presented for the nine months to 31 March 2015, due to the change in year-end to align Synergy with Vukile’s year-end following effective change of control.

^ The linked unit capital structure was converted to an all share structure during the year. Comparative figures represent linked units where applicable.

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RECONCILIATION OF PROFIT/(LOSS) TO HEADLINE EARNINGS AND TO PROFIT AVAILABLE FOR DISTRIBUTION

Note

201612 months

R000

2015* 9 months

R000

201412 months

R000

Profit/(loss) for the year/period 107 216 (35 615) 196 424

Adjusted for: 102 322Debenture interest – 76 332 298 746

Earnings 107 216 40 717Net change in fair value of investment properties 57 699 33 877 (195 022)Headline earnings 164 915 74 594 103 724Adjusted for:Amortisation of loan raising costs 754 556 594Straight-line rental income accrual (51 845) 505 (560)Other capital items – 169Deferred taxation 14 (61) –Gain on the ineffective portion of fair value of derivative financial instruments (225) –Net change in fair value of swaps – 508 (1 436)

Change in fair value of swaps – 705 (1 731)Deferred taxation on change in fair value of swaps – (197) 294

Profit available for distribution for the year/period 113 538 76 332 102 322

* Prior period information is presented for the nine months to 31 March 2015, due to the change in year-end to align Synergy with Vukile’s year-end following effective change of control.

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STATEMENT OF CHANGES IN EQUITY

Note

StatedcapitalR000

Retainedearnings

R000

Non-distributable

reservesR000

TotalR000

Balance at 30 June 2014 1 537 494 668 – 496 205Total comprehensive income for the period – (35 614) – (35 614)

Balance at 31 March 2015 1 537 459 054 – 460 591Profit for the year – 107 216 – 107 216Dividends paid – (56 932) – (56 932)Change in fair value of investment properties – 5 854 (5 854) –Transfer to non-distributable reserves – (473 171) 473 171 –Capital conversion of debentures to stated capital 7 952 971 – – 952 971Costs of conversion of debentures 7 (1 098) – – (1 098)Other comprehensive incomeRevaluation of cash flow hedges – – 609 609

Balance at 31 March 2016 953 410 42 021 467 926 1 463 357

STATEMENT OF CASH FLOWS

Note2016R000

2015R000

2014R000

Cash flows from operating activitiesCash generated from operations 16.1 204 466 138 228 179 727Finance income 12 1 628 915 939Interest paid 16.2 (109 461) (162 220) (169 866)Dividend paid 16.3 (56 932) – –

Net cash inflow/(outflow) from operating activities 39 701 (23 077) 10 799

Cash flows from investing activitiesAdditions to investment properties 3.2 (25 528) (34 183) (349 444)

Net cash outflow from investing activities (25 528) (34 183) (349 444)

Cash flows from financing activitiesFinancial liabilities raised 6 521 59 058 337 563Costs of conversion of debentures (1 098) – –

Net cash inflow from financing activities 5 423 59 058 337 563

Net cash inflow for the year/period 19 596 1 798 (1 082)Cash and cash equivalents at the beginning of the year/period 6 020 4 222 5 304

Cash and cash equivalents at the end of the year/period 25 616 6 020 4 222

NOTES TO THE ANNUAL FINANCIAL STATEMENTSfor the year ended 31 March 2016

1. ACCOUNTING POLICIES

1.1 Presentation of financial statements

The annual financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the JSE Listings Requirements, and the Companies Act of South Africa, 2008, as amended. The audited annual financial statements have been prepared on the historical cost basis except for investment properties and derivative financial instruments which are measured at fair value, and incorporate the principal accounting policies set out below.

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Except for the new amendments adopted as set out below, all accounting policies applied by Synergy in the preparation of these financial statements are consistent with those applied by Synergy as at and for the period ended 31 March 2015. Synergy has adopted the following new standards:

• Amendments to IAS 40, relating to investment properties• Amendments to IFRS 2, relating to share-based payments• Amendments to IFRS 3, relating to business combinations• Amendments to IFRS 8, relating to operating segments• Amendments to IFRS 10, relating to consolidated financial statements• Amendments to IFRS 13, relating to fair value measurement• Amendments to IAS 16, relating to property, plant and equipment• Amendments to IAS 19, relating to employee benefits• Amendments to IAS 24, relating to related party disclosures• Amendments to IAS 38, relating to intangible assets• The above amendments did not have a material impact on Synergy’s financial statements presented.

1.2 Significant judgements and sources of estimation uncertainty

In preparing the financial statements, management is required to make estimates and assumptions that affect the amounts represented in the financial statements and related disclosures. Use of available information and the application of judgement are inherent in the formation of estimates. Actual results in the future could differ from these estimates which may be material to the financial statements. Significant judgements include:

Tenant arrears

Synergy assesses its tenant arrears for impairment at the end of each reporting period. In determining whether an impairment loss should be recorded in profit or loss, Synergy considers the security held, historic experience with similar tenants, the period the amount is overdue and knowledge of the tenant’s circumstances.

Taxation

Judgement is required in determining the provision for income taxes due to the complexity of legislation. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Synergy recognises liabilities for anticipated tax issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

As Synergy has obtained REIT status effective 1 July 2013, it is not liable for capital gains tax on the disposal of directly held properties and local REIT securities. In addition, deferred tax is not recognised on the straight-line rental income accrual as the rental income accrual forms part of Synergy’s dividends. Given the REIT status, such dividends are fully deductible for tax purposes and hence no tax liability arises on rental income accruals.

Valuation of investment properties

Investment properties are held to earn investment income. Investment properties are treated as long-term investments and are carried at market value, determined annually. Principal to this valuation is the determination of the discount rate, capitalisation rate and long-term vacancy rate applicable to the investment property.

Changes in market conditions may result in capitalisation rates being revised and the fair value of investment properties adjusting significantly.

Initial recognition of investment properties

Investment properties were acquired as standalone assets for investment purposes. The inputs and processes required to produce outputs, and therefore an integrated set of activities are provided by Synergy’s property and asset manager, VAM. Accordingly, the acquisitions of investment properties do not constitute a business for Synergy.

An assessment is made with each acquisition of investment property as to whether the specific property meets the definition of a business and accordingly whether the initial recognition thereof should be in terms of IFRS 3: Business Combinations or alternatively IAS 40: Investment Properties.

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1.3 Investment property

Investment property is recognised as an asset when, and only when, it is probable that the future economic benefits that are associated with the investment property will flow to the enterprise, and the cost of the investment property can be measured reliably.

Investment property is initially recognised at cost. Transaction costs are included in the initial measurement. Costs include costs incurred initially and costs incurred subsequently to add to, or to replace a part of a property. If a replacement part is recognised in the carrying amount of the investment property, the carrying amount of the replaced part is derecognised. Tenant installation costs are capitalised to investment property.

Subsequent to initial measurement, investment property is measured at fair value. A gain or loss arising from a change in fair value is included in net profit or loss for the period in which it arises. Fair market value is the open-market value, which, in the opinion of the directors, is the fair market price at which the property would have been sold unconditionally on a willing buyer/willing seller basis for a cash consideration on the date of the valuation. Gains or losses arising from changes in the fair value of investment properties are recognised in net profit or loss for the period in which they arise. Such gains or losses are transferred to a non-distributable reserve in the statement of changes in equity and excluded from the calculation of distributable earnings.

Letting commissions are capitalised and amortised over the lease period. The carrying value of letting commissions is included in investment property.

All properties are valued by the directors of Synergy. External, independent valuation companies, having appropriate recognised professional qualifications and recent experience in the location and category of property being valued, values in excess of one-third of Synergy’s investment property portfolio every year (in line with JSE requirements). Any differences between the external valuations and the directors’ valuations are reported in the notes to the annual financial statements. The valuations are done on an open-market basis with consideration to the estimated cash flows expected to be received from renting out the property and an appropriate discount and capitalisation rate that reflects the specific risks inherent in the net cash flows per property. The fair values are based on market values, being the estimated amount for which the property could be exchanged in an orderly transaction between market participants at the measurement date after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

Valuations reflect, when appropriate, the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting vacant occupation, and the market’s general perception of their creditworthiness, the allocation of maintenance and insurance responsibilities between Synergy and the lessee, and the remaining economic life of the property.

1.4 Borrowing costs

Borrowing costs are capitalised to the extent that they are directly attributable to the acquisition, construction or production of a qualifying asset. Capitalisation of borrowing costs commences when the activities necessary to prepare the asset for its intended use are in progress and expenditures and borrowing costs are being incurred. Capitalisation of borrowing costs continues until the assets are substantially ready for their intended use. The capitalisation rate is arrived at by reference to the actual rate payable on borrowings for development purposes, net of any investment income earned on the temporary investment of those borrowings, or, with regard to that part of development cost financed out of general funds, the weighted average cost of borrowings. No borrowing costs have been capitalised during the year.

1.5 Financial instruments

Classification

Synergy classifies financial assets and financial liabilities into the following categories:

Loans and receivables

Financial liabilities measured at amortised cost

Derivative financial instruments.

Classification depends on the purpose for which the financial instruments were obtained or incurred and takes place at initial recognition. Classification is reassessed on an annual basis, except for derivatives and financial assets designated as at fair value through profit or loss, which shall not be classified out of the fair value through profit or loss category.

Initial recognition and measurement

Financial instruments are recognised initially when Synergy becomes a party to the contractual provisions of the instruments.

105

Synergy classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

For financial instruments which are not at fair value through profit or loss, transaction costs are included in the initial measurement of the instrument.

Derecognition

Financial assets are derecognised when the rights to receive cash flows from the investment have expired or have been transferred and Synergy has transferred substantially all risks and rewards of ownership.

Synergy derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

Impairment of financial assets

At each reporting date Synergy assesses all financial assets, other than those at fair value through profit or loss, to determine whether there is objective evidence that a financial asset or group of financial assets have been impaired.

For amounts due to Synergy, significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy and default of payments are all considered indicators of impairment.

Impairment losses are recognised in profit or loss. Impairment losses are reversed when an increase in the financial asset’s recoverable amount can be related objectively to an event occurring after the impairment was recognised, subject to the restriction that the carrying amount of the financial asset at the date that the impairment is reversed shall not exceed what the carrying amount would have been had the impairment not been recognised.

Reversals of impairment losses are recognised in profit or loss except for equity instruments classified as available for sale.

Trade and other receivables

Trade receivables are measured at initial recognition at fair value, and are subsequently measured at amortised cost using the effective interest method. Appropriate allowances for estimated irrecoverable amounts are recognised in profit or loss when there is objective evidence that the asset is impaired. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in profit or loss within operating expenses. When a trade receivable is uncollectable, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited against operating expenses in profit or loss.

Trade and other receivables are classified as loans and receivables.

Trade and other payables

Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method.

Derivative financial instruments

Derivative financial instruments are accounted for at fair value through profit or loss except for derivatives designated as hedging instruments in cash flow hedge relationships, which require a specific accounting treatment. Synergy does not hold or use derivative financial instruments for trading purposes. To qualify for hedge accounting, the hedging relationship must meet several strict conditions with respect to documentation, probability of occurrence of the hedged transaction and hedge effectiveness.

For the reporting periods under review, Synergy has designated certain interest rate swap contracts as hedging instruments in cash flow hedge relationships. These arrangements have been entered into to mitigate interest rate risk arising from Synergy’s borrowings incurred.

All derivative financial instruments used for hedge accounting are recognised initially at fair value and reported subsequently at fair value in the statement of financial position.

To the extent that the hedge is effective, changes in the fair value of derivatives designated as hedging instruments in cash flow hedges are recognised in other comprehensive income and included within the cash flow hedge reserve in equity. Any ineffectiveness in the hedge relationship is recognised immediately in profit or loss.

106

At the time the hedged item affects profit or loss, any gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss and presented as a reclassification adjustment within other comprehensive income. However, if a non-financial asset or liability is recognised as a result of the hedged transaction, the gains and losses previously recognised in other comprehensive income are included in the initial measurement of the hedged item.

If a forecast transaction is no longer expected to occur, any related gain or loss recognised in other comprehensive income is transferred immediately to profit or loss. If the hedging relationship ceases to meet the effectiveness conditions, hedge accounting is discontinued and the related gain or loss is held in the equity reserve until the forecast transaction occurs.

Other non-derivative financial instruments

Other non-derivative financial assets are measured at amortised cost using the effective interest method, less any impairment losses. Other non-derivative financial liabilities are measured at amortised cost using the effective interest method.

Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. These are initially measured at fair value and subsequently recorded at amortised cost.

Bank overdraft and other financial liabilities

Bank overdrafts and other financial liabilities are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with Synergy’s accounting policy for borrowing costs.

Offset

Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position when Synergy has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

1.6 Tax

Current tax assets and liabilities

Current tax for current and prior periods is, to the extent unpaid, recognised as a liability. If the amount already paid in respect of current and prior periods exceeds the amount due for those periods, the excess is recognised as an asset.

Current tax liabilities (assets) for the current and prior periods are measured at the amount expected to be paid to (recovered from) the tax authorities, using the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities

A deferred tax liability is recognised for all taxable temporary differences, except to the extent that the deferred tax liability arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction, affects neither accounting profit nor taxable profit/loss.

A deferred tax asset is recognised for all deductible temporary differences to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilised. A deferred tax asset is not recognised when it arises from the initial recognition of an asset or liability in a transaction which at the time of the transaction affects neither accounting profit nor taxable profit/loss.

A deferred tax asset is recognised for the carry forward of unused tax losses to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Tax expenses

Current and deferred taxes are recognised as income or an expense and included in profit or loss for the period, except to the extent that the tax arises from:

• a transaction or event which is recognised, in the same or a different period, to other comprehensive income, or• a business combination.

107

Current tax and deferred taxes are charged or credited to other comprehensive income if the tax relates to items that are credited or charged, in the same or a different period, to other comprehensive income.

Current tax and deferred taxes are charged or credited directly to equity if the tax relates to items that are credited or charged, in the same or a different period, directly in equity.

1.7 Impairment of assets

Synergy assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exists, Synergy estimates the recoverable amount of the asset.

An impairment loss of assets carried at cost less any accumulated depreciation or amortisation is recognised immediately in profit or loss. Any impairment loss of a revalued asset is treated as a revaluation decrease.

Synergy assesses at each reporting date whether there is any indication that an impairment loss recognised in prior periods for assets other than goodwill may no longer exist or may have decreased. If any such indication exists, the recoverable amounts of those assets are estimated.

The carrying amount of an asset, other than goodwill, attributable to a reversal of an impairment loss shall be increased to the recoverable amount, provided that such recoverable amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in prior periods.

A reversal of an impairment loss of assets carried at cost less accumulated depreciation or amortisation other than goodwill is recognised immediately in profit or loss. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase.

1.8 Stated capital and equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Ordinary shares are classified as equity.

1.9 Revenue

Revenue includes operating lease rental income and recovery of expenses from investment properties excluding value added tax. Rental income under operating leases is recognised in profit and loss on a straight-line basis over the term of the lease.

Lease incentives granted are recognised as an integral part of the rental income over the lease period. Interest is recognised in profit or loss using the effective interest rate method.

1.10 Segmental reporting

Synergy identifies and presents operating segments based on the information that is provided internally to the board via its asset manager. The board reviews the performance of its investment properties held by Synergy on an individual basis. Synergy’s directors have approved the operating segments reflected in the financial statements presented.

The measurement policies Synergy uses for segment reporting under IFRS 8 are the same as those used in its financial statements, except that the following item is not included in arriving at operating profit of the operating segments:

• Administration costs.

2. FINANCIAL RISK MANAGEMENT

Synergy has exposure to the following risks from its use of financial instruments:

• Credit risk• Liquidity risk• Market risk.

This note represents information about Synergy’s exposure to each of the above risks, Synergy’s objectives, policies and processes for measuring and managing risk, and its management of capital. Further quantitative disclosures are included throughout these financial statements.

The board of directors has overall responsibility for the establishment and oversight of Synergy’s risk management framework. The board has delegated the responsibility for developing and monitoring Synergy’s risk management policies to the executive directors. The executive directors report to the board of directors on their activities. Synergy’s audit and risk committee oversees how the executive directors monitor compliance with Synergy’s risk management policies and reviews the adequacy of the risk management framework in relation to the risks faced by Synergy.

108

Synergy’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and procedures are reviewed regularly to reflect changes in market conditions and Synergy’s activities.

2.1 Credit risk

Credit risk is the risk of financial loss to Synergy if a tenant or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from Synergy’s trade and other receivables and cash and cash equivalents.

Trade and other receivables

Trade and other receivables relate mainly to Synergy’s tenants and deposits with municipalities.

Synergy’s exposure to credit risk is influenced mainly by the individual characteristics of each tenant. Synergy’s widespread tenant base and high national tenant ratio reduces credit risk.

Management has established a credit policy under which each new tenant is analysed individually for creditworthiness before Synergy’s standard payment terms and conditions are offered which include, in the majority of cases, the provision of a deposit of at least one month’s rental. When available, Synergy’s review includes external ratings.

Investments, cash and cash equivalents

Synergy limits its exposure to credit risk by only placing funds with reputable financial institutions for investing and cash handling purposes.

2.2 Liquidity risk

Liquidity risk is the risk that Synergy will not be able to meet its financial obligations as they fall due. Synergy’s approach to managing liquidity is to ensure, as far as possible, that it always has sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to its reputation.

Synergy monitors cash flow requirements taking account of rentals receivable on a monthly basis. Typically Synergy ensures that it has sufficient cash on demand to meet expected operational expenses, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In addition Synergy has negotiated certain lines of credit with financial institutions, refer note 8.

2.3 Market risk

Market risk is the risk that changes in market prices, such as interest rates, will affect Synergy’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate risk

Synergy is mainly exposed to interest rate risk and adopts a policy of ensuring that an appropriate amount of its exposure to changes in interest rates on borrowings is on a fixed rate basis. This is achieved by entering into interest rate swaps as hedges of the variability in cash flows attributable to interest rate risk. All such transactions are carried out within the guidelines set by the board of directors.

Currency risk

Synergy has no exposure to currency risk.

2.4 Fair values

A number of Synergy’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

Trade and other receivables

The fair value of trade and other receivables is estimated at present value of future cash flows, discounted at the market rate of interest at the reporting date.

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Derivatives

The fair value of interest rate swaps is based on broker quotes. This is the estimated amount that Synergy would receive or pay to terminate the swap at the reporting date, taking into account current interest rates and the current creditworthiness of the counterparties.

Non-derivative financial liabilities

Fair value, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.

2.5 Fair value measurement of non-financial assets (investment properties)

Synergy’s property portfolio has been valued at R2.442 billion as at 31 March 2016 (2015: R2.422 billion).The portfolio was valued by the directors. In total seven of the 15 investment properties (47% of the portfolio by number, and 58% by portfolio value), were also independently valued at 31 March 2016 by Knight Frank (Pty) Ltd (Knight Frank) and Quadrant Properties (Pty) Ltd (Quadrant) (professional valuers registered with the South African Institute of Valuers) with consideration to the future earnings potential and an appropriate discount and capitalisation rate for each property to evaluate the directors’ valuations.

The external valuations performed by Knight Frank and Quadrant are in line with the directors’ valuations of the same properties.

The fair value measurement for investment property of R2.442 billion (2015: R2.422 billion) has been categorised as a recurring level 3 fair value in terms of the fair value hierarchy based on the inputs to the valuation technique used. The fair value of all investment property determined is supported by market evidence.

All properties are valued under the discounted cash flow (DCF) method, which capitalises the estimated rental income stream, net of projected operating costs, using a discount rate derived from market yields. The estimated rental stream takes into account current occupancy levels, estimates of future vacancy levels, the terms of in-place leases and expectations of rentals from future leases over the remaining economic life of the buildings.

Under the DCF method, the property’s fair value is estimated using explicit assumptions about the benefits and liabilities of ownership over the asset’s life including the exit or terminal value.

The most significant inputs, all of which are unobservable, are the estimated rental value, assumptions regarding vacancy levels, the discount rate and the reversionary capitalisation rate. The estimated fair value increases if the estimated rental increases, vacancy levels decline or if discount rate (market yields) and reversionary capitalisation rate decline. The overall valuations are sensitive to all four assumptions. Management considers the range of reasonable possible alternative assumptions is greatest for reversionary capitalisation rate rental values and vacancy levels and that there is also an interrelationship between these inputs.

The following table reflects the levels within the hierarchy of non-financial assets measured at fair value at 31 March 2016:

2016Level 3

R000

2015Level 3

R000

2014Level 3

R000

Investment properties 2 441 574 2 421 900 2 422 100

The range of discount rates and reversionary capitalisation rates applied to the portfolio are between 13.3% and 16.3% (2015: 13.2% and 14.9%), and between 8.3% and 11.6% (2015: 8.2% and 9.9%) respectively, depending on the risk profile of each portfolio asset.

Sensitivity analysis

The effect on the fair value of the portfolio of a 1% increase in the discount rate would result in a decrease in the fair value of R251.9 million (10.3%) (2015: R256.5 million (11.8%) the average discount rate on the portfolio would increase from 14.0% to 15.0% (2015: 13.7% to 14.7%) and the average exit capitalisation rate would increase from 9.4% to 10.4% (2015: 8.8% to 9.8%) due to the interlinked nature of the rates.

The effect on the fair value of the portfolio of a 1% increase in the long-term vacancy rate would result in a decrease in the fair value of R29.2 million (1.2%) (2015: R45 million (1.9%)). The analysis has been prepared on the assumption that all other variables remain constant.

The sensitivity information presented above represents a 12-month period ended 31 March 2016, compared to prior period information, representing a nine-month period ended 31 March 2015.

110

201612 months

R000

20159 months

R000

201412 months

R000

3. INVESTMENT PROPERTIES AND RELATED RECEIVABLES

Stated at fair valueProperty acquisitions and development cost 1 956 741 1 935 441 1 905 460Capital expenditure and tenant installation 399 165 456 864 490 741Lease commissions 15 696 11 468 7 266

Fair value 2 371 602 2 403 773 2 403 467Straight-line rental income adjustment 69 972 18 127 18 633

Balance at the end of the year/period 2 441 574 2 421 900 2 422 100

3.1 Details of investment propertiesInvestment properties include commercial property in South Africa which are owned to earn rentals and for capital appreciation. Note 2.5 sets out how the fair value of investment properties has been determined. The group’s properties are mortgaged to the value of R0.98 billion as security for bank debt incurred (2015: R0.97 billion) – Refer note 8.

3.2 Movement in investment properties for the year/period 2 421 900

Investment properties opening balance – 2 422 100 1 877 074Capital expenditure and tenant installations 21 300 –– Additions – 29 981 345 417– Acquisitions 21 300 6 000 339 395Revamping, Tenant installations and other capital expenses 51 845 23 981 6 021Increase/(decrease) in straight-lining receivable 4 228 (505) 560Increase in deferred lease incentive expense (57 699) 4 202 9 027Movement in fair value adjustment (5 854) (33 878) –– Fair value adjustment (51 845) (34 383) 195 022– Straight-line adjustment 505

Investment properties closing balance 2 441 574 2 421 900 2 422 100

Operating lease rentalsNon-cancellable operating rentals are receivable as follows:Less than one year 215 522 225 241 212 111Between one and five years 421 010 479 722 473 624More than five years 55 939 64 008 53 232

3.3 Straight-line rental income adjustmentBalance at the beginning of the year/period 18 127 18 632 18 072

Current year/period movement 51 845 (505) 560

Balance at the end of the year/period 69 972 18 127 18 632

111

201612 months

R000

20159 months

R000

201412 months

R000

4. DEFERRED TAXBalance at the beginning of the year/period 282 85 379 Movement in profit or loss 61 197 (294)Balance at the end of the year/period 343 282 85ComprisingFair value of interest rate swaps – 282 85Deferred tax asset arising – prior tax losses 895 – –Allowance for future expenditure (646) – –Income received in advance 1 514 – –Prepayments (2 518) – –Provision for doubtful debts 1 098 – –

Net deferred tax asset 343 282 85

5. TRADE AND OTHER RECEIVABLESGross rental receivables 13 697 8 780 8 344Allowance for impairment of receivables (5 232) (4 455) (3 490)Deposits 2 676 2 468 2 149Other receivables 16 157 14 829 14 321

27 298 21 622 21 324

Further information on receivables is set out in note 18.4.3 Financial instruments – all amounts are short term. The net carrying value of trade and other receivables is considered a reasonable approximation of fair value.

201612 months

R000

20159 months

R000

201412 months

R000

6. CASH AND CASH EQUIVALENTSCash on call* 14 321 3 894 3 194Current account including petty cash 11 295 2 126 1 028

25 616 6 020 4 222* The cash on call balance is restricted by various guarantees held by the municipalities that govern the districts where Synergy’s properties are located. The municipal guarantees are limited to an amount of R2.1 million (2015: R2.1 million).

112

201612 months

R000

20159 months

R000

201412 months

R000

7. STATED CAPITALAuthorised1 000 000 000 A ordinary no par value shares2 000 000 000 B ordinary no par value sharesIssued47 352 203 (2015: 47 352 203) A shares at R0.01 474 474 473106 352 670 (2015: 106 352 670) B shares at R0.01 1 063 1 063 1 063Capital conversion of debentures to stated capital net of costs of conversion of debentures^ 951 873 – –

953 410 1 537 1 537^ Following the capital conversion process adopted at the general meeting of the company held on 22 June 2015, the A and B linked units in existence at 31 March 2015 were converted from a linked unit capital structure to a share-only capital structure at a cost of R1.1 million, in order to align the capital structure of the company with global best practice for REITs. The A and B units were delinked, and the debenture capital capitalised to stated capital, such that the capital structure of the company comprises only A ordinary shares and B ordinary shares from that date forward.

Total number of shares in issue at 31 March 153 704 873 153 704 873 153 704 873A shares 47 352 203 47 352 203 47 352 203B shares 106 352 670 106 352 670 106 352 670Net asset value per combined share/linked unit (cents) 952 920 943

Net asset value per A share/linked unit (cents)^ 1 169 1 193 1 099Net asset value per B share/linked unit (cents) 855 798 873Fair value per share/linked unit represented by the market price at 31 March (cents)Fair value of A share/linked unit 1 180 1 210 1 100Fair value of B share/linked unit 700 750 745^ Calculated based on the 60-day volume weighted average trading price at 31 March 2016 limited to combined net asset value in accordance with the

provisions of Synergy’s Memorandum of Incorporation.

113

Interest rate%

Expiry date ofinterest rate

2016R000

2015R000

2014R000

8. BORROWINGSTotal financial liabilities 976 016 968 658 909 044Non-current financial liabilities 977 190 970 578 910 878Loan raising costs (1 174) (1 920) (1 834)Financial liabilities consist of the following:8.1 Nedbank Limited (Nedbank)

amounts included in non-current liabilities 435 690 438 477 438 363amounts included in current liabilities – – –

Nedbank facilities and loan balances consist of the following:

Nedbank facility A (expiry June 2017)

variable portion Prime less

150 bps June 2017 125 008 126 514 126 377fixed portion in terms of swap (Nedbank) 7.08% June 2017 60 000 60 000 60 000fixed portion in terms of swap (Nedbank) 7.65% June 2017 50 000 50 000 50 000

235 008 236 514 236 377

Interest is paid on a monthly basis with full capital amount payable at the end of the 60-month term of the loan.

The above facility is secured by mortgage bonds over the following properties with a carrying value of R594.2 million (2015: R533.4 million):

Erf 114 Ulundi BA and Remainder of Erf 493 Ulundi BAErf 12050 PhuthaditjhabaErf 1077 Phuthaditjhaba-BErf 291 Phuthaditjhaba-DNedbank facility B (expiry October 2018)

variable portion Prime less

150 bps October 2018 110 682 201 963 201 987fixed portion in terms of swap (Nedbank) 10.49% February 2019 40 000 – –fixed portion in terms of swap (Nedbank) 9.92% February 2019 50 000 – –

200 682 201 963 201 987

The total facility is R201.0 million (2015: R201.0 million).

Interest is paid on a monthly basis with full capital amount payable at the end of the 60-month term of the loan.

The above facility is secured by mortgage bonds over the following properties with a carrying value of R279.0 million (2015: R310.0 million):

Erf 6192 Wesfleur Atlantis

Erf 15634 Wesfleur Atlantis

114

Interest rate%

Expiry date ofinterest rate

2016R000

2015R000

2014R000

8.2 Standard Bank of South Africa Limited (Standard Bank)amounts included in non-current liabilities 276 500 265 163 205 578amounts included in current liabilities – – –Standard Bank facilities and loan balances consist of the following:Standard Bank facility A (expiry September 2019)

variable portion Aprime less

110 bpsSeptember

2019 37 500 76 163 66 578

variable portion B

three-monthJibar plus

235 bpsSeptember

2019 19 000 19 000 19 000fixed portion in terms of swap (Standard Bank) 10.20% June 2017 80 000 80 000 80 000fixed portion in terms of swap (Standard Bank) 8.88% June 2016 40 000 40 000 40 000fixed portion in terms of swap (Standard Bank) 10.99%

September2020 50 000 – –

226 500 215 163

The total facility is R245.0 million (2015: R245.0 million).Interest is paid on a monthly basis with full capital amount payable at the end of the 60-month term of the loan.Standard Bank facility B (expiry September 2017)

variable portion prime less

160 bpsSeptember

2017 10 000 50 000 201 987fixed portion in terms of swap (Standard Bank) 10.76% July 2019 40 000 – –

50 000 50 000 201 987

The total facility is R50.0 million (2015: R50.0 million).Interest is paid on a monthly basis with full capital amount payable at the end of the 60-month term of the loan.The above A and B facilities are secured by mortgage bonds over the following properties with a carrying value of R622.1 million (2015: R624.0 million):Erf 817 Melodie Extension 22 TownshipErven 18 – 25, 51 – 52 and 695 all of KwaMashu PlazaNotarially tied Erf 103 Amarosa Extension 6 Township and Portion 497 of the Farm WilgespruitPortion 48 (a portion of Portion 6), erven 431, 450, 524 and all of the Farm Albinia No 957Erf 3 Hubyeni TownshipErf 15288 Newcastle

115

Interest rate%

Expiry date ofinterest rate

2016R000

2015R000

2014R000

8.3 FirstRand Bank Limited (RMB)amounts included in non-current liabilities 265 000 266 938 266 937amounts included in current liabilities – – –

RMB facilities and loan balances consist of the following:RMB facility (expiry May 2017)

variable portion

one-month Jibar plus

230 bps May 2017 28 295 30 233 30 732fixed portion (RMB) 9.14% May 2017 90 000 90 000 90 000fixed portion (RMB) 8.36% May 2017 146 705 146 705 146 705

265 000 266 938 266 937

The total facility is R265.0 million (2015: R265.0 million).

Interest is paid on a monthly basis with full capital amount payable at the end of the 60-month term of the loan.

The above facility is secured by mortgage bonds over the following properties with a carrying value of R814.7 million (2015: R777.8 million):

Erf 410 Hammanskraal Extension 1

Erf 1522 Del Judor Extension 16 Township

Erf 4486 Gugulethu

Erf 4489 Gugulethu

Remainder of Erf 4483 Gugulethu

The above financing facilities are at market-related terms.

2016 R000

2015 R000

2014 R000

9. DERIVATIVE FINANCIAL INSTRUMENTSAssetsInterest rate swaps – fair value hedges 763 – –Total 763 – –Less: Non-current portionInterest rate swaps – fair value hedges 622 – –

622 – –Current portion 141 – –LiabilitiesInterest rate swaps – fair value hedges 938 1 009 304Total 938 1 009 304Less: Non-current portionInterest rate swaps – fair value hedges 938 926 440

938 926

Current portion – 83 (136)

The ineffective gain recognised in profit or loss that arises from cash flow hedge amounts to R0.2 million (2015: Rnil).

The notional outstanding interest rate swap contracts at 31 March 2016 amount to R646.7 million (2015: R506.7 million).

As at 31 March 2016 the fixed interest rates vary from 7.65% to 10.99% and the main floating rates are three-month Jibar and prime.

116

2016 R000

2015 R000

2014 R000

10. TRADE AND OTHER PAYABLESTrade creditors 4 951 4 301 3 138Rental received in advance 6 161 6 550 5 206Interest payable accrual 2 437 –Operating expense accruals 26 846 16 457 17 264VAT payable 2 811 1 833Tenant deposits 12 077 12 147 10 607

55 283 41 288 36 217

11. PROFIT/(LOSS) BEFORE TAXATION IS STATED AFTER RECOGNISINGAudit fee (38) (375) (308)– Current year (398) (375) (308)– Overprovision in prior year 360 – –Direct operating expenses arising from investment property that generated rental income during the year– Municipal services and recoupments (94 166) (60 787) –– Repairs and maintenance (6 165) (3 202) –– Property administration fees (23 176) (10 960) –– Labour intensive services (18 593) (13 064) (13 743)Impairment loss relating to tenants and related receivables (1 529) (1 399)– bad debts provided for (777) (965) (802)– bad debts written off (752) (434) (2 210)

12. FINANCE INCOMEInterest received on bank balances outstanding 1 209 481 621Interest on debtors 419 434 318

1 628 915 939

13. FINANCE COSTSInterest paid on loans 83 955 57 668 67 993 Occupational interest paid – 483 4 169Amortisation of loan raising costs 754 556 594Other interest paid 199 54 -

84 908 58 761 72 757

14. TAXATIONSouth African normal income tax (61) (197) 294 – income tax – – –– capital gains tax – – –– deferred tax income (61) (197)Reconciliation of tax rate % % %Effective tax rate (0.06) 0.55 0.15Permanent differences – fair value adjustments (3.57) (33.19) 27.76REIT dividend 29.67 59.68Prior year under provided 0.49 – -Items not deductible for tax purposes 1.53 0.56 (0.08)Non-taxable income (0.06) 0.40 0.08

Standard tax rate 28.00 28.00 28.00

117

The charge relating to components of other comprehensive income is as follows:

Before tax R000

Tax charge R000

After tax R000

Movement of the fair value on derivative financial instruments 834 – 834– Effective portion of the fair value on derivative financial instruments 609 – 609– Ineffective gain of the fair value on derivative financial instruments 225 – 225

Other comprehensive income 834 – 834

2016 R000

2015 R000

2014 R000

15. BASIC AND DILUTED EARNINGS/(LOSS) PER SHARE/LINKED UNIT15.1 Basic and diluted earnings/(loss) per combined share/linked unit

Basic and diluted earnings/(loss) per combined share/linked unit (cents) 69.75 (23.17) 127.79The calculation of the basic and diluted earnings/(loss) per share/linked unit is based on the weighted average number of 153 704 873 (2015: 153 704 873) shares/linked units in issue during the year/period and a profit of R107,2 million (2015: loss of R35,6 million).

15.2 Headline earnings/(loss)The calculation of the headline earnings/(loss) per share/linked unit is based on a weighted average of 153 704 873 (2015: 153 704 873) shares/linked units in issue during the year/period and the headline earnings/(loss) is calculated as follows:Profit/(loss) for the year/period 107 216 (35 615) 196 423 Fair value adjustments to investment properties 57 699 33 877 (195 022)

Headline earnings/(loss) 164 915 (1 738) 1 401 Interest paid to debenture holders – 76 332 102 322

Headline earnings – combined share/linked unit 164 915 74 594 103 724

Headline earnings/(loss) per combined share/linked unit (cents) 107.29 (1.13) 0.91Headline earnings per A share/linked unit (cents) 107.29 66.53 87.70Headline earnings per B share/linked unit (cents) 107.29 40.52 58.48

15.3 Distributable earningsHeadline earnings to shareholders/linked shareholders 164 915 74 594 103 724Amortisation of loan raising costs 754 556 594 Straight-line rental income accrual (51 845) 505 (560)Other capital items – 169Deferred tax (61) – –Ineffective gain on fair value of derivative financial instruments (225) – –Changes in fair value of swaps (net of deferred taxation) – 508 (1 436)Changes in fair value of swaps – 705 (1 731)Deferred taxation – (197) 294

Distributable earnings 113 538 76 332 102 322

118

2016 R000

2015 R000

2014 R000

16. NOTES TO THE STATEMENT OF CASH FLOWS16.1 Cash generated from operations

Profit before taxation 107 155 (35 812) 196 718Adjusted for:Finance income (1 628) (915) (939)Finance costs 84 908 135 093 175 079Debenture interest – 76 332 102 322Other interest 72 757Borrowing costs 84 908 58 761Straight-lining of operating leases (51 845) 505 (560)Fair value adjustment to investment properties 57 699 33 877 (195 022)Derivative financial instruments matured during the year 83 – –Ineffective fair value gain on derivative financial instruments (225) – –Fair value adjustment in respect of swaps – 705 (1 731)

196 147 133 453 173 545

Changes in working capital net of assets acquired 8 319 4 775 6 182Increase in trade and other receivables (5 676) (297) 2 665Increase in trade and other payables 13 995 5 072 3 516

Cash generated from operations 204 466 138 228 179 727

16.2 Interest paidInterest charge per statement of profit or loss and other comprehensive income 84 908 58 761 175 079Less: Amortisation of loan raising costs (754) (556) (596)Debenture interest paid 25 307 104 015 (4 618)

Total interest paid 109 461 162 220 169 866

16.3 Dividends paidDividends paid 56 932 – –

Total dividends paid 56 932 – –

Total interest and dividends paid 166 393 162 220 –

119

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17.4

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9 15

.5

7.4

971

June

201

220

9.6

Cor

ner H

ans

Stry

dom

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e an

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man

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Renb

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13 3

0815

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3.2

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11

.111

31

June

201

214

7.6

Old

War

mba

ths

Road

, Ham

man

skra

al

Hill

cres

t Ric

hden

s Sh

oppi

ng C

entre

Kw

aZul

u-N

atal

10 1

9612

.9

3.4

9.5

5.7

122

24 M

ay 2

012

121.

6 59

– 6

1 O

ld M

ain

Road

, Hill

cres

t

Har

tbee

spoo

rt S

edib

a Sh

oppi

ng C

entre

N

orth

Wes

t10

887

11.6

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2 8.

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67

Oct

ober

201

111

9.8

Die

Ou

Wap

ad,

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tbee

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rt

120

Prop

erty

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ince

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(m

²)Re

venu

e (R

m)

Prop

erty

op

erat

ing

costs

(Rm

)

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op

erat

ing

inco

me*

(R

m)

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il va

canc

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fect

ive

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rt R

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ping

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7711

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9.7

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9522

Dec

embe

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111

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ner D

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n an

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lm R

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al11

204

13.2

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8.9

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105

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ctob

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106.

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oad

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8612

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528 

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an

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f Sh

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Cap

e5

181

6.9

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110

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r Koe

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aire

and

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, W

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oppi

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9 5.

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06

Dec

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r 201

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e

Mak

hado

Nzh

elel

e Va

lley

Shop

ping

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entre

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popo

5 30

86.

1 1.

2 4.

9 0.

095

1 Ju

ne 2

012

51.2

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orne

r Mai

n Ro

ad

and

R52

3, D

zana

ni

Erm

elo

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e C

entre

M

pum

alan

ga6

639

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1.4

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15.7

821

June

201

240

.5

Cor

ner D

e Em

igra

tie

Road

and

Vo

ortre

kker

Ave

nue,

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mel

o

19

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199.

34.

511

0

2 44

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ope

ratin

g in

com

e is

show

n ne

t of i

nter

est.

# Bas

e re

nt e

xclu

ding

reco

verie

s.

A m

ajor

reve

nue

prov

ider

for S

yner

gy is

Spa

r Gro

up L

imite

d, a

ccou

ntin

g fo

r 19.

1% (2

015:

17.

11%

) of S

yner

gy’s

reve

nue.

Reve

nue

attr

ibut

able

to th

e Sp

ar G

roup

Lim

ited

in th

e pe

riod

ende

d 31

Mar

ch 2

016

is R

37.2

mill

ion

(201

5: R

41.3

mill

ion)

.

121

Prop

erty

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ince

GLA

(m

²)Re

venu

e (R

m)

Prop

erty

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erat

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Net

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me*

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fect

ive

date

of

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Valu

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n (R

m)

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ess

Gug

ulet

hu S

quar

e Sh

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tern

Cap

e 2

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20.

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730

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ust 2

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ve B

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et, N

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ogo

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Cap

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51

Sept

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treFr

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21

538

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0 8

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623

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ust 2

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298

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ai a

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loun

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0 5

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610

31

June

201

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ro S

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13

308

17.

7 8

.09.

712

.011

31

June

201

2 1

67.8

Old

War

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ths

Road

, Ham

man

skra

al

Hub

yeni

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ppin

g C

entre

Lim

popo

12

685

11.8

4.9

6.9

0.7

871

June

201

2 1

10.0

Cor

ner R

578

and

R52

8, E

lim

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ashu

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ppin

g C

entre

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ulu-

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al 1

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4 1

2.6

6.4

6.2

6.1

102

25 O

ctob

er 2

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107

.230

0 M

alan

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treG

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ng11

178

13

.2 6

.2 7

.04.

799

22 D

ecem

ber 2

011

117

.5

Cor

ner D

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n an

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alco

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treN

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114

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122

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apad

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Prop

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m)

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269

1

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8.6

127

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012

113

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ld M

ain

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t

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elo

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e Sh

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ng C

entre

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mal

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6

639

4

.6 2

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58.

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308

5

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181

7

.4 3

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010

81

June

201

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2.5

Cor

ner K

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re a

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f Roa

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entre

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aZul

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atal

5 0

06

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114

6 D

ecem

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53.

4C

orne

r Alle

n an

d K

irkla

nd S

treet

s, N

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199

996

2

41.3

93.

7 1

47.6

110

2 4

22.0

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ope

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g in

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e is

show

n ne

t of i

nter

est

123

18.

FIN

AN

CIA

L IN

STR

UM

EN

TS

Expo

sure

to m

arke

t, cr

edit

and

liqui

dity

risk

s ar

ise in

the

nor

mal

cou

rse

of t

he c

ompa

ny’s

busin

ess.

Der

ivat

ive

finan

cial

inst

rum

ents

are

use

d as

and

whe

n re

quire

d to

hed

ge

expo

sure

to fl

uctu

atio

ns in

inte

rest

rate

s.

18.1

M

arke

t ris

k

18.1

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Inte

rest

rat

e ri

sk

The

com

pany

ado

pts a

pol

icy

of e

nsur

ing

that

an

appr

opria

te a

mou

nt o

f its

exp

osur

e to

cha

nges

in in

tere

st r

ates

on

borr

owin

gs is

on

a fix

ed b

asis.

Int

eres

t rat

e sw

aps h

ave

been

ent

ered

into

to a

chie

ve a

n ap

prop

riate

mix

of f

ixed

and

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ting

rate

exp

osur

e. A

t the

repo

rtin

g da

te, t

he c

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ny h

ad e

nter

ed in

to th

e fo

llow

ing

inte

rest

rate

swap

s with

resp

ect t

o th

e fo

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ing

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litie

s:

Mat

urity

Fixe

d ra

te

%

Fair

val

ue

at 3

1 M

arch

20

16

R00

0

Fair

valu

e at

31

Mar

ch

2015

R

000

Fair

valu

e at

30

June

20

14

R00

0

Ass

etN

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nk fa

cilit

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swap

(Ned

bank

)4

July

201

66.

59 8

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-

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ap (N

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nk)

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ne 2

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529

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k fa

cilit

y–

swap

(Sta

ndar

d Ba

nk)

30 Ju

ne 2

016

9.15

59

–

––

swap

(Sta

ndar

d Ba

nk)

30 S

epte

mbe

r 201

910

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331

–

–Fa

ir v

alue

ass

et

76

3 –

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nts i

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ded

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on-c

urre

nt a

sset

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ount

s inc

lude

d in

cur

rent

ass

ets

141

–

Liab

ility

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bank

faci

lity

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ap (N

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nk)

1 Ju

ne 2

015

7.60

– (1

4)(4

1)–

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(Ned

bank

)4

July

201

66.

59–

(91)

(96)

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ap (N

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ne 2

017

7.65

(7)

–

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bank

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Feb

ruar

y 20

1910

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)–

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bank

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Feb

ruar

y 20

199.

915

(226

)–

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anda

rd B

ank

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lity

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ap (S

tand

ard

Bank

)30

June

201

58.

88 –

(6

8)11

3–

swap

(Sta

ndar

d Ba

nk)

30 Ju

ne 2

017

9.50

– (8

35)

327

– sw

ap (S

tand

ard

Bank

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July

201

910

.76

(187

)–

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(Sta

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nk)

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ptem

ber 2

020

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9(4

09)

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val

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ty

(9

38)

(1 0

08)

304

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ount

s inc

lude

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rent

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ilitie

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38)

(926

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nts i

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ded

in c

urre

nt li

abili

ties

– (8

2)(N

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nk):

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inte

rest

rate

on

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hedg

ed th

roug

h N

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nk L

imite

d.(S

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Bank

): T

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tere

st ra

te o

n th

e fa

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y ha

s bee

n he

dged

thro

ugh

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dard

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k of

Sou

th A

frica

Lim

ited.

124

Not

e

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ctiv

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ount

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ths

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tive i

nter

est ra

tes a

nd re

prici

ngAt

the

repo

rtin

g da

te S

yner

gy’s

inte

rest

rate

pro

file 

was

:31

Mar

ch 2

016

Cas

h an

d ca

sh e

quiv

alen

ts–

cash

on

call

66.

2014

286

14 2

86–

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ent a

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63.

5511

330

11 3

30–

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nk fa

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17.

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17.

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110

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k fa

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riabl

e po

rtio

n A

8.2

9.40

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500)

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7 50

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rtio

n B

8.2

9.58

(19

000)

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0)–

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Bank

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28.

88(4

0 00

0)(4

0 00

0)–

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ndar

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nk)

8.2

10.9

9(5

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swap

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nk)

8.2

10.2

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anda

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ank

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ble

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8.2

8.90

(10

000)

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0)–

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ap (S

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ard

Bank

)8.

210

.76

(40

000)

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0 00

0)–

RM

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cilit

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varia

ble

port

ion

8.3

9.33

(28

295)

–(2

8 29

5)–

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ed p

ortio

n (R

MB)

8.3

9.14

(90

000)

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0 00

0)–

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ed p

ortio

n (R

MB)

8.3

8.36

(146

705

)–

(146

705

)–

Deb

entu

res

––

––

–

(951

574

)(1

4 38

4)(8

07 1

90)

(130

000

)

125

Not

e

Effe

ctiv

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tere

st ra

te

%

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ount

R

000

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12

mon

ths

R00

0

1 –

4 ye

ars

R00

0

Mor

e th

an

4 ye

ars

R00

0At

the

repo

rtin

g da

te S

yner

gy’s

inte

rest

rate

pro

file 

was

:31

Mar

ch 2

015

Cas

h an

d ca

sh e

quiv

alen

ts–

cash

on

call

64.

950

3 8

94

3 89

4 –

––

curr

ent a

ccou

nts

63.

750

2 1

26

2 12

6 –

–Fi

nanc

ial l

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litie

sN

edba

nk fa

cilit

y A

– va

riabl

e po

rtio

n8.

17.

750

(126

514

)–

(126

514

)–

– sw

ap (N

edba

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8.1

7.60

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0 00

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(60

000)

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bank

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17.

970

(50

000)

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lity

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ble

port

ion

8.1

7.75

0(2

01 9

63)

–(2

01 9

63)

–St

anda

rd B

ank

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lity

A–

varia

ble

port

ion

A8.

28.

150

(76

163)

––

(76

163)

– va

riabl

e po

rtio

n B

8.2

8.45

0(1

9 00

0)–

–(1

9 00

0)–

swap

(Sta

ndar

d Ba

nk)

8.2

9.50

0(8

0 00

0)–

–(8

0 00

0)–

swap

(Sta

ndar

d Ba

nk)

8.2

8.88

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0 00

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0 00

0)St

anda

rd B

ank

faci

lity

B–

varia

ble

port

ion

8.2

7.65

00(5

0 00

0)–

(50

000)

–R

MB

faci

lity

– va

riabl

e po

rtio

n8.

38.

510

(30

233)

–(3

0 23

3)–

– fix

ed p

ortio

n (R

MB)

8.3

9.14

0(9

0 00

0)–

(90

000)

––

fixed

por

tion

(RM

B)8.

38.

360

(146

705

)–

(146

705

)–

Deb

entu

res

Varia

ble

(952

971

)–

–(9

52 9

71)

(1 9

17 5

30)

6 02

0(7

55 4

15)

(1 1

68 1

35)

126

Not

e

Effe

ctiv

e in

tere

st ra

te

%

Car

ryin

g am

ount

R

000

0 –

12

mon

ths

R00

0

1 –

4 ye

ars

R00

0

Mor

e th

an

4 ye

ars

R00

030

June

201

4C

ash

and

cash

equ

ival

ents

– ca

sh o

n ca

ll6

4.70

03 

194

3 19

4–

––

curr

ent a

ccou

nts

63.

500

1028

1 02

8–

–Fi

nanc

ial l

iabi

litie

sN

edba

nk fa

cilit

y A

– va

riabl

e po

rtio

n8.

17.

500

(126

 377

)–

(126

 377

)–

– sw

ap (N

edba

nk)

8.1

7.90

0(6

0 00

0)–

(60 

000)

––

swap

(Ned

bank

)8.

18.

360

(50 

000)

–(5

0 00

0)–

Ned

bank

faci

lity

B–

varia

ble

port

ion

8.1

7.50

0(2

01 9

87)

–(2

01 9

87)

–St

anda

rd B

ank

faci

lity

A–

varia

ble

port

ion

A8.

28.

200

(66 

578)

–(6

6 57

8)–

– va

riabl

e po

rtio

n B

8.2

8.40

5(1

9 00

0)–

(19 

000)

––

swap

(Sta

ndar

d Ba

nk)

8.2

9.83

0(8

0 00

0)–

(80 

000)

––

swap

(Sta

ndar

d Ba

nk)

8.2

9.21

0(4

0 00

0)–

(40 

0000

)–

RM

B fa

cilit

y–

varia

ble

port

ion

8.3

8.35

6(3

0 23

2)–

(30 

232)

––

fixed

por

tion

(RM

B)8.

39.

440

(90 

000)

–(9

0 00

0)–

– fix

ed p

ortio

n (R

MB)

8.3

8.66

0(1

46 7

05)

–(1

46 7

05)

–D

eben

ture

sVa

riabl

e(9

52 9

71)

––

(952

 971

)

(1 8

59 6

27)

4 22

2(9

10 8

78)

(952

 971

)

127

18.1

.1.2

Se

nsiti

vity

ana

lysis

The

com

pany

has

a m

ixtu

re o

f fix

ed a

nd f

loat

ing

inte

rest-

bear

ing

finan

cial

liab

ilitie

s. T

he e

ffect

on

prof

it or

loss

of a

1%

incr

ease

in in

tere

st ra

tes o

n flo

atin

g ra

te in

tere

st-be

arin

g fin

anci

al li

abili

ties a

t rep

ortin

g da

te, w

ould

be

an in

crea

sed

inte

rest

exp

ense

of R

3.0

mill

ion

(201

5: R

5.0

mill

ion)

. Thi

s is

base

d on

the

float

ing

rate

inte

rest-

bear

ing

liabi

lity

bala

nce

at p

erio

d en

d, a

nd h

as b

een

prep

ared

on

the

assu

mpt

ion

that

all

othe

r var

iabl

es re

mai

n co

nsta

nt, a

nd is

pre

pare

d on

the

sam

e ba

sis a

s tha

t of t

he p

rior p

erio

d.

2016

R

000

2015

R

000

2014

R

000

18.2

C

redi

t ris

k18

.2.1

C

redi

t exp

osur

eT

he c

arry

ing

amou

nt o

f fin

anci

al a

sset

s rep

rese

nts t

he m

axim

um c

redi

t exp

osur

e. T

he m

axim

um e

xpos

ure

to c

redi

t ris

k at

the

repo

rtin

g da

te w

as:

Der

ivat

ive

finan

cial

ass

ets –

fina

ncia

l ins

trum

ents

--

137

Tena

nt an

d re

lated

rece

ivab

les (n

et o

f allo

wan

ce fo

r bad

deb

ts)10

 594

4 32

54 

854

Oth

er re

ceiv

able

s16

 157

15 8

4316

 470

Cas

h an

d ca

sh e

quiv

alen

ts25

 616

6 02

04 

222

52

 367

26

188

25 6

83

18.2

.2

Impa

irm

ent l

osse

sT

he a

gein

g of

tena

nt a

nd re

late

d re

ceiv

able

s pas

t due

but

not

yet

impa

ired

at th

e re

port

ing

date

was

:Pa

st du

e 1

– 30

day

s3 

942

3 50

8 3 

850

Past

due

31 –

60

days

1 51

199

13

0Pa

st du

e 61

– 1

20 d

ays

1 57

356

66

Past

due

> 12

0 da

ys3 

568

662

807

Tota

l 10

 594

4 32

54 

854

The

mov

emen

t in

the

allo

wan

ce fo

r im

pairm

ent i

n re

spec

t of t

enan

t and

rela

ted

rece

ivab

les d

urin

g th

e ye

ar/p

erio

d w

as

as fo

llow

s:Ba

lanc

e at

the

begi

nnin

g of

the

year

/per

iod

(4 4

55)

(3 4

90)

(2 6

88)

Impa

irmen

t los

s rec

ogni

sed

(1 5

29)

(1 3

99)

(3 0

12)

Bad

debt

s writ

ten

off

752

434

2 21

1Ba

lanc

e at

the

end

of th

e ye

ar/p

erio

d (5

232

)(4

455

)(3

490

)

Impa

irmen

t los

ses a

re re

cogn

ised

on a

regu

lar b

asis

afte

r com

preh

ensiv

ely

asse

ssin

g th

e in

divi

dual

circ

umst

ance

s and

cre

dit r

isk o

f the

tena

nt. O

nce

Syne

rgy

is sa

tisfie

d th

at n

o re

cove

ry o

f the

am

ount

ow

ing

is po

ssib

le, t

he a

mou

nt is

con

sider

ed ir

reco

vera

ble a

nd, n

et o

f dep

osits

hel

d, is

writ

ten

off a

gain

st th

e fin

anci

al a

sset

.

Man

agem

ent h

as m

ade a

n as

sess

men

t of t

he d

ebts

nei

ther

pas

t due

nor

impa

ired

and

are s

atisf

ied

with

the c

redi

t qua

lity o

f the

se d

ebto

rs, i

nclu

ding

oth

er re

ceiv

able

s.

128

18.3 Liquidity risk

The following are the contractual maturities of financial liabilities. No interest payments have been included as the amounts involved are dependent on future changes in interest rates.

Carrying value R000

1 – 12 months

R000

1 – 2 years

R000

2 – 5 years

R000

More than 5 years R000

31 March 2016Non-derivative financial liabilitiesFinancial liabilities 977 190 – – 977 190 –Trade and other payables 49 122 49 122 – – –– Trade and other payables as per note 10 55 283 55 283 – – –– Rental received in advance (6 161) (6 161) – – –Derivative financial liabilitiesFinancial instruments 938 – (141) (622) –

31 March 2015Non-derivative financial liabilitiesFinancial liabilities 970 578 – – 970 578 –– Trade and other payables 34 738 34 738 – – –– Trade and other payables as per note 10 41 288 41 288 – – –Rental received in advance (6 550) (6 550) – – –Debentures 952 971 – – – 952 971Debenture interest payable 25 307 25 307 – – –Derivative financial liabilitiesFinancial instruments 1 008 82 91 835 –

30 June 2014Non-derivative financial liabilitiesFinancial liabilities 910 878 – – 910 878 –Trade and other payables 31 010 31 010 – – –– Trade and other payables as per note 10 36 216 36 217 – – –– Rental received in advance (5 208) (5 208) – – –Debentures 952 971 – – – 952 971Derivative financial liabilities – – –Financial instruments 440 440 – – –

Cash flows are monitored on a regular basis to ensure that cash resources are adequate to meet funding requirements.

2016 R000

2015 R000

2014 R000

Permitted borrowings for the company:Value of property portfolio (refer note 3) – – 2 422 100 50% restriction on borrowing per MOI 1 220 787 1 210 950Total financial liabilities 977 190 970 578 (910 878)

Unutilised borrowing capacity 243 597 240 372 35 122

Gearing ratio – loan-to-value (%) 40.3 40.1 37.6

129

18.4 Fair value measurement

18.4.1 Grouping

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly

Level 3: unobservable inputs for the asset or liability.

18.4.2 Fair value hierarchy

The following table presents financial assets and liabilities measured at fair value in the statement of financial position in accordance with the fair value hierarchy.

The level within which the financial asset or liability is classified is determined based on the lowest level of significant input to the fair value measured.

The financial assets and liabilities measured at fair value in the statement of financial position are grouped into the fair value hierarchy as follows:

2016 (R000) 2015 (R000)Level 1 Level 2 Total Level 1 Level 2 Total

AssetsDerivative financial instruments – 763 763 – – –

Total – 763 763 – – –LiabilitiesDerivative financial instruments – (938) (938) – (1 008) (1 008)

Total – (938) (938) – (1 008) (1 008)

Net fair value – (175) (175) – (1 008) (1 008)

There have been no significant transfers between levels 1 and 2 in the reporting period under review. There were no transfers into or out of level 3 in the reporting period under review.

Measurement of fair value

The methods and valuation techniques used for the purpose of measuring fair value are unchanged compared to the previous reporting period.

Derivative financial instruments

The fair values of these swap contracts are determined by Nedbank Limited and Standard Bank of South Africa Limited, using valuation techniques that maximise the use of observable market inputs. Derivatives entered into by Synergy are included in level 2 and consist of interest rate swap contracts.

130

18.4.3 Financial instruments by category

Synergy uses widely recognised valuation models for determining the fair value of common and more simple financial instruments, like interest rate swaps that use only observable market data and require little management judgement and estimation. Observable prices and model inputs are usually available in the market for listed debt and equity instruments, exchange traded derivatives and simple over-the-counter derivatives like interest rate swaps. Availability of observable market prices and model inputs reduces the need for management judgement and estimation and also reduces the uncertainty associated with determination of fair values.

Note 1.5 of Synergy’s accounting policies provides a description of each category of financial assets and financial liabilities and related accounting policies. The carrying amounts of financial assets and financial liabilities in each category are as follows:

Designated at fair value

R000

Loans and receivables

R000

Liabilities at amortised cost

R000

Total carrying amount

R000 Fair value

R000

31 March 2016Trade and other receivables – 27 298 – 27 298 27 298Cash and cash equivalents – 25 616 – 25 616 25 616Interest-bearing borrowings – – (976 016) (976 016) (976 016)Interest rate swaps (level 2) (175) – – (175) (175)Trade and other payables – – (55 283) (55 283) (55 283)

(175) 52 914 (1 031 299) (978 560) (978 560)

Net gain/(loss) per category 834 99 (84 908)

31 March 2015Trade and other receivables – 20 168 – 20 168 20 168Cash and cash equivalents – 6 020 – 6 020 6 020Linked debentures – – (952 971) (952 971) (952 971)Interest-bearing borrowings – – (968 658) (968 658) (968 658)Interest rate swaps (level 2) (1 008) – – (1 008) (1 008)Trade and other payables – – (32 904) (32 904) (32 904)Linked debenture interest payable – – (25 307) (25 307) (25 307)

(1 008) 26 188 (1 979 840) (1 954 660) (1 954 660)

Net (loss) per category (705) (484) (135 093)

2014Trade and other receivables – 21 324 – 21 324 21 324Cash and cash equivalents – 4 222 – 4 222 4 222Linked debentures – – (952 971) (952 971) (952 971)Interest-bearing borrowings – – (909 044) (909 044) (909 044)Interest rate swaps (level 2) 137 – – 137 137Interest rate swaps (level 2) (440) – – (440) (440)Trade and other payables – – (31 010) (31 010) (31 010)Linked debenture interest payable – – (52 990) (52 990) (52 990)

(304) 25 546 (1 946 015) (1 920 772) (1 920 772)

Net gain/(loss) per category 1 731 (2 073) (175 079)

19. RELATED-PARTY TRANSACTIONS19.1 Identity of related parties

Common directorship and shareholding (related entity) – Vukile Asset Management (Pty) LtdDirectors as listed in the directors’ reportShareholder with control – Vukile Property Fund Limited

131

2016R000

2015R000

2014R000

19.2 Related entityVukile Asset Management (Pty) LtdAmount included in trade payables (payable in 30 days) (2 342)Property and asset management fees paid to related entity (23 176)Leasing commission paid to related entity (4 460)Vukile Property Fund LimitedDebenture interest (42 778)Amount included in debenture interest payable (13 867)Dividend paid (46 985)Capital Land Asset Management Proprietary Limited:Amount included in trade payables (payable in 30 days) 2 546 2 503Amount included in trade receivables (receivable in 30 days) –Property and asset management fees paid to related entity 19 273 24 140Acquisition fees paid to related entity 3 350Leasing commission paid to related entity 4 460 3 155Liberty Group Limited:Debenture interest 3 886Amount included in debenture interest payable 2 013Vukile Property Fund Limited:Debenture interest 42 778 30 109Amount included in debenture interest payable 13 867 15 706

Directbeneficial Indirect Total %

19.3 Directors’ and officers’ shareholdings31 March 2016Synergy A sharesSJ Segar 58 706 13 000 71 706 0.15Synergy B sharesSJ Segar 116 428 – 116 428 0.11LG Rapp – – – –GS Moseneke 200 – 200 0.00MJ Potts 19 850 – 19 850 0.02RC Hawton 100 – 100 0.00

Total 195 284 13 000 208 284 0.14

31 March 2015Synergy A sharesSJ Segar 58 706 13 000 71 706 0.15Synergy B sharesSJ Segar 116 428 – 116 428 0.11

Total 175 134 13 000 188 134 0.26

30 June 2014Synergy A linked unitsU Meyer – – – –SJ Segar 58 706 13 000 71 706 0.15Synergy B linked unitsWM Brooks – 300 000 300 000 0.28U Meyer – 981 300 981 300 0.92SJ Segar 116 428 – 116 428 0.11

Total 175 134 1 884 300 2 059 434 2.71

There has been no change in directors’ and officers’ shareholding between the year-end and the date of approval of the annual financial statements.

132

19.4 Directors’ remuneration19.4.1 Non-executive

Non-executive directors’ remuneration for services as director are as follows:

2016R000

2015R000

2014R000

MJ Kuscus 312 238 302 LX Mtumtum 336 237 281SJ Segar 240 172 216 I Zwarenstein (four months pro rata fees) 80 – –LG Rapp* 264 21 –MJ Potts* 144 11 –MM Mdlolo – 137 130AS Ramsden – 21 238U Meyer – 92 119

1 376 929 1 285* Directors’ fees paid to non-independent directors are paid to VAM in respect of services rendered on its behalf. Remuneration paid

by Vukile to LG Rapp and MJ Potts in respect of their positions as chief executive officer and financial director of Vukile, amounted to R10.75 million and R4.16 million respectively (2015 full year: R9.17 million and R3.4 million).

19.4.2 ExecutiveExecutive directors are not paid directors’ fees from Synergy. Their remuneration is paid by Vukile Property Fund Limited, and such costs are recovered from Synergy via asset management fees charged.

SalaryR000

BonusR000

Totalremuneration

R000

31 March 2016GS Moseneke 1 297 1 335 2 632RC Hawton 1 250 58 1 308

2 547 1 393 3 940

31 March 2015WM Brooks^ 1 192 3 327 4 519A Raubenheimer^ 963 439 1 402

2 155 3 766 5 921

30 June 2014WM Brooks 1 485 2 830 2 978U Meyer (Resigned as an executive director effective 1 August 2013) 30 366 396A Raubenheimer (Appointed effective 1 August 2013)r 1 100 – 1 100

6 168 5 129 4 474^ 2015 executive directors’ fees were paid at the time by CLAM and recovered from Synergy via asset management fees charged.

19.4.3 Directors’ service contractsThere are no fixed-term service contracts for executive or non-executive directors.

20. CAPITAL MANAGEMENTThe group’s capital management objectives are:To ensure the group’s ability to continue as a going concern.

133

To provide an adequate return to shareholders by pricing services commensurately with the level of risk.Synergy monitors capital on the basis of the carrying amount of equity less cash equivalents as presented in the statement of financial position and cash flow hedges recognised in other comprehensive income.Capital for the reporting periods under review is summarised as follows:

2016R000

2015R000

Total equity 1 463 357 1 413 562*

Cash flow hedges 175 1 008Cash and cash equivalents (25 616) (6 020)

Capital 1 437 916 1 408 550

Total equity 1 463 357 1 413 562*

Borrowings 976 016 968 658

Overall financing 2 439 373 2 382 220

Capital-to-overall financing ratio 0.59 0.59* Linked debentures are disclosed as part of total equity for 2015 comparative purposes.

Management assesses Synergy’s capital requirements in order to maintain an efficient overall financing structure which avoids excessive leverage. Synergy manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure Synergy may issue new shares or sell assets to reduce debt.The board’s policy is to maintain a strong capital base comprising its shareholders’ interest so as to maintain investor creditor and market confidence and to sustain future development of the business. It is Synergy’s stated purpose to deliver long-term sustainable growth in dividends per share.There were no changes in the approach to capital management during the year. The company is not subject to externally imposed capital requirements. Synergy has complied with its bank and corporate bond covenants.

21. INTERNATIONAL FINANCIAL REPORTING STANDARDS AND AMENDMENTS ISSUED BUT NOT YET EFFECTIVE

At the date of approval of these annual financial statements, certain new accounting standards, amendments and interpretations to existing standards have been published but are not yet effective, and have not been adopted early by the entity. Management anticipates that all of the pronouncements will be adopted in the entity’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to Synergy’s financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on Synergy’s annual financial statements.

Synergy has chosen not to early adopt the following standards and interpretations which have been published and are mandatory for its accounting periods beginning on or after the dates shown:

Standard Details of amendmentsAnnual periods on/or

beginning after

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations Annual improvements 2012 to 2014 cycle: Amends IFRS 5 to clarify that when an entity reclassifies an asset (or disposal group) directly from being held for sale to being held for distribution (or vice versa), the accounting guidance in paragraphs 27 to 29 of IFRS 5 does not apply. The amendments also state that when an entity determines that the asset (or disposal group) is no longer available for immediate distribution or that the distribution is no longer highly probable, it should cease held-for-distribution accounting and apply the guidance in paragraphs 27 to 29.

1 July 2016

134

Standard Details of amendmentsAnnual periods on/or

beginning after

IFRS 7 Financial Instruments:Disclosures Annual improvements 2012 to 2014 Cycle: The amendments provide additional guidance to help entities identify the circumstances under which a servicing contract is considered to be ‘continuing involvement’ for the purposes of applying the disclosure requirements in paragraphs 42E – 42H of IFRS 7. Such circumstances commonly arise when, for example, the servicing fee is dependent on the amount or turning of the cash flows collected from the transferred financial asset or when a fixed fee is not paid in full due to non-performance of that asset.

1 July 2016

Annual improvements 2012 to 2014 Cycle: These amendments clarify that the additional disclosure required by the recent amendments to IFRS 7 Disclosure – Offsetting Financial Assets and Financial Liabilities is not specifically required for all interim periods. However, the additional disclosure is required to be given in condensed interim financial statements that are prepared in accordance with lAS 34 Interim Financial Reporting when its inclusion would be necessary in order to meet the general principles of lAS 34.

1 July 2016

IFRS 9 Financial InstrumentsIFRS 9 Financial Instruments (2014) replaces IAS 39 Financial Instruments: Recognition and Measurement.

1 January 2018

IFRS 15 Revenue from Contracts with CustomersNew guidance on recognition of revenue that requires recognition of revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration the entity expects to be entitled to in exchange for those goods or services.

1 January 2018

IFRS 16 LeasesIFRS 16 will require lessees to account for leases “on-balance sheet” by recognising a “right-of-use” asset and a lease liability.

IFRS 16 also:

Changes the definition of a leaseSets requirements on how to account for the asset and liability, including complexities such as non-lease elements, variable lease payments and option periodsProvides exemptions for short-term leases and leases of low value assetsChanges the accounting for sale and leaseback arrangementsLargely retains IAS 17’s approach to lessor accountingIntroduces new disclosure requirements.

1 January 2019

IAS 1 Presentation of Financial StatementsAmendments clarifying IAS 1’s specified line items on the statement(s) of profit and loss and other comprehensive income and the statement of financial position can be disaggregated.Additional requirements of how entities should present subtotals in the statement(s) of profit or loss and other comprehensive income and the statement of financial position.Clarification that entities have flexibility as to the order in which they present their notes to the financial statements, but also emphasising the need to consider fundamental principles of comparability and understandability in determining the order.

1 January 2016

IAS 27 Consolidated and Separate Financial StatementsAmendments to introducing a third option which allows entities to account for investments in subsidiaries, joint ventures and associates under the equity method in their separate financial statements.

1 January 2016

IAS 34 Interim Financial ReportingAnnual improvements 2012 to 2014 cycle: The amendments clarify the meaning of disclosure of information elsewhere in the interim financial report and require the inclusion of a cross-reference from the interim financial statements to the location of this information. The amendments specify that this information must be available to users of the interim financial statements on the same terms as the interim financial statements and at the same time, or the interim financial statements will be incomplete.

1 July 2016

135

Ann

exur

e 14

VE

ND

OR

S

Det

ails

of t

he v

endo

rs o

f the

VAM

equ

ity, t

he V

ukile

por

tfolio

and

the

Cum

ulat

ive

equi

ty a

re d

etai

led

in t

he t

able

bel

ow. D

etai

ls of

all

othe

r m

ater

ial a

sset

s, in

clud

ing

imm

ovab

le

prop

ertie

s, su

bsid

iarie

s and

inve

stmen

ts, ac

quire

d by

the S

yner

gy g

roup

dur

ing

the t

hree

year

s pre

cedi

ng th

e las

t pra

ctic

able

dat

e, ar

e set

out

in A

nnex

ure

8 of

the r

evise

d lis

ting

part

icul

ars.

Des

crip

tion

VAM

equ

ityEn

tity

whi

ch a

cqui

red/

will

acq

uire

the

asse

tSy

nerg

yD

ate

of a

cqui

siti

on1

Oct

ober

201

6C

onsi

dera

tion

22 9

45 5

22 “

B” sh

ares

Valu

atio

n–

Goo

dwill

pai

d an

d m

anne

r in

whi

ch it

was

acc

ount

ed fo

rSe

e pa

ragr

aph

11.5

of t

he c

ircul

arLo

ans i

ncur

red

to fi

nanc

e ac

quis

itio

nN

/AN

atur

e of

ass

et a

cqui

red

100%

of s

hare

s and

cla

ims

Nam

e of

ven

dor

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137

Annexure 15

DETAILS OF PROPERTY AND ASSET MANAGERS

DETAILS OF ASSET MANAGER

Details of VAM are set out below. As at the last practicable date, VAM provides asset management services to Synergy in respect of the Synergy portfolio in terms of the VAM asset management agreement. With effect from the implementation date, the asset management function of the company will be internalised and the VAM asset management agreement terminated.

Name: Vukile Asset Management Proprietary Limited

Address: One-on-Ninth, corner Glenhove Road and Ninth Street, Melrose Estate, 2196

Shareholder(s): Vukile Property Fund Limited

Terms of VAM asset management agreement: Synergy appoints VAM, as an independent contractor, to render asset management services and property management services in respect of Synergy’s portfolio of properties.

The appointment commenced on 14 December 2011 and endures for an initial fixed term of 10 years (unless Synergy purchases VAM’s business or it is otherwise terminated).

Remuneration in terms of VAM asset management contract:

For all asset management services, VAM is paid a monthly fee equivalent to 1/12 of 0.5% of the aggregate market capitalisation and borrowings of Synergy. For all property management services, VAM is paid a monthly fee equivalent to 4% of the gross monthly income collected.

Synergy pays VAM a fee equal to 1% of the purchase price of any property or portion of a property acquired by Synergy.

Synergy also pays VAM a leasing commission for any new leases negotiated and existing leases re-negotiated by VAM.

Acquisition of VAM by Synergy Synergy has the right to purchase the business conducted by VAM at any time from 13 December 2021, and is obliged to purchase the business conducted by VAM when or in the event that (i) Synergy terminates the VAM asset management agreement upon a sale, alienation or other disposition of all or substantially all of Synergy’s property portfolio to any entity that is not associated with Synergy and the acquirer has not agreed to take over the rights and obligations of Synergy in respect of the property sold, (ii) in the event that the agreement is cancelled by Synergy linked unitholders (now Synergy shareholders) as permitted in terms of the JSE Listings Requirements, or (iii) the agreement is not renewed by Synergy shareholders on expiry of its term, with the purchase price being the greater of:

i. the fair market value of VAM’s business, being an amount equivalent to the anticipated aggregate fees payable to VAM for the year following the effective date of the acquisition (calculated by multiplying the monthly fee payable by Synergy to VAM as asset manager in the last month prior to the effective date of the acquisition by 12, capitalised at a rate equivalent to the forward yield); and

ii. R50 million.

Appointments to other listed property entities Vukile

138

The directors of VAM are Sedise Moseneke, Rob Hawton and Ina Lopion. The full names, ages, business address, qualifications and experience of the directors of VAM are outlined below. The directors will resign as directors of VAM with effect from the implementation date. Details of the directors of VAM post-implementation of the transaction are set out in paragraph 3.3 of the revised listing particulars.

Name and age Sedise Moseneke (38)

Business address One-on-Ninth, cnr Glenhove Road and 9th Street, Melrose Estate, Johannesburg

Qualifications BDS, CCPP

Experience Sedise is an executive director of Vukile responsible for investment and acquisitions. He was chief executive of Encha Properties Limited from 2004 until Vukile’s acquisition of a portfolio of government-tenanted properties from Encha in 2013. He is a past president of the South African Property Owners Association (SAPOA) and is the non-executive chairman of Encha Property Services Proprietary Limited. Sedise also sits on the board of Nu-Hold Group Proprietary Limited, an upmarket residential and commercial property development and investment company. He is a member of the South African Institute of Black Property Practitioners (SAIBPP). He also serves on the finance, investment and university estate committee of the University of South Africa.

Name and age Rob Hawton (40)

Business address One-on-Ninth, cnr Glenhove Road and 9th Street, Melrose Estate, Johannesburg

Qualifications MCom, CA(SA)

Experience Rob holds BCom and BCom (Hons) degrees in accounting and a Master’s degree in finance from the University of Johannesburg and is a chartered accountant. Rob, who completed his articles with PricewaterhouseCoopers, was previously the head of finance and support for the real estate investment division within the Corporate and Investment Bank of the Standard Bank Group, where he spent eight years. Prior to that, he held various finance positions within Investec Bank Limited, Barclays Africa Limited, Tourvest Retail Travel Limted and Credit Suisse (London).

Name and age Ina Lopion (57)

Business address One-on-Ninth, cnr Glenhove Road and 9th Street, Melrose Estate, Johannesburg

Qualifications BSc

Experience Ina has 22 years’ property experience and six years’ life insurance experience with the Sanlam Group. She is the asset management director of Vukile, responsible for asset management within Vukile and managing both the Vukile portfolio and Synergy portfolio.

DETAILS OF PROPERTY MANAGERS

Details of Broll are set out below. As at the last practicable date, Broll provides property management services to Synergy in respect of the Synergy portfolio, in terms of a property management agreement entered into between VAM and Broll on 22 June 2015. Broll will continue to provide property management services in respect of the Vukile portfolio, for the period from 1 October 2016 to 30 September 2017, as more fully described in paragraph 4.8.7 of the circular, whereafter its appointment as property manager in respect of the Vukile portfolio will be terminated.

Name: Broll Property Group Proprietary Limited

Address: 27 Fricker Road, Johannesburg, 2196

Shareholder(s): Broll Management, Rowmoor Investments 579 Proprietary Limited, Tactical Software Systems Proprietary Limited

Directors: Elscke Badenhorst, Jonathan Broll, Royden du Plooy, Ken Gerber, Malcolm Horne, Leonard Michau

Functions performed: The property management services in respect of a portion of Synergy’s portfolio of properties has been outsourced by VAM to Broll. Broll performs all duties that may be reasonably required of a manager and administrator of a property portfolio, including without limitation (i) letting and tenant management, (ii) retail management, (iii) facilities management, (iv) energy and utility management, (v) corporate governance and financial management, (vi) secretarial and legal duties and (vii) asset management support.

The property management agreement between VAM and Broll will be available for inspection in terms of paragraph 32 of the circular.

139

Details of JHI are set out below. As at the last practicable date, JHI provides property management services to Synergy in respect of the Synergy portfolio, in terms of a property management agreement entered into between VAM and JHI on 1 June 2015 (the “VAM JHI agreement”). With effect from the implementation date, JHI will provide property management services to Synergy in respect of the reconstituted Synergy portfolio (excluding, for the period from 1 October 2016 – 30 September 2017, the Vukile portfolio), in terms of the Arrowhead property management agreement.

JHI will continue to provide property management services in respect of the Vukile portfolio, in terms of the VAM JHI agreement for the period from 1 October 2016 to 30 September 2017, as more fully described in paragraph 4.8.7 of the circular.

Name: JHI Properties Proprietary Limited

Address: 3A Summit Road, Dunkeld West, Hyde Park

Shareholder(s): Excellence Property Services Proprietary Limited

Directors: JE Wellstead, M van der Walt, NNN Radebe

Functions performed as at the last practicable date:

The property management services in respect of a portion of Synergy’s portfolio of properties has been outsourced by VAM to JHI in terms of the VAM JHI agreement. As at the last practicable date and until the implementation date, JHI performs all duties that may be reasonably required of a manager and administrator of a property portfolio, including without limitation (i) letting and tenant management, (ii) retail management, (iii) facilities management, (iv) energy and utility management, (v) corporate governance and financial management, (vi) secretarial and legal duties and (vii) asset management support.

Functions performed from the implementation date:

From the effective date, the property management services in respect of a portion of the company’s reconstituted portfolio of properties will be outsourced to JHI in terms of the Arrowhead property management agreement. JHI will perform all duties that may be reasonably required of a manager and administrator of a property portfolio, including without limitation (i) strategies and mandates, (ii) budgets, (iii) collectible income, (iv) credit control, (v) leasing management, (vi) maintenance and technical management, (vii) account payments, (viii) reporting and (ix) control procedures.

The VAM JHI agreement, as well as the Arrowhead property management agreement, will be available for inspection in terms of paragraph 32 of the circular.

140

Annexure 16

EXTRACT FROM THE MEMORANDUM OF INCORPORATION

The salient terms of the MoI are set out below. The details below are a direct extract from the MoI. The salient terms of the MoI, as amended in terms of paragraph 4.12 of the circular, are set out in Annexure 5 of the revised listing particulars.

1. INTERPRETATION

1.1 In this Memorandum of Incorporation, unless the context clearly indicates a contrary intention, the following words and expressions bear the meanings assigned to them and cognate expressions bear corresponding meanings

1.1.1 “Act” means the Companies Act, No. 71 of 2008, as amended, consolidated or re-enacted from time to time, and includes all schedules to such Act and the regulations;

1.1.2 “A ordinary share” means an A ordinary share of no par value in the share capital of the company having the rights and restrictions set out, inter alia, in clauses 7.2, 7.21, 34 and 40;

1.1.3 “A ordinary share distribution(s)” means a distribution declared in respect of an A ordinary share calculated with reference to clause 34.4;

1.1.4 “A ordinary shareholder” means the holder of an issued A ordinary share who is entered as such in the securities register, subject to the provisions of section 57;

1.1.5 “B ordinary share” means a B ordinary share of no par value in the share capital of the company having the rights and restrictions set out, inter alia, in clauses 7.2, 34 and 40;

1.1.6 “B ordinary shareholder” means the holder of an issued B ordinary share who is entered as such in the securities register, subject to the provisions of section 57 ;

1.1.7 “board” means the board of directors from time to time of the company or if there is only one director, then that director;

1.1.8 “business day” means any day excluding a Saturday, Sunday or public holiday in South Africa;

1.1.9 “certificated securities” means securities issued by the company that are not uncertificated securities;

1.1.10 “Central Securities Depositary” has the meaning set out in section 1 of the Financial Markets Act;

1.1.11 “Commission” means the Companies and Intellectual Property Commission established by section 185;

1.1.12 “company” means the company named on the first page of this document, duly incorporated under the registration number endorsed thereon;

1.1.13 “CPI” means the Consumer Price Index for all income groups for all items as published by Statistics South Africa (or its successor-in-title), provided that if the aforesaid Index is discontinued or modified it shall be replaced by such index as determined by the company’s auditors from time to time;

1.1.14 “designated date” means either the interim designated date or the final designated date;

1.1.15 “director” means a member of the board of the company as contemplated in section 66, or an alternate director, and includes any person occupying the position of a director or alternate director, by whatever name designated;

1.1.16 “electronic communication” has the meaning set out in section 1 of the Electronic Communications and Transactions Act, No 25 of 2002;

1.1.17 “file” or “filed” when used as a verb, means to deliver a document to the Commission in the manner and form, if any, prescribed for that document;

1.1.18 “final designated date” means 31 March of each calendar year and/or such other date as is determined by the board from time to time;

1.1.19 “Financial Markets Act” means the Financial Markets Act, 19 of 2012, including any amendment, consolidation or re-enactment thereof;

1.1.20 “first income period” means each of the 6 month periods from 1 April to 30 September of each calendar year or such other period as is determined by the board from time to time;

141

1.1.21 “IFRS” means the International Financial Reporting Standards, as adopted from time to time by the board of the International Accounting Standards Board from time to time;

1.1.22 “income period” means the first income period or the second income period, as the case may be;

1.1.23 “interim designated date” means 30 September of each calendar year and/or such other date as is determined by the board from time to time;

1.1.24 “JSE” means the exchange, licensed under the Financial Markets Act, operated by the JSE Limited (Registration number 2005/022939/06), a public company duly incorporated in South Africa;

1.1.25 “JSE Listings Requirements” means the Listings Requirements of the JSE applicable from time to time;

1.1.26 “participant” has the meaning set out in section 1 of the Financial Markets Act;

1.1.27 “prescribed officer” means a person who, within the company, performs any function that has been designated by the Minister in terms of section 66(10), as defined in the Act;

1.1.28 “prime rate” means the publicly quoted prime overdraft rate of interest of the bankers of the company (the “bank”) from time to time, nominal annual, compounded monthly as certified by any branch or more senior manager of that bank, whose appointment and designation it shall not be necessary to prove, and whose determination of the rate shall be proof of that rate until the contrary is established;

1.1.29 “regulations” means the regulations published in terms of the Act from time to time;

1.1.30 “rules” means any rules made in respect of the company from time to time as contemplated in section 15(3) to (5);

1.1.31 “second income period” means each of the 6 month periods from 1 October to 31 March of each calendar year or such other period as is determined by the board of directors of the company from time to time;

1.1.32 “securities” means –

1.1.32.1 any share, notes, bonds, debentures or other instruments, irrespective of their form or title, issued, or authorised to be issued, by a profit company for the purpose of raising capital; or

1.1.32.2 anything falling within the meaning of “securities” as set out in section 1 of the Financial Markets Act and includes shares held in a private company;

1.1.33 “securities register” means the register contemplated in section 50(1) and referred to in clause 8 hereof;

1.1.34 “SENS” means the Stock Exchange News Service established and operated by the Issuer Regulation Division of the JSE provided that, in the event that the shares or other securities of the company are not listed on the JSE, all the provisions of this Memorandum of Incorporation relating to the publication of notices via SENS shall no longer apply and such notices shall thereafter only be published in accordance with the provisions of the Act;

1.1.35 “share” means one of the units into which the proprietary interest in the company is divided, and includes an “A” ordinary share and/or a “B” ordinary share as indicated by the context;

1.1.36 “shareholder” means the holder of a share and who is entered as such in the securities register, subject to the provisions of section 57;

1.1.37 “solvency and liquidity test” has the meaning attributed thereto in section 4;

1.1.38 “South Africa” means the Republic of South Africa;

1.1.39 “sub-register” means the record of uncertificated securities administered and maintained by a participant, which forms part of the company’s register of shareholders in terms of the Act;

1.1.40 “trading day” means any day on which the JSE (or any other exchange on which the securities of the company are listed) is open and available for trading;

1.1.41 “uncertificated securities” means any “securities” defined as such in the Financial Markets Act; and

1.1.42 “uncertificated securities register” means the record of uncertificated securities administered and maintained by a participant or Central Securities Depositary, as determined in accordance with the rules of the Central Securities Depositary, and which forms part of the company’s securities register established and maintained in terms of the Act.

142

7. ISSUE OF SHARES AND VARIATION OF RIGHTS

7.1 Subject to any relevant provisions of this Memorandum of Incorporation and without prejudice to any special rights previously conferred on the holders of any existing shares or class of shares in the company, any shares whether in the initial or in any increased capital may be issued with such preferred, deferred, or other special rights or such restrictions, whether in regard to dividend, voting, return of capital or otherwise, as the company may from time to time determine provided however that there shall be no restriction on the transfer of shares, subject to the remaining provisions of this clause 7. Preference shares may be issued and existing shares may, subject to the provisions of clause 7.4.5, be converted into preference shares on the basis that they are, or at the option of the company are liable, to be redeemed on such terms and in such manner as shall be prescribed in this Memorandum of Incorporation or the resolution authorising or effecting such issue or conversion.

7.2 The company is authorised to issue:

7.2.1 1 000 000 000 A ordinary shares each of which ranks pari passu in respect of all rights with the other A ordinary shares; and

7.2.2 2 000 000 000 B ordinary shares, each of which ranks pari passu in respect of all rights with the other B ordinary shares.

7.3 Save as provided in this clause 7, clause 34 and clause 40 of this Memorandum of Incorporation, all issued shares shall rank pari passu in all respects.

7.4 The board shall not have the power to –

7.4.1 create any class of shares; or

7.4.2 increase or decrease the number of authorised shares of any class of the company’s shares; or

7.4.3 consolidate and reduce the number of the company’s issued and authorised shares of any class; or

7.4.4 subdivide its shares of any class by increasing the number of its issued and authorised shares of that class without an increase of its capital; or

7.4.5 convert one class of shares into one or more other classes, save where a right of conversion attaches to the class of shares created; or

7.4.6 reclassify any classified shares that have been authorised but not issued; or

7.4.7 classify any unclassified shares that have been authorised but not issued; or

7.4.8 change the name of the company; or

7.4.9 vary any preferences, rights, limitations or other terms of any shares,

and such powers shall only be capable of being exercised by the shareholders by way of a special resolution of the shareholders in general meeting, which for the avoidance of doubt shall be a combined general meeting of all shareholders, subject to the statutes, the JSE and the remaining provisions of this Memorandum of Incorporation.

7.5 Each share issued by the company has associated with it an irrevocable right of the shareholder to vote on any proposal to amend the preferences, rights, limitations and other terms associated with that share.

7.6 Subject to and without limitation to the provisions of clause 7.4, 7.8 and 7.20, the authorisation and classification of shares, the creation of any class of shares, the conversion of one class of shares into one or more other classes (unless otherwise provided by the terms of issue of the shares of that class), the consolidation of securities, the sub-division of securities, the change of the name of the company, the increase of number of shares, and the variation of any preferences, rights, limitations and other terms associated with each class of shares as set out in this Memorandum of Incorporation may be changed only by an amendment of this Memorandum of Incorporation by special resolution of the shareholders at a combined general meeting and in accordance with the JSE Listings Requirements, to the extent required, save if such an amendment is ordered by a court in terms of section 16(1)(a) and 16(4).

7.7 Notwithstanding anything to the contrary contained herein, the variation of any preference, rights, limitations and other terms associated with any class of shares as set out in this Memorandum of Incorporation may be enacted only by an amendment of this Memorandum of Incorporation by special resolution of the shareholders at a combined general meeting and such amendments shall not be implemented without a special resolution taken by the holders of shares in that class at a separate meeting. In such instances the holders of such shares will also be allowed to vote at the combined general meeting of shareholders, subject to clause 20.2.

7.10 The board may, subject to clauses 7.11 and 7.16, resolve to issue shares of the company at any time, but only within the classes and to the extent that those shares have been authorised by or in terms of this Memorandum of Incorporation.

143

7.11 Subject to clauses 7.10 and 7.16, the board may not issue unissued shares unless such shares have first been offered to existing shareholders of the shares of that class in proportion to their shareholding of that class of shares (on such terms and in accordance with such procedures as the board may determine), unless the relevant issue of shares -

7.11.1 is a capitalisation issue to all shareholders in accordance with the provisions of clause 13; or

7.11.2 is for the acquisition of assets, is a vendor consideration placing related to an acquisition of assets, or is an issue for the purposes of an amalgamation or merger; or

7.11.3 is an issue pursuant to options or conversion rights; or

7.11.4 is an issue in terms of an approved share incentive scheme; or

7.11.5 is an issue of shares for cash (as contemplated in the JSE Listings Requirements), which has been approved by the shareholders by ordinary resolution, either by way of a general authority (which may be either conditional or unconditional) to issue shares in its discretion or a specific authority in respect of any particular issue of shares, in accordance with the JSE Listings Requirements, provided that, if such approval is in the form of a general authority to the directors, it shall be valid only until the next annual general meeting of the company or for 15 months from the date of the passing of the ordinary resolution, whichever is the earlier, and it may be varied or revoked by any general meeting of the shareholders prior to such annual general meeting or the expiry of the aforesaid 15 month period; or

7.11.6 otherwise falls within a category in respect of which it is not, in terms of the JSE Listings Requirements, a requirement for the relevant shares to be so offered to existing shareholders of that class; or

7.11.7 is otherwise undertaken in accordance with an authority approved by ordinary shareholders in general meeting,

provided that if any fraction of a share will have to be issued pursuant to such an offer, that fraction may be rounded off in accordance with the rounding principle (that is, a shareholder becoming entitled to a fraction of a share arising from such an offer will be rounded up or down to the nearest number in accordance with the rounding principle whereby fractions of 0.5 and above will be rounded up and fractions below 0.5 will be rounded down).

7.12 The directors may exclude any shareholders or category of shareholders from an offer contemplated in clause 7.11 if and to the extent that they consider it necessary or expedient to do so because of legal impediments or compliance with the laws or the requirements of any regulatory body of any territory, outside of South Africa, that may be applicable to the offer.

7.13 Alterations of share capital, authorised shares and rights attaching to a class/es of shares, all issues of shares for cash and all issues of options and convertible securities granted or issued for cash must, in addition to the aforegoing provisions, be in accordance with the JSE Listings Requirements.

7.14 All securities of the company for which a listing is sought on the JSE and all securities of the same class as securities of the company which are listed on the JSE must, notwithstanding the provisions of section 40(5) but unless otherwise required by the Act, only be issued after the company has received the consideration approved by the board for the issuance of such securities.

7.15 Subject to sections 40(5) to 40(7) when the company has received the consideration approved by the board for the issuance of any shares –

7.15.1 those shares are fully paid up; and

7.15.2 the company must issue those shares and cause the name of the holder to be entered onto the company’s securities register in accordance with sections 49 to 56.

7.16 Notwithstanding anything to the contrary contained in this Memorandum of Incorporation, any issue of shares, securities convertible into shares, or rights exercisable for shares in a transaction, or a series of integrated transactions shall, in accordance with the provisions of section 41(3), require the approval of the shareholders by special resolution if the voting power of the class of shares that are issued or are issuable as a result of the transaction or series of integrated transactions will be equal to or exceed 30% (thirty percent) of the voting power of all the shares of that class held by shareholders immediately before that transaction or series of integrated transactions.

7.17 Except to the extent that any such right is specifically included as one of the rights, preferences or other terms upon which any class of shares is issued or otherwise provided in this Memorandum of Incorporation, no shareholder shall have any pre-emptive or other similar preferential right to be offered or to subscribe for any additional shares in the unissued share capital of the company.

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7.18 For so long as there are both A and B ordinary shares in issue by the company, unless otherwise agreed to by ordinary resolution of the holders of A ordinary shares in general meeting, the total number of A ordinary shares in issue may never exceed the total number of B ordinary shares in issue.

7.19 In addition to the provisions of clause 7.7, no resolution either converting A ordinary shares to B ordinary shares or vice versa or into any other class of shares shall be of any force or effect, unless with the consent or resolution passed in the same manner as a special resolution of both the holders of the A ordinary shares and the B ordinary shares taken at a separate general meeting of the A ordinary shareholders and a separate general meeting of the B ordinary shareholders. The provisions of this Memorandum of Incorporation relating to a general meeting shall mutatis mutandis apply to any such separate general meeting except that –

7.19.1 the necessary quorum shall be a shareholder or shareholders of the class present in person, or represented by proxy and holding in excess of 50% of the capital paid or credited as paid on the issued shares of that class;

7.19.2 if at any adjourned meeting of such holders a quorum as above defined is not present, those holders who are present shall be a quorum; and

7.19.3 any holder of shares of the class present in person or represented by proxy may demand a poll and, on a poll, shall have 1 vote for each share of the class of which he is the holder.

7.20 Securities in each class for which a listing is applied on the JSE must rank pari passu in respect of all rights.

7.21 The A ordinary shares may be redeemed, in whole or in part, pro rata or otherwise, on or after 14 December 2016, by way of a resolution of the board of directors (the “redemption resolution”), provided that the board shall not be authorised to pass a redemption resolution without the consent of a resolution of shareholders at a combined general meeting, which resolution will require at least 75% of the combined votes exercisable by A ordinary shareholders and B ordinary shareholders present in person or by proxy or representative and entitled to vote at such combined general meeting being cast in favour thereof. If so redeemed by way of redemption resolution, the A ordinary shares shall be redeemed by the company at the volume weighted average sales price of an A ordinary share (as shown by the official price list published by the JSE) over the 60 trading days immediately preceding the date on which the redemption resolution is passed. The procedure to be followed by the company in regard to the redemption shall be determined by the company at the appropriate time and be approved by the JSE. Not less than 6 weeks’ notice of redemption shall be given to all A ordinary shareholders prior to any redemption being effected. Any redemption of the A ordinary shares shall be effected in accordance with the timetable determined in terms of the JSE Listings Requirements.

18. MEETINGS OF SHAREHOLDERS

18.11 Not less than 15 business days’ notice shall be delivered to all shareholders registered at the date of issue of the notice of meetings called for the passing of a special resolution and not less than 15 business days’ notice shall be delivered to all shareholders for the passing of an ordinary resolution, calculated as of the record date for the meeting as determined under clause 16. Notices of general or annual general meetings are to be delivered to each person entitled to vote at such meeting who has elected to receive such documents.

18.12 The quorum requirement for a meeting of shareholders to begin or for a matter to be considered are at least three shareholders present in person. In addition, the quorum requirement for a meeting of shareholders is as set out in section 64(1) and accordingly –

18.12.1 a meeting of shareholders may not begin until sufficient persons are present at the meeting to exercise, in aggregate, at least 25% of the voting rights that are entitled to be exercised in respect of at least one matter to be decided at the meeting; and

18.12.2 a matter to be decided at a meeting of shareholders may not begin to be considered unless sufficient persons are present at the meeting to exercise, in aggregate, at least 25% of all of the voting rights that are entitled to be exercised in respect of that matter at the time the matter is called on the agenda.

20. VOTES OF SHAREHOLDERS

20.1 Subject to any special rights or restrictions as to voting attached to any shares by or in accordance with this Memorandum of Incorporation, at a meeting of the company –

20.1.1 every shareholder present and entitled to exercise voting rights shall be entitled to one vote on a show of hands, irrespective of the number of voting rights that shareholder would otherwise be entitled to exercise; and

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20.1.2 on a poll any person who is present at the meeting, whether as a shareholder or as proxy for a shareholder, has the number of votes determined in accordance with the voting rights associated with the shares held by that shareholder. No objection shall be raised to the admissibility of any vote except at the meeting or adjourned meeting at which the vote objected to is or may be given or tendered and every vote not disallowed at such meeting shall be valid for all purposes. Any such objection shall be referred to the chairperson of the meeting, whose decision shall be final and conclusive;

20.1.3 the holders of securities other than “A” and “B” ordinary shares shall not be entitled to vote on any resolution at a meeting of shareholders, except as provided in clause 20.2.

20.2 The holders of shares, other than “A” and “B” ordinary shares or any shares created for the purpose of black economic empowerment in terms of the Broad-Based Black Economic Empowerment Act, 53 of 2003 or the Broad-Based Black Economic Empowerment Codes of Good Practice, (“affected shareholders”) shall not be entitled to vote on any resolution taken by the company other than -

20.2.1 during any special period, as provided for in clause 20.2.3 below, during which any dividend, any part of any dividend on such shares or any redemption payment thereon remains in arrears and unpaid; and/or

20.2.2 in regard to any resolution proposed for the winding-up of the company or the reduction of its capital;

20.2.3 the period referred to in clause 20.2.1 above shall be the period commencing on a day specified in this Memorandum of Incorporation, if any, not being more than six months after the due date of the dividend or redemption payment in question or, where no due date is specified, after the end of the financial year of the company in respect of which such dividend accrued or such redemption payment became due;

and provided that where the shares held by such affected shareholders (“affected shares”) are entitled to vote, they shall not carry any special rights or privileges and the affected shareholder shall be entitled to one vote for every affected share held provided that the total voting rights of the affected shareholders in respect of the affected shares shall not be more than 24,99% (twenty four comma ninety nine percent) of the total voting rights of all shareholders at such meeting.

22. RESOLUTIONS OF SHAREHOLDERS

22.1 For an ordinary resolution to be approved it must be supported by more than 50% of the voting rights of shareholders exercised on the resolution, as provided in section 65(7), unless otherwise stated in this Memorandum of Incorporation. Notwithstanding the aforegoing, to the extent that the JSE Listings Requirements requires the support of a higher percentage of voting rights to be exercised in respect of any ordinary resolution, the company shall not implement such ordinary resolution unless such ordinary resolution is supported by the higher percentage of voting rights of shareholders required to be exercised on that resolution in terms of the JSE Listings Requirements.

22.2 For a special resolution to be approved it must be supported by the holders of at least 75% of the voting rights exercised on the resolution, as provided in section 65(9)

22.3 No matters, except

22.3.1 those matters set out in section 65(11); and

22.3.2 any other matter required by the Act or this Memorandum of Incorporation to be resolved by means of a special resolution; or

22.3.3 for so long as the company’s securities are listed on the JSE, any other matter required by the JSE Listings Requirements to be resolved by means of a special resolution in terms of the JSE Listings Requirements,

require a special resolution adopted at a meeting of shareholders of the company.

24. COMPOSITION AND POWERS OF THE BOARD OF DIRECTORS

24.1 The board must comprise at least four directors (or such greater number of directors, if any, that the company must have to satisfy any requirement in terms of the Act to appoint an audit committee and a social and ethics committee), and the shareholders shall be entitled to determine such maximum number of directors as they from time to time shall consider appropriate.

24.2 Subject to clauses 24.3, 24.4 and 24.5, all directors shall be elected by an ordinary resolution of the shareholders at a general or annual general meeting of the company and no appointment of a director in accordance with a resolution passed in terms of section 60 shall be valid.

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24.12 The directors shall rotate in accor dance with the following provisions of this clause 24.12 –

24.12.1 at each annual general meeting referred to in clause 18.5, ⅓ (one third) of the directors for the time being, or if their number is not 3 or a multiple of 3, the number nearest to ⅓ (one third), but not less than ⅓ (one third), shall retire from office;

24.12.2 the directors to retire in every year shall be those who have been longest in office since their last election, but as between persons who became directors on the same day, those to retire shall, unless they otherwise agree among themselves, be determined by lot;

24.12.3 a retiring director shall be eligible for re-election;

24.12.4 a retiring director shall act as a director throughout the annual general meeting at which he retires;

24.12.5 the company, at the general meeting at which a director retires in the above manner, or at any other general meeting, may fill the vacancy by electing a person thereto, provide that the company shall not be entitled to fill the vacancy in accordance with clause 23;

24.12.6 if at any meeting at which an election of directors ought to take place the offices of the retiring directors are not filled, unless it is expressly resolved not to fill such vacancies, the meeting shall stand adjourned and the further provisions of this Memorandum of Incorporation, including clauses 18.13 to 18.16 (inclusive) will apply mutatis mutandis to such adjournment, and if at such adjourned meeting the vacancies are not filled, the retiring directors, or such of them as have not had their offices filled, shall be deemed to have been re-elected at such adjourned meeting.

30. BORROWING POWERS

30.1 Subject to the provisions of clause 30.3, all other provisions of this Memorandum of Incorporation the directors may from time to time -

30.1.1 borrow for the purpose of the company such sums as they think fit;

30.1.2 secure the payment or repayment of any such sums or any other sum, as they think fit, whether by the creation and issue of debentures, mortgage or charge upon all or any of the property or assets of the company;

30.1.3 make such regulations regarding the issue and transfer of debentures and all such other matters incidental to the debentures as the directors think fit,

provided that the directors shall not, without the consent of a resolution of shareholders in a combined general meeting which resolution will require at least 75% of the votes exercisable by A ordinary shareholders and B ordinary shareholders entitled to vote at such combined general meeting be cast in favour thereof, permit the company’s debt gearing levels to exceed 50% of the value of its property portfolio as independently valued from time to time.

34. DISTRIBUTIONS

34.1 If the company resolves to declare a distribution to shareholders in respect of any income period, no such distribution may be declared by the company in respect of the B ordinary shares for such income period until the A ordinary share distribution has been declared in respect of the A ordinary shares for that income period, and no such distribution shall be paid by the company in respect of the B ordinary shares for such income period unless the relevant A ordinary share distribution has been paid.

34.2 The A ordinary shares shall not confer on the A ordinary shareholders the right to any distributions other than the A ordinary share distributions.

34.3 If the company resolves to declare a distribution to shareholders in respect of any income period, such distribution shall be paid no later than 4 months after the designated date in question or such shorter period as may be prescribed in terms of the JSE Listings Requirements.

34.4 The A ordinary share distribution for the A ordinary shares shall be calculated as follows:

34.4.1 for the financial year ending 31 March 2016:

34.4.1.1 for the first income period ending 30 September 2015, a distribution of 47.32277 cents per A ordinary share;

34.4.1.2 for the second income period ending 31 March 2016, a distribution of 47.32277 cents per A ordinary share;

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34.4.2 in respect of the financial years ending 31 March 2017 and 31 March 2018:

34.4.2.1 for the first income period, a distribution per A ordinary share equivalent to 105% of the first distribution in respect of the immediately preceding financial year;

34.4.2.2 for the second income period, a distribution per A ordinary share equivalent to 105% of the second distribution in respect of the immediately preceding financial year;

34.4.3 in respect of the financial year ending 31 March 2019 and thereafter:

34.4.3.1 for the first income periods, a distribution per A ordinary share equivalent to the prior year’s A ordinary share distribution for the first income period, escalated by an amount equal to the lesser of 5% and the most recently available CPI figure;

34.4.3.2 for the second income periods, a distribution per A ordinary share equivalent to the prior year’s A ordinary share distribution for the second income period, escalated by an amount equal to the lesser of 5% and the most recently available CPI figure.

34.4.4 In the event that the company declares a distribution in an amount less than those amounts as determined in clauses 34.4.1, 34.4.2 and 34.4.3, then in such event that lesser amount shall be paid for that period, apportioned pro rata to each “A” ordinary share in issue on the relevant record date. In the event that the A ordinary share distribution is less than the amount provided in clauses 34.4.1, 34.4.2 and 34.4.3, as the case may be the difference in the amount paid and that which would have been payable in terms of clauses 34.4.1, 34.4.2 and 34.4.3 as applicable, shall not accrue or accumulate to the A ordinary shareholders and there shall be no right to claim any shortfall.

34.4.5 In determining the A ordinary share distribution with reference to any prior period’s distribution, the prior period’s distribution shall be the determined or calculated distribution for the equivalent period in the prior year calculated in terms of clauses 34.4.1, 34.4.2 34.4.3, whether or not such amount was paid having regard to the availability of funds.

34.5 The directors of the company shall for the purposes of calculation, be entitled in their discretion (subject to the statutes and the JSE Listings Requirements) to ignore or round off downward fractions of a cent in effecting payment of any A ordinary share distribution.

34.6 If there is any change in the financial year of the company, the company shall be and it is hereby authorised to change the dates from which A ordinary share distributions are calculated, fall due, accrue and/or become payable, provided that –

34.6.1 the rights of A ordinary shareholders to A ordinary share distributions on their A ordinary shares shall not be diminished or adversely affected by such changes; and

34.6.2 the company shall forthwith notify A ordinary shareholders of any changes made by notice in terms of clause 37 or if the A ordinary shares are listed on the JSE or any other exchange, on SENS (if listed on the JSE) or any other news service of the relevant exchange and in such other manner prescribed by the relevant exchange.

34.7 Any A ordinary share distribution declared but not paid on the due date therefor, shall bear interest from such date up to the date of payment (excluding date of payment), calculated and compounded on a daily basis at the Prime Rate plus 2%.

34.8 Distributions shall be declared by the directors in accordance with the Act.

34.9 Distributions may be declared either free of or subject to the deduction of income tax and any other tax or duty in respect of which the company may be chargeable.

34.10 Subject to clause 34.7 above, no distribution shall bear interest against the company, except as otherwise provided under the conditions of issue of the shares in respect of which such distribution is payable.

34.11 Subject to clause 34.4, the directors may from time to time declare and pay to the shareholders such interim distributions as the directors consider to be justified by the profits of the company.

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38. AMENDMENT OF MEMORANDUM OF INCORPORATION

38.1 Every provision of this Memorandum of Incorporation is capable of amendment in accordance with sections 16, 17 and 152(6)(b). There is accordingly no provision of this Memorandum of Incorporation which may not be amended as contemplated in sections 15(2)(b) and (c).

38.2 This Memorandum of Incorporation may only be altered or amended by way of a special resolution of the shareholders in accordance with section 16(1)(c), except if such amendment is in compliance with a Court order as contemplated in section 16(1)(a)

40. SUBORDINATION OF B ORDINARY SHARES AND REPAYMENT WATERFALL ON WINDING-UP OF THE COMPANY

If the company is wound up, the assets remaining after payment of debts and liabilities of the company and the costs of the liquidation shall be applied as follows:

Firstly –

40.1 each of the A ordinary shareholders shall be entitled to an amount equal to the volume weighted average traded sales price of an A ordinary share (as shown by the official price list published by the JSE) over the 60 trading days immediately preceding the date of publication of any announcement detailing events relating to such winding up;

thereafter –

40.2 each of the B ordinary shareholders shall be entitled to receive any surplus of such monies available for distribution.

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Synergy Income Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2007/032604/06)JSE share code: SGA ISIN: ZAE000202883JSE share code: SGB ISIN: ZAE000202891

(Approved as a REIT by the JSE)(“Synergy” or “the company”)

NOTICE OF GENERAL MEETING OF SHAREHOLDERS

Where appropriate and applicable, the terms defined in the circular to which this notice of general meeting is attached bear the same meanings in this notice of general meeting and, in particular, in the resolutions set out below.

Notice is hereby given that a general meeting of Synergy shareholders will be held at 10:00 on Tuesday, 25 October 2016 at One-on-Ninth, corner Glenhove Road and Ninth Street, Melrose Estate, 2196, for the purpose of considering and, if deemed fit, passing with or without modification, the resolutions set out below.

Shareholders are referred to the circular, which sets out the information and explanatory material that they may require in order to determine whether to participate in the general meeting and vote on the resolutions set out below.

In terms of section 62(3)(e) of the Companies Act:

• a shareholder who is entitled to attend and vote at the general meeting is entitled to appoint a proxy or two or more proxies to attend, participate in and vote at the general meeting in the place of the shareholder;

• a proxy need not be a shareholder of the company; and

• shareholders recorded in the register of the company on the voting record date (including shareholders and their proxies) are required to provide reasonably satisfactory identification before being entitled to attend or participate in the general meeting. In this regard, all shareholders recorded in the register on the voting record date will be required to provide identification satisfactory to the chairman of the general meeting. Forms of identification include valid identity documents, drivers’ licenses and passports.

The resolutions set out in this notice of general meeting are all inter-conditional and are further each subject to the fulfilment or, if applicable, waiver of the conditions precedent to the transaction, as set out in paragraph 4.14 of the circular, save for any such condition precedent relating to the passing of such resolution.

Important dates to note

2016

Record date for receipt of notice of the general meeting Friday, 16 September

Last day to trade in order to be eligible to participate in and vote at the general meeting Tuesday, 11 October

Voting record date Friday, 14 October

Last day to lodge forms of proxy for the general meeting with the transfer secretaries, by 10:00 (forms of proxy not lodged with the transfer secretaries in time may be handed to the chairman of the general meeting immediately before the commencement thereof )

Friday, 21 October

Last day for shareholders objecting to the Vukile asset exchange to notify Synergy of their objection in terms of section 164(3) of the Companies Act, by 10:00

Tuesday, 25 October

General meeting held at 10:00 Tuesday, 25 October

Results of the general meeting announced on SENS Tuesday, 25 October

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2016

Results of the general meeting published in the press Wednesday, 26 October

Announcement regarding the TRP ruling in respect of the waiver of the obligation of Arrowhead to make the mandatory offer released on SENS

Thursday, 27 October

Announcement regarding the TRP ruling in respect of the waiver of the obligation of Arrowhead to make the mandatory offer published in the press

Friday, 28 October

If the Vukile asset exchange was approved in terms of section 115 of the Companies Act by shareholders at the general meeting, but with 15% or more votes in opposition, last day on which shareholders who voted against the Vukile asset exchange can require the company to seek court approval in terms of section 115(3)(a) of the Companies Act

Tuesday, 1 November

Shareholders to request the Takeover Special Committee to review the TRP exemption ruling by Thursday, 3 November

TRP waiver proceedings to be regarded as completed, subject to shareholders not requesting a review of the TRP ruling

Thursday, 3 November

Last day for shareholders who voted against the Vukile asset exchange to apply for leave to apply to court for a review of the Vukile asset exchange in terms of section 115(3)(b) of the Companies Act

Tuesday, 8 November

Last day for Synergy to send notice of the approval of the Vukile asset exchange to shareholders who qualify to receive such notice in terms of section 164(4) of the Companies Act (if any)

Tuesday, 8 November

Last day for shareholders to deliver written notice in terms of section 164(7) of the Companies Act demanding that Synergy pay the shareholder the fair value for all of the Synergy shares held by that shareholder3

Tuesday, 22 November

Notes:

1. All dates and times in this circular are local dates and times in South Africa and are subject to change. Any changes will be announced on SENS and published in the press.

2. Synergy shareholders are referred to page 4 of the circular for information on the action required to be taken by them.3. This date applies to shareholders who objected to the Vukile asset exchange in terms of section 164(3) of the Companies Act before the commencement

of the general meeting and thereby qualify to receive notice of the approval of the Vukile asset exchange in terms of section 164(4) of the Companies Act and who actually receive notice on the date of the general meeting. The date applicable to any specific shareholder should be determined in accordance with section 164(7) of the Companies Act.

SPECIAL RESOLUTION 1: ISSUE OF SHARES IN TERMS OF THE VAM INTERNALISATION

“Resolved in terms of section 41(1)(b) of the Companies Act that the issue of the VAM consideration shares to Vukile pursuant to the implementation of the VAM internalisation agreement, be and is hereby authorised.”

In order for special resolution 1 to be adopted, the support of at least 75% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on special resolution 1.

Reason and effect

The issue of the VAM consideration shares to Vukile, in terms of the VAM internalisation, constitutes the issue of shares to a person related or inter-related to Synergy, as contemplated in section 41(1)(b), read with section 2, of the Companies Act. Accordingly, such issue of shares is required to be approved by a special resolution of Synergy shareholders. The effect of special resolution 1 will be that Synergy is authorised to issue the VAM consideration shares to Vukile as contemplated in the VAM internalisation agreement.

SPECIAL RESOLUTION 2: APPROVAL OF THE DISPOSAL OF ALL OR THE GREATER PART OF SYNERGY’S ASSETS IN TERMS OF SECTIONS 112 AND 115 OF THE COMPANIES ACT

“Resolved in terms of sections 112 and 115(2) of the Companies Act that the disposal by Synergy of the Synergy portfolio to Vukile, in terms of the Vukile asset exchange, be and is hereby authorised.”

In order for special resolution 2 to be adopted, the support of at least 75% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on special resolution 2. Those voting rights controlled by Vukile and its related persons and persons acting in concert with Vukile (if any), will be excluded in determining the number of votes in support of special resolution 2 and for purposes of determining the required quorum.

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As required in terms of Takeover Regulation 110 read with Takeover Regulation 90, the independent board has appointed the independent expert to provide a report on fairness and reasonableness of the transaction, which incorporates the Vukile asset exchange, insofar as Synergy shareholders are concerned. The independent expert has concluded that the transaction is fair and reasonable, and their report in this regard is set out in Annexure 1 of the circular.

Shareholders are advised that, notwithstanding the approval of special resolution 2, they may be entitled to seek relief in terms of section 115 of the Companies Act in certain circumstances. In addition, shareholders are advised that they are entitled to seek relief in terms of section 164 of the Companies Act in relation to the Vukile asset exchange. Complete extracts of sections 115 and 164 of the Companies Act are included as an Appendix to Annexure 1 of the circular.

Reason and effect

The exchange by Synergy of the Synergy portfolio for the Vukile portfolio, in terms of the Vukile asset exchange, constitutes the disposal of all or the greater part of Synergy’s assets, as contemplated in section 112 of the Companies Act. Accordingly, in terms of section 115 of the Companies Act, the Vukile asset exchange is required to be approved by a special resolution of Synergy shareholders. The effect of special resolution 2 will be that Synergy is authorised to dispose of the Synergy portfolio as contemplated in the Vukile asset exchange agreement.

SPECIAL RESOLUTION 3: REVOCATION OF SPECIAL RESOLUTION 2 IN THE EVENT OF THE VUKILE ASSET EXCHANGE LAPSING

“Resolved that, subject to and in the event that (i) special resolution 2 has been passed; and (ii) any dissenting shareholder has sent a demand to Synergy in terms of sections 164(5) to (8) of the Companies Act to be paid the fair value of its shares and (iii) Synergy announces that the Vukile asset exchange agreement has lapsed for any reason and will not be further pursued except in terms of a new approval from Synergy shareholders, special resolution 2 is revoked with effect from the date of the said announcement in (ii), as contemplated in section 164(9)(c) of the Companies Act, and accordingly any such dissenting shareholder shall have no rights to be so paid under section 164 of the Companies Act in that the Vukile asset exchange did not and shall not become effective.”

In order for special resolution 3 to be adopted, the support of at least 75% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on special resolution 3.

Reason for and effect

The reason and effect of special resolution 3 is to remove the rights to payment of dissenting shareholders if the Vukile asset exchange is terminated. Special resolution 3 shall become effective only if: (i) special resolution 2 is approved at the meeting in terms of the Companies Act and it is announced that the Vukile asset exchange agreement has lapsed or been terminated.

SPECIAL RESOLUTION 4: ISSUE OF SHARES IN TERMS OF THE CUMULATIVE ACQUISITION

“Resolved in terms of section 41(3) of the Companies Act that the issue of the Cumulative consideration shares to the Cumulative shareholders pursuant to the implementation of the Cumulative acquisition agreement, be and is hereby authorised.”

In order for special resolution 4 to be adopted, the support of at least 75% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on special resolution 4.

Reason and effect

The voting rights associated with the Cumulative consideration shares will equal 60.6% of the total voting rights associated with the issued shares as at the implementation date. Accordingly, the issue of the Cumulative consideration shares to Arrowhead, in terms of the Cumulative acquisition, is required to be approved by a special resolution of Synergy shareholders in terms of section 41(3) of the Companies Act. The effect of special resolution 4 will be that Synergy is authorised to issue the Cumulative consideration shares to Arrowhead as contemplated in the Cumulative acquisition agreement.

SPECIAL RESOLUTION 5: CHANGE OF NAME

“Resolved in terms of clause 7.5 of the MoI and section 16 of the Companies Act that the name of the company be and is hereby changed from “Synergy Property Fund Limited” to “Gemgrow Properties Limited” on and with effect from the implementation date.”

In order for special resolution 5 to be adopted, the support of at least 75% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected in the register as such on the voting record date are entitled to vote on special resolution 5.

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Reason for and effect

Given the fundamental change to the nature of the company, and its property portfolio, that will be brought about through the implementation of the transaction (as more fully detailed in the circular), the board believes that it is appropriate to change the name of the company.

SPECIAL RESOLUTION 6: AMENDMENT OF THE MOI

“Resolved in terms of clause 38 of the MoI and section 16 of the Companies Act, that the existing MoI be and is hereby amended on and with the date of filing of this special resolution with the Companies and Intellectual Properties Commission by:

i. providing that any conversion of “A” shares to “B” shares, or vice versa, or any redemption of any class of shares in whole or in part, is subject to approval by the holders of both “A” shares and “B” shares by way of a separate special resolution taken at a separate general meeting of each class of shareholder;

ii. reflecting the change of name, as more fully detailed in paragraph 4.11 of the circular;

iii. reflecting the change in year-end, as more fully detailed in paragraph 1.6 of the circular; and

iv. providing for the payment of quarterly distributions to “A” and “B” shareholders on the same terms as half-yearly distributions are determined in terms of Synergy’s existing MoI, so as to align the company’s distribution policy with that of Arrowhead.

A copy of the new MoI, incorporating the amendments referred to above and the salient terms of which are included of Annexure 5 of the revised listing particulars, can be accessed on Synergy’s website www.synergyincomefund.com or inspected at Synergy’s registered office.

In order for special resolution 6 to be adopted, the support of at least 75% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected in the register as such on the voting record date are entitled to vote on special resolution 6.

Reason for and effect

The amendment of the MoI proposed above is required in order to reflect the amendments brought about by the implementation of the transaction. The Cumulative acquisition is conditional on the MoI being amended accordingly. Save as set out above, the existing MoI will remain unchanged.

ORDINARY RESOLUTION 1: VAM INTERNALISATION

“Resolved in terms of section 10.4(e) of the JSE Listings Requirements that the VAM internalisation, in terms of which Synergy will acquire 100% of the issued share capital of VAM from Vukile in consideration for the issue of the VAM consideration shares to Vukile, be and is hereby authorised, and that the VAM asset management agreement be and is hereby terminated on and with effect from the implementation date.”

In order for ordinary resolution 1 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, other than Vukile and its associates, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 1. The voting rights controlled by Vukile and its associates will not be taken into account in determining the outcome of ordinary resolution 1 (although will be taken into account in determining the requisite quorum).

ORDINARY RESOLUTION 2: ACQUISITION OF THE VUKILE PORTFOLIO

“Resolved in terms of sections 9.20 and 10.4(e) of the JSE Listings Requirements that the acquisition by Synergy of the Vukile portfolio from Vukile, in terms of the Vukile asset exchange, be and is hereby authorised.”

In order for ordinary resolution 2 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, other than Vukile and its associates, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 2. Those voting rights controlled by Vukile and its associates will be excluded in determining the number of votes in support of ordinary resolution 2, however voting rights controlled by Vukile and its associates will be taken into account in determining the required quorum.

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ORDINARY RESOLUTION 3: DISPOSAL OF THE SYNERGY PORTFOLIO

“Resolved in terms of sections 9.20 and 10.4(e) of the JSE Listings Requirements that the disposal by Synergy of the Synergy portfolio to Vukile, in terms of the Vukile asset exchange, be and is hereby authorised.”

In order for ordinary resolution 3 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, other than Vukile and its associates, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 3. Those voting rights controlled by Vukile and its associates will be excluded in determining the number of votes in support of ordinary resolution 3, however voting rights controlled by Vukile and its associates will be taken into account in determining the required quorum.

ORDINARY RESOLUTION 4: CUMULATIVE ACQUISITION

“Resolved in terms of section 9.20 of the JSE Listings Requirements that the Cumulative acquisition, in terms of which Synergy will acquire 100% of the issued share capital of Cumulative in consideration for the issue of the Cumulative consideration shares to the Cumulative shareholders, be and is hereby authorised.”

In order for ordinary resolution 4 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 4.

ORDINARY RESOLUTION 5: WAIVER OF MANDATORY OFFER BY INDEPENDENT “A” SHAREHOLDERS

“Resolved in terms of Takeover Regulation 86(4) that the mandatory (or comparable) offer that would have been required to be made by Arrowhead and/or any of its related or concert parties to remaining “A” shareholders in terms of section 123 read with section 125 of the Companies Act pursuant to the implementation of the Cumulative acquisition, be and is hereby fully and irrevocably waived.”

In order for ordinary resolution 5 to be adopted, the support of more than 50% of the voting rights exercised on the resolution, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 5.

Ordinary resolution 5 is a resolution of “A” shareholders only. Only “A” shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 5. Arrowhead and any other non-independent shareholders will not be able to vote on ordinary resolution 5.

ORDINARY RESOLUTION 6: WAIVER OF MANDATORY OFFER BY INDEPENDENT “B” SHAREHOLDERS

“Resolved in terms of Takeover Regulation 86(4) that the mandatory offer that would have been required to be made by Arrowhead and/or any of its related or concert parties to remaining “B” shareholders in terms of section 123 read with section 125 of the Companies Act pursuant to the implementation of the Cumulative acquisition, be and is hereby fully and irrevocably waived.”

In order for ordinary resolution 6 to be adopted, the support of more than 50% of the voting rights exercised on the resolution, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 6.

Ordinary resolution 6 is a resolution of “B” shareholders only. Only “B” shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 6. Arrowhead and any other non-independent shareholders will not be able to vote on ordinary resolution 6.

ORDINARY RESOLUTION 7: ELECTION OF GERALD LEISSNER AS A DIRECTOR

“Resolved that Gerald Leissner is hereby elected as a director of the company, with effect from the implementation date.”

A brief CV of Gerald Leissner is set out is set out in paragraph 3.1 of the revised listing particulars.

In order for ordinary resolution 7 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 7.

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ORDINARY RESOLUTION 8: ELECTION OF GREGORY KINROSS AS A DIRECTOR

“Resolved that Gregory Kinross is hereby elected as a director of the company, with effect from the implementation date.”

A brief CV of Gregory Kinross is set out is set out in paragraph 3.1 of the revised listing particulars.

In order for ordinary resolution 8 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 8.

ORDINARY RESOLUTION 9: ELECTION OF CLIFFORD ABRAMS AS A DIRECTOR

“Resolved that Clifford Abrams is hereby elected as a director of the company, with effect from the implementation date.”

A brief CV of Clifford Abrams is set out is set out in paragraph 3.1 of the revised listing particulars.

In order for ordinary resolution 9 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 9.

ORDINARY RESOLUTION 10: ELECTION OF AYESHA REHMAN AS A DIRECTOR

“Resolved that Ayesha Rehman is hereby elected as a director of the company, with effect from the implementation date.”

A brief CV of Ayesha Rehman is set out is set out in paragraph 3.1 of the revised listing particulars.

In order for ordinary resolution 10 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 10.

ORDINARY RESOLUTION 11: ELECTION OF MERVYN SEREBRO AS A DIRECTOR

“Resolved that Mervyn Serebro is hereby elected as a director of the company, with effect from the implementation date.”

A brief CV of Mervyn Serebro is set out is set out in paragraph 3.1 of the revised listing particulars.

In order for ordinary resolution 11 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 11.

ORDINARY RESOLUTION 12: AUTHORITY TO GIVE EFFECT TO RESOLUTIONS

“Resolved that any director or the company secretary of Synergy be and is hereby authorised to do all such things and sign all such documents required to give effect to special and ordinary resolutions proposed above and passed at the general meeting.”

In order for ordinary resolution 12 to be adopted, the support of more than 50% of the voting rights exercised on the resolution by shareholders, present in person or by proxy at the general meeting, is required. Only shareholders reflected on the register as such on the voting record date are entitled to vote on ordinary resolution 12.

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VOTING AND QUORUM

The quorum requirement for the general meeting to begin or for a matter to be considered is at least three shareholders present in person. In addition:

– the general meeting may not begin until sufficient persons are present in person or represented by proxy to exercise, in aggregate, at least 25% of the voting rights that are entitled to be exercised in respect of at least one matter to be decided at the general meeting; and

– a matter to be decided at the general meeting may not begin to be considered unless sufficient persons are present in person or represented by proxy to exercise, in aggregate, at least 25% of all of the voting rights that are entitled to be exercised in respect of that matter at the time the matter is called on the agenda.

Every shareholder present in person or represented by proxy and entitled to exercise voting rights at the general meeting shall be entitled to vote on a show of hands, irrespective of the number of voting rights that shareholder would otherwise be entitled to exercise. On a poll, any person who is present at the general meeting, whether as a shareholder or as proxy for a shareholder, has the number of votes determined in accordance with the voting rights associated with the shares held by that shareholder.

Notwithstanding the above, the voting rights controlled by Vukile and its associates will not be taken into account in determining the outcome of ordinary resolutions 1 – 3, although will be taken into account in determining the requisite quorum. The voting rights controlled by Vukile and its associates, related persons and persons acting in concert with Vukile (as defined in the Companies Act), if any, will be excluded both for purposes of determining the requisite quorum and in determining the number of votes in support of special resolution 2.

SHAREHOLDERS

General instructions

Shareholders who are entitled to attend, speak and vote at the general meeting are encouraged to do so.

Electronic participation

The company has made provision for shareholders or their proxies to participate electronically in the general meeting by way of telephone conferencing. Should you wish to participate in the general meeting by telephone conference call, you, or your proxy, should advise the company thereof by no later than 10:00 on Friday, 21 October 2016, by submitting by e-mail to the company secretary at johann.neethling@vukile.co.za relevant contact details, including an e-mail address, cellular number and landline as well as full details of your title to Synergy shares and proof of identity, in the form of copies of identity documents and share certificates (in the case of certificated shares) or written confirmation from your CSDP confirming your title to the dematerialised shares (in the case of dematerialised shares). Upon receipt of the required information, you will be provided with a secure code and instructions to access the electronic communication during the general meeting. Shareholders should note that access to the electronic communication will be at the expense of the shareholders who wish to utilise the facility.

Shareholders and their appointed proxies attending by conference call will not be able to cast their votes at the general meeting through this medium. Accordingly, shareholders making use of the electronic participation facility are requested to submit their forms of proxy to the company, as directed.

Proxies and authority for representatives to act

The attached form of proxy is only to be completed by:

• certificated shareholders; or

• “own name” dematerialised shareholders,

who cannot attend the general meeting but wish to be represented thereat.

All other beneficial owners who have dematerialised their shares through a CSDP or broker, without “own name” registration, and who wish to attend the general meeting, must instruct their CSDP or broker to provide them with the necessary letter of representation, or they must provide the CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker. These shareholders must not use a form of proxy.

Forms of proxy are requested to be deposited at the transfer secretaries, Link Market Services South Africa Proprietary Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001, posted to PO Box 4844, Johannesburg, 2000, faxed to 086 674 2450 or emailed to meetfax@linkmarketservices.co.za so as to arrive no later than 10:00 on Friday, 21 October 2016. Forms of proxy not lodged with the transfer secretaries in time may be handed to the chairman of the general meeting immediately before the commencement of the general meeting. Any shareholder who completes and lodges a form of proxy will nevertheless be entitled to attend, speak and vote in person at the general meeting should the shareholder decide to do so.

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A company that is a shareholder, wishing to attend and participate at the general meeting should ensure that a resolution authorising a representative to so attend and participate at the general meeting on its behalf, is passed by its directors.

Synergy does not accept responsibility and will not be held liable for any failure on the part of the CSDP or broker of a dematerialised Synergy shareholder to notify such shareholder of the general meeting of or any business to be conducted thereat.

GENERAL NOTES

1. Shareholders who are companies or other bodies corporate may, by resolution of its directors or other governing body, authorise any person to act as its representative at the general meeting.

2. The chairperson of the general meeting will be making a demand that all resolutions put to the vote shall be decided by way of a poll.

By order of the board

Synergy Income Fund Limited26 September 2016

Registered officeOne-on-NinthCorner Glenhove Road and Ninth StreetMelrose Estate2196

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Synergy Income Fund Limited(Incorporated in the Republic of South Africa)

(Registration number 2007/032604/06)JSE share code: SGA ISIN: ZAE000202883JSE share code: SGB ISIN: ZAE000202891

(Approved as a REIT by the JSE)(“Synergy” or “the company”)

FORM OF PROXY

Where appropriate and applicable, the terms defined in the circular to which this form of proxy is attached bear the same meanings in this form of proxy.THIS FORM OF PROXY IS ONLY FOR USE BY:

• certificated shareholders;• “own name” dematerialised shareholders.For completion by the aforesaid registered shareholders who are unable to attend the general meeting to be held at 10:00 on Tuesday, 25 October 2016 at Synergy’s registered office (One-on-Ninth, Corner Glenhove Road and Ninth Street, Melrose Estate, 2196).If you are a dematerialised shareholder, other than with “own name” registration, do not use this form. Dematerialised shareholders, other than with “own name” registration, should provide instructions to their appointed CSDP or broker in the form as stipulated in the agreement entered into between the shareholder and the CSDP or broker.

I/We (FULL NAMES IN BLOCK LETTERS PLEASE)

Email address

Telephone number

Cellphone number

of (address)

being the holder(s) of “A” shares hereby appoint:

“B” shares hereby appoint:1. or failing him/her

2. of failing him/her

3. the chairman of the general meetingas my/our proxy to attend and speak and to vote for me/us and on my/our behalf at the general meeting of shareholders and at any adjournment or postponement thereof, for the purpose of considering and, if deemed fit, passing, with or without modification, the resolutions to be proposed at the general meeting, and to vote on the resolutions in respect of the shares registered in my/our name(s):Please indicate with an “X” in the appropriate spaces below how you wish your votes to be cast. Unless this is done the proxy will vote as he/she thinks fit.

Number of votes*In favour of *Against *Abstain

A B A B A BSpecial resolution 1: Issue of shares in terms of the VAM internalisationSpecial resolution 2: Approval of the disposal of all or the greater part of Synergy’s assets in terms of sections 112 and 115 of the Companies ActSpecial resolution 3: Revocation of special resolution 2 in the event of the Vukile asset exchange lapsingSpecial resolution 4: Issue of shares in terms of the Cumulative acquisitionSpecial resolution 5: Change of nameSpecial resolution 6: Amendment of the MoIOrdinary resolution 1: VAM internalisationOrdinary resolution 2: Acquisition of the Vukile portfolioOrdinary resolution 3: Disposal of the Synergy portfolioOrdinary resolution 4: Cumulative acquisitionOrdinary resolution 5: Waiver of mandatory offer by independent “A” shareholdersOrdinary resolution 6: Waiver of mandatory offer by independent “B” shareholdersOrdinary resolution 7: Election of Gerald Leissner as a directorOrdinary resolution 8: Election of Gregory Kinross as a directorOrdinary resolution 9: Election of Clifford Abram as a directorOrdinary resolution 10: Election of Ayesha Rehman as a directorOrdinary resolution 11: Election of Mervyn Serebro as a directorOrdinary resolution 12: Authority to give effect to resolutions

* One vote per share held by shareholders, recorded in the registers on the voting record dateUnless otherwise instructed my proxy may vote or abstain from voting as he/she thinks fit.Signed this day of 2016

Signature

Assisted by me (where applicable)

(State capacity and full name)

A shareholder entitled to attend and vote at the general meeting is entitled to appoint a proxy to attend, vote and speak in his/her stead. A proxy need not be a shareholders of Synergy. Each shareholder is entitled to appoint one or more proxies to attend, speak and, on a poll, vote in place of that shareholder at the general meeting.Forms of proxy are requested to be deposited at the transfer secretaries, Link Market Services South Africa Proprietary Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001, posted to PO Box 4844, Johannesburg, 2000, faxed to 086 674 2450 or emailed to meetfax@linkmarketservices.co.za so as to arrive no later than 10:00 on Friday, 21 October 2016. Forms of proxy not lodged with the transfer secretaries in time may be handed to the chairman of the general meeting immediately before the commencement of the general meeting. Any shareholder who completes and lodges a form of proxy will nevertheless be entitled to attend, speak and vote in person at the general meeting should the shareholder decide to do so.Please read notes on the reverse side hereof

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NOTES TO THE FORM OF PROXY:

1. Only shareholders who are registered in the registers of Synergy under their own name on the date on which shareholders must be recorded as such in the registers maintained by the transfer secretaries, in order to attend and vote at the general meeting, being Friday, 14 October 2016 (the “voting record date”), may complete a form of proxy or attend the general meeting. This includes certificated shareholders or “own name” dematerialised shareholders. A proxy need not be a shareholder of Synergy.

2. Certificated shareholders wishing to attend the general meeting have to ensure beforehand with the transfer secretaries that their shares are registered in their own name.

3. Beneficial shareholders whose shares are not registered in their “own name”, but in the name of another, for example, a nominee, may not complete a proxy form, unless a form of proxy is issued to them by a registered shareholder and they should contact the registered shareholder for assistance in issuing instructions on voting their shares, or obtaining a proxy to attend, speak and, on a poll, vote at the general meeting.

4. Dematerialised shareholders who have not elected “own name” registration in the registers of Synergy through a CSDP and who wish to attend the general meeting, must instruct the CSDP or broker to provide them with the necessary letter of representation to attend.

5. Dematerialised shareholders who have not elected “own name” registration in the register of Synergy through a CSDP and who are unable to attend, but wish to vote at the general meeting, must timeously provide their CSDP or broker with their voting instructions in terms of the custody agreement entered into between that shareholder and the CSDP or broker.

6. A shareholder may insert the name of a proxy or the names of two or more alternative proxies of the shareholder’s choice in the space, with or without deleting “the chairman of the general meeting of shareholders”. The person whose name stands first on the form of proxy and who is present at the general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

7. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed, should such shareholder wish to do so. In addition to the aforegoing, a shareholder may revoke the proxy appointment by:

7.1 cancelling it in writing, or making a later inconsistent appointment of a proxy; and

7.2 delivering a copy of the revocation instrument to the proxy, and to Synergy.

8. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the shareholder as of the later of the date:

8.1 stated in the revocation instrument, if any; or

8.2 upon which the revocation instrument is delivered to the proxy and Synergy as required in section 58(4)(c)(ii) of the Companies Act.

9. Should the instrument appointing a proxy or proxies have been delivered to the transfer secretaries, as long as that appointment remains in effect, any notice that is required by the Companies Act or the MoI to be delivered by the company to the shareholder must be delivered to:

9.1 the shareholder; or

9.2 the proxy or proxies if the shareholder has in writing directed Synergy to do so and has paid any reasonable fee charged by Synergy for doing so.

10. A proxy is entitled to exercise, or abstain from exercising, any voting right of the relevant shareholder without direction, except to the extent that the existing MoI or the instrument appointing the proxy provide otherwise.

11. If Synergy issues an invitation to shareholders to appoint one or more persons named by Synergy as a proxy, or supplies a form of instrument appointing a proxy:

11.1 such invitation must be sent to every shareholder who is entitled to receive notice of the meeting at which the proxy is intended to be exercised;

11.2 Synergy must not require that the proxy appointment be made irrevocable; and

11.3 the proxy appointment remains valid only until the end of the relevant meeting at which it was intended to be used, unless revoked as contemplated in section 58(5) of the Companies Act.

12. Any alteration or correction made to this form of proxy must be initialled by the signatory/ies. A deletion of any printed matter and the completion of any blank space(s) need not be signed or initialled.

13. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form unless previously recorded by the transfer secretaries or waived by the chairman of the general meeting.

14. A minor must be assisted by his/her parent/guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the transfer secretaries.

15. A company holding shares in Synergy that wishes to attend and participate at the general meeting should ensure that a resolution authorising a representative to act is passed by its directors. Resolutions authorising representatives in terms of section 57(5) of the Companies Act must be lodged with the transfer secretaries prior to the general meeting.

16. Where there are joint holders of shares any one of such persons may vote at any meeting in respect of such shares as if he were solely entitled thereto; but if more than one of such joint holders wishes to be present or represented at the general meeting, that one of the said persons whose name appears first in the register of such shares or his proxy, as the case may be, shall alone be entitled to vote in respect thereof.

17. The chairman of the general meeting may reject or accept any proxy which is completed and/or received other than in accordance with the instructions, provided that he shall not accept a proxy unless he is satisfied as to the matter in which a shareholder wishes to vote.

18. A proxy may not delegate his/her authority to act on behalf of the shareholder, to another person.

19. A shareholder’s instruction to the proxy must be indicated by the insertion of the relevant number of shares to be voted on behalf of that shareholder in the appropriate space provided. Failure to comply with the above will be deemed to authorise the chairperson of the general meeting, if the chairperson is the authorised proxy, to vote in favour of the resolutions at the general meeting or other proxy to vote or to abstain from voting at the general meeting as he/she deems fit, in respect of the shares concerned. A shareholder or the proxy is not obliged to use all of the votes exercisable by the shareholder or the proxy, but the total of votes cast in respect whereof abstention is recorded may not exceed the total of the votes exercisable by the shareholder or the proxy.

20. Forms of proxy are requested to be deposited at the transfer secretaries, Link Market Services South Africa Proprietary Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, 2001, posted to PO Box 4844, Johannesburg, 2000, faxed to 086 674 2450 or emailed to meetfax@linkmarketservices.co.za so as to arrive no later than 10:00 on Friday, 21 October 2016. Forms of proxy not lodged with the transfer secretaries in time may be handed to the chairman of the general meeting immediately before the commencement of the general meeting. Any shareholder who completes and lodges a form of proxy will nevertheless be entitled to attend, speak and vote in person at the general meeting should the shareholder decide to do so.

21. This form of proxy may be used at any adjournment or postponement of the general meeting, including any postponement due to a lack of quorum, unless withdrawn by the shareholder.

22. The aforegoing notes include a summary of the relevant provisions of section 58 of the Companies Act, as required in terms of that section.

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160 PRINTED BY INCE (PTY) LTD REF. JOB011422