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: ZAE000202883 JSE 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.

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.

CORPORATE INFORMATION

Registered office of Synergy

Synergy Income Fund Limited (Registration number 2007/032604/06) One-on-Ninth Corner Glenhove Road and Ninth Street Melrose Estate, 2196 (PO Box 2234, Parklands, 2121)

Corporate advisor

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

Independent expert

PSG Capital Proprietary Limited (Registration number 2006/015817/07) 1st Floor, Ou Kollege Building 35 Kerk Street Stellenbosch, 7600 (Postal address as above)

Independent reporting accountants

Grant Thornton Johannesburg Chartered Accountants (Practice number 903485E) @Grant Thornton Wanderers Office Park 52 Corlett Drive Illovo, 2196 (Private Bag X5, Northlands, 2116)

Independent property valuer

Quadrant Properties Proprietary Limited (Registration number 1995/003097/07) 16 North Road, Dunkeld West Sandton, 2196 (PO Box 1984 Parklands 2121)

Transfer Secretaries

Link Market Services South Africa Proprietary Limited (Registration number 2000/007239/07) 13th Floor, Rennie House 19 Ameshoff Street Braamfontein, 2001 (PO Box 4844, Johannesburg, 2000)

Vukile Asset Management Proprietary Limited

(Registration number 2007/016890/07) One-on-Ninth Corner Glenhove Road and Ninth Street Melrose Estate, 2196 (PO Box 2234, Parklands, 2121)

Date and place of incorporation of VAM

Incorporated in the Republic of South Africa on 21 June 2007

Company secretary

Johann Neethling (FCIS, MCom) Synergy Income Fund Limited One-on-Ninth Corner Glenhove Road and Ninth Street Melrose Estate, 2196 (PO Box 2234, Parklands, 2121)

Sponsor

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

Attorneys and competition law advisors

Cliffe 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 property valuer

Knight Frank (Gauteng) Proprietary Limited (Registration number 2011/100568/07) 50 Old Kilcullen Road Bryanston, 2191 (Postal address as above)

Independent property valuer

Real Insight Proprietary Limited (Registration number 2012/101775/07) 5th Floor, North Wing Hyde Park Corner Hyde Park, 2196 (PO Box 413581, Craighall, 2024)

Cumulative Properties Limited

(Registration number 2015/335578/06) 2nd Floor 18 Melrose Boulevard Melrose Arch, 2196 (PO Box 685, Melrose Arch, 2076)

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

Date and place of incorporation of Cumulative

Incorporated in the Republic of South Africa on 21 September 2015

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

			Page
26.		Litigation statement	39
27.	Directors' responsibility statement
28.	Opinion and recommendation
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

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 [email protected] 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.

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.

SALIENT DATES AND TIMES

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

2016

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:

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.
Synergy shareholders are referred to page 4 of this circular for information on the action required to be taken by them.
1. 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.
1. 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.

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;

"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;

"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;

""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;

"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.

Synergy Income Fund Limited

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.
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 incomefocused 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.

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.
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
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.

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	[email protected]
If delivered by hand or courier	The Executive Director Takeover Regulation Panel 1st Floor Building, Free Stone Park 135 Patricia Road Atholl, 2196
If posted	The Executive Director Takeover Regulation Panel PO Box 91833 Auckland Park, 2006
If faxed	The Executive Director Takeover Regulation Panel +27 11 784 0062

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;
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.

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.

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).

Director	Direct beneficial	Indirect beneficial	Held by associates	Total shares held	% of total shares
Sedise Moseneke	604 352	9 300 606	–	9 904 958	1.43
Michael Potts	940 037	–	–	940 037	0.14
Laurence Rapp	1 536 074	185 000	–	1 721 075	0.25
Sean 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 onmarket 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 onmarket 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 onmarket sale to settle tax liability due in respect of shares vested in terms of paragraph 4.17.1.4.7 above;
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).

Director	Direct beneficial	Indirect beneficial	Held by associates	Total shares held	% of total shares
Sedise Moseneke	604 352	9 300 606	–	9 904 958	1.43
Michael Potts	940 037	–	–	940 037	0.14
Laurence Rapp	1 536 074	185 000	–	1 721 074	0.25
Ina Lopion	349 989	–	–	349 989	0.05
Mervyn 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.

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.

Director	Direct beneficial	Indirect beneficial	Total shares held	% of B shares	% of total shares
Sedise Moseneke	200	–	200	<0.01	<0.01
Michael Potts	19 500	–	19 500	0.02	0.01
C 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;
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
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

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 on GLA %	Based on gross income %
Western Cape	27.0	33.2
KwaZulu-Natal	22.5	21.7
Gauteng	12.6	11.2
Mpumalanga	12.1	9.4
Free State	11.0	12.1
Limpopo	9.2	7.6
North 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 on GLA %	Based on gross income %
A	74.4	69.6
B	5.4	6.3
C	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).

8.2.4 Vacancy profile

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

8.2.5 Lease expiry profile

	Based on GLA %	Based on gross income %
Vacant	4.5	–
March 2017	23.8	25.2
March 2018	14.6	17.7
March 2019	19.9	21.1
March 2020	18.6	19.4
March 2021	10.5	9.7
March 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 on GLA %	Based on gross income %
Western Cape	13.7	15.9
KwaZulu-Natal	14.1	8.7
Gauteng	69.5	71.0
Eastern Cape	2.7	4.4
Total	100.0	100.0

	Based on GLA %	Based on gross income %
Retail	1.4	2.8
Office	41.2	62.7
Industrial	57.4	34.5
Total	100.0	100.0

9.2.3 Tenant profile

	Based on GLA %	Based on gross income %
A	36.4	40.8
B	7.5	9.8
C	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 on GLA %
Retail	3.5
Office	9.0
Industrial	2.1
Total	5.0

9.2.5 Lease expiry profile

	Based on GLA %	Based on gross income %
Vacant	5.0	–
March 2017	40.5	40.0
March 2018	19.7	21.7
March 2019	10.3	10.9
March 2020	13.2	11.2
March 2021	6.8	10.8
March 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	118.93
Office	95.90
Industrial	42.86
Total	65.38

	%
Retail	6.6
Office	7.8
Industrial	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.

	Based on GLA %	Based on gross income %
Eastern Cape	4.0	5.3
Free State	4.3	2.5
Gauteng	53.4	46.4
KwaZulu-Natal	11.2	13.6
Limpopo	6.7	8.9
Mpumalanga	5.8	5.6
Northern Cape	4.2	5.6
North West	2.2	0.9
Western Cape	8.2	11.2
Total	100.0	100.0

10.2.1 Geographic profile

10.2.2 Sectoral profile

	Based on GLA %	Based on gross income %
Retail	26.0	32.0
Office	32.2	44.6
Industrial	41.8	23.4
Total	100.0	100.0

	Based on GLA %	Based on gross income %
A	38.0	43.0
B	14.0	17.0
C	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	9.6
Office*	17.4
Industrial	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 on GLA %	Based on gross income %
Vacant	10.2	–
March 2017	26.3	31.4
March 2018	20.3	24.0
March 2019	18.7	22.0
March 2020	10.4	13.3
March 2021	6.7	5.3
March 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 average rental per m2
Retail	77.2
Office	94.7
Industrial	33.4
Total	63.0

10.2.7 Weighted average rental escalation profile

	%
Retail	8.0
Office	8.5
Industrial	8.3
Total	8.3

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

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.

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.

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):

Director	Direct beneficial	Indirect beneficial	Total 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
Director	Direct beneficial	Indirect beneficial	Total shares held	% of B shares	% of total shares
Sean Segar	116 428	–	116 428	0.11	0.08
Sedise Moseneke	200	–	200	<0.01	<0.01
Michael Potts	19 500	–	19 500	0.02	0.01
C Potts (associate of Michael
Potts)	350	–	350	<0.01	<0.01
Rob Hawton	100	–	100	<0.01	<0.01
Total	136 578	–	136 578	0.13	0.09

"A" shares

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.

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.

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:

Executive	Number of "B" shares	% of "B" shares	% of total shares
Gerald Leissner	6 000 000	1.50	1.34
Mark Kaplan	6 000 000	1.50	1.34
Imraan Suleman	6 000 000	1.50	1.34
Chief Operating Officer of Synergy (from the implementation date)	3 000 000	0.75	0.67
Financial 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 and allowances R'000	Other benefits and ad-hoc payments R'000	Performance bonus R'000	Total R'000
Executive directors
Sedise Moseneke	–	1 297	–	1 335	2 632
Rob Hawton	–	1 250	–	58	1 308
Non-executive directors
Laurence Rapp2	264	–	–	–	264
Michael Potts2	144	–	–	–	144
Martin Kuscus	312	–	–	–	312
Lizwi Mtumtum	336	–	–	–	336
Sean Segar	240	–	–	–	240
Ilan Zwarenstein2	80	–	–	–	80
Total	1 376	2 547	–	1 393	5 316

Remuneration paid to executive directors is paid by Vukile, with the costs recovered from Synergy via asset management fees charged.
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.
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.
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.

Shareholder	Number of "A" shares	% of "A" shares	% of total shares
Investment Solutions Limited	9 811 617	20.72	6.38
Coronation Fund Managers	9 189 264	19.41	5.98
Vukile	4 691 084	9.91	3.05
Golden Hind Partnership	3 247 247	6.86	2.11
Old 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.

Shareholder	Number of "B" shares	% of "B" shares	% of total shares
Vukile	95 241 591	89.55	61.96
Coronation 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.

Shareholder	Number of "A" shares	% of "A" shares	% of total shares
Investment Solutions Limited	9 811 617	20.72	2.20
Coronation Fund Managers	9 189 264	19.41	2.06
Vukile	4 691 084	9.91	1.05
Golden Hind Partnership	3 247 247	6.86	0.73
Old 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.

Shareholder	Number of "B" shares	% of "B" shares	% of total shares
Arrowhead	247 412 267	61.74	55.22
Vukile	118 187 113	29.49	27.42
Total	365 599 380	91.24	82.64

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.

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 postimplementation 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.

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.

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

15 September 2016

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

15 September 2016

The Directors Synergy Income Fund Limited One-on-Ninth Cnr Glenhove Road and Ninth Street Melrose 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.

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.

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;
• 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.

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 nonfinancial 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.

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

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.
(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.
(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
(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.
(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.

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

The Directors Synergy Income Fund Limited Ground Floor, One-on-Ninth Corner Glenhove Road and Ninth Street Melrose Estate 2196

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.

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 marketrelated 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.

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.

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

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.

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 Ltd Roger Martin Fitchet MRICS FIV(SA) Registered Professional Valuer SACPVP 1373

No	Property name	Physical address	Owner	description (Erf number) Registered legal	description Property and use	inspection date Valuer's	Leasehold Freehold\	of leasehold Tenure	Rentable area (GLA) (m²)	age of building Approximate	Building grade	contravention planning and statutory Zoning, (if any) town	void/vacancy perpetual Assumed	Income projection (Net Income, excl to 31 July 2017 1 August 2016 for the period CapEx) (R)	Valuation (R) as at 31 July 2016
	SYNERGY PORTFOLIO
1	Shopping Centre Atlantis City	Wesfleur Close, Western Cape Atlantis,	Income Fund Synergy	Erf 15634 & 6192 Wesfleur	Shops	25th April 2016	Freehold	N/A	22 105	2005	Shopping Centre Community	General Business 2 & 4	3.00%	R29 090 505	R302 100 000
2		Emalahleni Highland Mews Corner Hans Strydom Avenue and Watermeyer Street, Mpumalanga Emalahleni,	Income Fund Synergy	Erf 1522 Del Judor Extension 16	Shops	30th March 2016	Freehold	N/A	16 804	1970; 2008	Shopping Centre Community	Business 3	1.50%	R18 295 093	R224 000 000
3	Hammanskraal Renbro Shopping Centre	Corner of the Old Warmbaths Road (R101) and (R734), Hammanskraal Extension 1, Gauteng	Income Fund Synergy	Hammanskraal Erf 410 Ext 1	Shops	29th March 2016	Freehold	N/A	13 098	2009	Shopping Centre Community	Special	5.00%	R12 949 490	R160 400 000
4	Hillcrest Richdens Shopping Centre	59 – 61 Old Main Road, KwaZulu-Natal Hillcrest,	Income Fund Synergy	and Remainder of Portion 48 Registration Division FT of the Farm Albinia 957, Portion 431, 1358, 450	Shops/ Office	21st March 2016	Freehold	N/A	10 196	1980	Shopping Centre Neighbourhood	Commercial General	2.00%	R12 305 036	R137 400 000
5	Shopping Centre KwaMashu	KwaMashu Unit P, Malandela Road, KwaZulu-Natal Durban,	Income Fund Synergy	Erf 18, 19, 20, 21, 22, 23, Kwamashu Unit P 24, 25, 51 and 52	Shops	28th March 2016	Freehold	N/A	11 144	2007	Shopping Centre Neighbourhood	Special Shopping	2.50%	R10 226 351	R103 300 000
6	Valley Shopping Centre Makhado Nzhelele	Corner Main Road and the R523 to Thohoyandou	Income Fund Synergy	Erf 3013 Makhado – A	Shops	24th March 2016	Freehold	N/A	5 308	2009	Shopping Centre Neighbourhood	Business 2	1.50%	R4 919 770	R55 900 000
7	Roodepoort Ruimsig Shopping Centre	Malcolm Roads, Amarosa, Corner Dorreen and Roodepoort, Gauteng	Income Fund Synergy	& Erf 177 Amorosa Erf 103 Amorosa Extension 12 Extension 5	Shops/ Office	31st March 2016	Freehold	N/A	9 296	2003	Shopping Centre Community	Business 1	1.00%	R9 958 095	R119 400 000
8	Ulundi King Senzangakona Shopping Centre	KwaZulu-Natal Ulundi,	Income Fund Synergy	Erf 493 & Erf 114 Ulundi BA	Shops	5th April 2016	Freehold	N/A	22 365	2010	Shopping Centre Community	Commercial General	0.50%	R22 643 796	R262 300 000
9	Van Riebeeckshof Shopping Centre Welgedacht	Koelenhof and Delaire Roads, Corner of Van Riebeeckshof, Durbanville	Income Fund Synergy	Erf 37821 & Erf 37826 Bellville	Shops	25th April 2016	Freehold	N/A	5 181	2002	Shopping Centre Neighbourhood	Local Business 2	1.00%	R6 198 924	R64 000 000

SCHEDULE OF PROPERTIES 58

Valuation (R) 31 July 2016 R63 600 000 (Net Income, excl to 31 July 2017 1 August 2016 for the period projection (R) R7 239 317 Income CapEx) void/vacancy perpetual Assumed 3.00% General Business 3 contravention Zoning, town planning and statutory (if any) B-Grade offices Building	R77 700 000 R7 869 036 3.00% Standard Industrial General Industrial 1 1990s	R86 000 000 R9 130 934 1.00% Business 4 B+ Grade offices	R177 800 000 R16 669 488 3.50% Standard Industrial Industrial 3	R50 800 000 R4 970 510 3.00% Residential 1 & Business 4	R71 100 000 R5 876 251 6.00%	R89 800 000 R7 865 133 2.00%	R143 900 000 R14 442 043 3.00%	R92 900 000 R7 942 421 5.00%	R58 100 000 R5 733 080 4.00%	R86 900 000 R8 366 111 4.50%	R54 400 000 R5 978 687 3.00%



					Special	General Industrial	Business 1		Special	Special	Business 4
Grade				B+ Grade offices	B-Grade offices	Manufacturing Light	B-Grade offices	Standard Industrial Industrial 3	Shopping Centre Neighbourhood	B-Grade offices	B+ Grade offices
Approximate building age of 1990s		1980s	1998	1999	2006	1998	1984	1995	1998	2000	1999
(GLA) (m²) Rentable 6 317 area	19 834	9 040	35 016	5 744	8 457	16 914	12 093	28 225	4 431	9 045	3 857
Tenure of leasehold N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A
Leasehold Freehold Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold
inspection date Valuer's 25th April 2016	25th April 2016	28th April 2016	31st March 2016	28th March 2016	31st March 2016	10th March 2016	31st March 2016	29th March 2016	29th March 2016	31st March 2016	31st March 2016
description Property and use Shops/ Office	Industrial	Offices	Industrial	Offices	Offices	Industrial	Offices	Industrial	Shops	Offices	Offices
legal description (Erf number) Registered Erf 31628 Bellville	Erf 18005,18006 & 23181 Parow	East London Erf 42903	Meadowdale Ext 1 Erf 210	Parktown Erf 930	Midridge Park Erf 2	Remainder of Erf 17764 Pinetown	Erf 3261 Pretoria	Erf 268 Robertville Extension 4 & Erf 105 Robertville Extension 3	Portion 13 of Erf 4602 Bryanston	Erf 6 Epsom Downs	Erf 431 Hyde Park
Vukile Prop Fund Owner Ltd	Vukile Prop Fund Ltd	Vukile Prop Fund +Ltd	Vukile Prop Fund Ltd	Vukile Prop Fund Ltd	Vukile Prop Fund Ltd	Vukile Prop Fund Ltd	Vukile Prop Fund Ltd	Proprietary Ltd MICC Prop	Vukile Prop Fund Ltd	Vukile Prop Fund Ltd	Vukile Prop Fund Ltd
73 Wille Van Schoor Avenue, Physical address Bellville,	Corner Fritz Spilhaus Avenue and Jean Simonis Street, Western Cape Western Cape Parow,	59 Western Avenue, East London Vincent,	50 Herman Road, Gauteng Province Meadowdale, Germiston,	55 Empire Road, Parktown	International Gateway Business Park off New Road, Challenger Avenue & Pioneer Avenue, Midridge Park, Midrand	26 – 30 Kyalami Road, KwaZulu-Natal Westmead, Pinetown,	220 Madiba Street, Gauteng Province Pretoria,	255 Nadine Street, Roodepoort	Corner William Nicol Drive and Main Road, Bryanston, Sandton	Epsom Downs, Sloane Street, Bryanston, Sandton	6th Avenue and 1st Road in Hyde Park, Johannesburg, Gauteng
Cape Town Bellville VUKILE PORTFOLIO Property name Suntyger No 10	Cape Town Parow Industrial Park	East London Vincent Office Park 12	Germiston Meadowdale R24 13	Jhb Parktown 55 Empire Road 14	Midrand IBG	Kyalami Industrial Park Pinetown Westmead	Pretoria High Court Chambers	Roodepoort Robertville Industrial Park	Grosvenor Shopping Centre Sandton Bryanston	Sandton Bryanston St Andrews Complex	Sandton Hyde Park 50 Sixth Road

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

The Directors Synergy Income Fund Ltd One-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

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.

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.

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.

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 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 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.

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.

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.

15.7 Structural condition

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.

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 Parfitt Quadrant Properties Proprietary Ltd Dunkeld Court 16 North Road, corner Jan Smuts Avenue Dunkeld West, 2196 Professional Associated Valuer Dip. Val. MIV(SA) Registered Professional Property Valuer (no. 2712/2) (Registered without restriction in terms of the Property Valuers Act, No. 47 of 2000)

No	Building name	Physical address	description Legal	description Property and use	inspection Valuer's date	Freehold/ Leasehold	Tenure of leasehold	Lettable area (m2)	Building age	Zoning, town planning and statutory contravention (if any)	Assumed perpetual vacancy void/	(R) Income projection for the period 31 July 2017 1 June 2016 to	31 July 2016 (R) Valuation as at
	SYNERGY PORTFOLIO
1	Shopping Centre Elim Hubyeni	Corner of Giyani and Levubu Roads, Limpopo Elim,	Elim-Hubyeni Township Erf 3	Shopping Centre Neighbourhood	April/May 2016	Freehold	–	11 874	3 Years	Special for retail – No town planning or statutory contraventions	0.40%	11 639 359.93	127 500 000
2	Game Centre Ermelo	Corner de Emigratie Road and Voortrekker Ave, Mpumalanga Ermelo,	Ermelo Ext 12 Erf 9392	Shopping Centre Neighbourhood	April/May 2016	Freehold	–	6 639	9 Years	Special for retail – No town planning or statutory contraventions	0.50%	5 334 127.25	53 800 000
3	Gugulethu Square	Ny 1 Gugulethu Mall Ny 1 Ny 25, Cape Town Guguletu,	Remainder of Erf 4483, Erven 4486 and 4489 Gugulethu	Shopping Centre Community	April/May 2016	Freehold	–	24 955	7 Years	Business for retail – No town planning or statutory contraventions	0.25%	37 627 663.84	415 000 000
4	Hartbeespoort Sediba Shopping Centre	Hartebeespoort, Die Ou Wapad North West	Melodie Ext 22 Erf 817	Shopping Centre Neighbourhood	April/May 2016	Freehold	–	10 669	11 Years	Special for retail – No town planning or statutory contraventions	1.00%	11 121 650.00	121 500 000
5	Phuthaditjhaba Setsing Crescent	Cnr Setai & Motlaing Road, Phuthaditjhaba, Free State	Erven 12050 Phuthaditjhaba- -A, 1077 Phuthaditjhaba-B and 291 Phuthaditjhaba-D	Shopping Centre Community	April/May 2016	Freehold	–	20 678	8 Years	Business 1 – No town planning or statutory contraventions	0.25%	28 857 067.89	328 000 000
	VUKILE PORTFOLIO												1 045 800 000
6	294 Battery Street Pretoria Silverton	294 Battery Street, Silverton	Erf 2149 Silverton Ext 56	Industrial warehouse with offices B-Grade	April/May 2016	Freehold	–	5 787	8 years	Restricted industrial – No town planning or statutory contraventions	1.00%	2 338 356.05	23 600 000
7	330 Alwyn Street Pretoria Silverton	330 Alwyn Street, Silverton	Portion 39 of Erf 170 Waltloo Ext 1	Industrial warehouse with offices B-Grade	April/May 2016	Freehold	–	1 185	15 Years	General industrial – No town planning or statutory contraventions	0.75%	482 852.05	4 700 000
8	Pretoria Silverton 22 Axle Street	22 Axle Street, Silverton	Erf 2084 Silverton Ext 46	Industrial warehouse with offices B-Grade	April/May 2016	Freehold	–	1 817	7 Years	Restricted industrial – No town planning or statutory contraventions	0.25%	1 064 334.27	11 300 000
9	301 Battery Street Pretoria Silverton	301 Battery Street, Silverton	Erf 2146 Silverton Ext 58	Industrial warehouse with offices B-Grade	April/May 2016	Freehold	–	3 784	4 Years	Restricted industrial – No town planning or statutory contraventions	2.00%	1 871 073.99	18 500 000
10	309 Battery Street Pretoria Silverton	309 Battery Street, Silverton	Silverton Erf 2111 Ext 58	Industrial warehouse with offices B-Grade	April/May 2016	Freehold	–	3 770	6 Years	Restricted industrial – No town planning or statutory contraventions	0.50%	1 934 836.00	20 900 000
11	34 Bearing Crescent Pretoria Silverton	34 Bearing Crescent, Silverton	Erf 2153 Silverton Ext 60	Industrial warehouse with offices A-Grade	April/May 2016	Freehold	–	5 000	8 Years	Restricted industrial – No town planning or statutory contraventions	1.00%	2 511 421.40	26 200 000
12	Valley View Industrial Park Durban	Valley View Industrial Park, 24 Otto Volek Road, New Germany, Durban	New Germany Erf 1227 Durban	Industrial warehouse with offices B-Grade	April/May 2016	Freehold	–	30 790	32 Years	General industrial – No town planning or statutory contraventions	0.75%	12 076 675.04	138 100 000
13	Sunwood Park Lynnwood Pretoria	379 Queens Crescent Street, Pretoria East	Lynnwood Erf 962	A-Grade Offices	April/May 2016	Freehold	–	6 412	25 Years	Special – for offices – No town planning or statutory contraventions	1.25%	6 523 164.89	66 000 000

	Building age Lettable area (m2) Tenure of leasehold	Freehold/ Leasehold	inspection Valuer's date	description Property and use	description Legal	Physical address
	18 Years 5 317 –	Freehold	April/May 2016	A-Grade Offices	Hatfield Erf 665	Cnr Arcadia and Festival Street, Hatfield, Pretoria
	18 Years 8 139 –	Freehold	April/May 2016	A-Grade Offices	Erven 1225 and 1226 Sunninghill Ext 98	11 Simba Road, Sunninghill, Sandton
19 Years	20 157 –	Freehold	April/May 2016	A-Grade Offices	Erf 32139 Bellville	3 Tijgerpark Road, Bellville Park, Bellville
13 Years	8 316 –	Freehold	April/May 2016	A-Grade Offices	Lynnwood Manor Erf 551 Ext 2	Corner of Sanlam, Lynnwood Streets Alkantrand and
16 Years	3 529 –	Freehold	April/May 2016	B-Grade Offices	Units 1 and 2 of SS Xcelpark 503/1990 and Units 8 and 9 of SS Xcelpark 746/2002	441 Lynwood Road, Lynnwood, Pretoria
23 Years	2 410 –	Freehold	April/May 2016	B-Grade Offices	of Erf 246, Portion 5 of Erf 246 Edenburg Re of Portion 2 Re of Erf 246,	36–38 Homestead Street, Rivonia
31 Years	10 365 –	Freehold	April/May 2016	Industrial Park – mini units	Strijdompark Erf 413 Ext 23	5 CR Swart Drive, Strijdompark Randburg,
27 Years	27 249 –	Freehold	April/May 2016	A-Grade Offices	Houghton Estate Erf 2477	36 Boundry Road, Houghton Estate
20 Years	32 006 –	Freehold	April/May 2016	warehouse with offices B-Grade Industrial	Erven 294, 295 and 441 Kya Sand Ext 27	Cnr River Rd & Hyskraan, Randburg, Kya Sands

25 049

REAL INSIGHT SUMMARY VALUATION REPORT IN RESPECT OF THE PROPERTIES COMPRISING THE CUMULATIVE PORTFOLIO

The Directors Synergy Income Fund Limited 2nd Floor, 18 Melrose Boulevard Melrose Arch Johannesburg

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.

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	Addresses	Rentable area (GLA) (m2 )	Property use
101 Dorp Street GVT	101 Dorp Street	5 093	Office
105 Landdros Mare Street &	105 Landdros Mare Street &
106 Mark Street	106 Mark Street	571	Retail
106 Landdros Mare Street	106 Landdros Mare Street	1 200	Retail
135 Pietermaritz Street	135 Pietermaritz Street	2 198	Office
137 Sivewright	131 Sivewright Avenue	4 518	Office
151/155 Juniper Road	151 – 155 Juniper Road	1 561	Office
16/18 Forge Rd	16 & 18 Forge Road	3 166	Industrial
21 Dartfield (Omlap)	21 Dartfield Field	1 016	Industrial
249 Commissioner	141 Albertina Sisulu	1 120	Industrial
38 Derrick Road	38 Derrick Road	3 846	Industrial
38 Prospecton Road	38 Prospection Road	1 528	Mixed Use
4 Weightman Avenue	4 Weightman Avenue	4 171	Retail
46 Steel Road	46 Steel Road	3 790	Industrial
9 Montague Drive	9 Montague Drive	2 649	Industrial
Absa Gezina	840 Steve Biko Road, Gezina	2 053	Retail
Absa Heidelberg	42 Ueckermann, Heidelberg	777	Retail

		Rentable area
Building name	Addresses	(GLA) (m2 )	Property use
Absa Nigel	Cnr Hendrik Verwoerd & 2nd Ave	961	Retail
ABSA Randburg	308 Oak Avenue	1 533	Retail
Bedford	4 – 6 Skeen Boulevard	9 095	Office
Beka Bloemfontein Total	82 Long Street, Hilton	400	Industrial
Beka Durban	17 Cordova Place, Briardene Industrial Park	490	Industrial
Citizens Building Kimberley	8 – 14 Jones Road	840	Retail
Citizens Cape Town	177 Main Road	1 798	Retail
CMH Spartan	60 Steel Road	2 467	Industrial
Corpgro Welkom	Cnr 2nd & 3rd Streets	4 401	Industrial
Creston	49 – 51 Forge Road	6 546	Industrial
Dept. of Forestry & Water	2 Hargreaves Avenue	3 790	Office
Diesel Road	12 – 14 Diesel Road	7 923	Industrial
	Main Road, Hazyview
Dikai Shopping Centre	(R40 National Highway Cnr R536)	2 923	Retail
Edufin PE	3 Sommers Road	3 500	Office
Ellerines Dundee	Cnr Wilson, King Edward & Victoria Streets	3 518	Retail
Ellerines Thohoyandou	Thohoyandou Shopping Centre	829	Retail
Empire Place	106 Hans van Rensburg Street	1 066	Office
F B Motors	105 & 107 Hans van Rensburg Street	4 217	Office
Federal Mogul	41 Anderson Street	900	Office
Greytown Shopping Centre	Cnr Sergeant & Oakes Streets	5 373	Retail
Groblersdal Fruit & Veg City	2 Van Riebeeck Street	3 980	Retail
Herfred Pietersburg	52 Bok Street	2 250	Retail
Hi Tech Mini Factories	14 – 16 Gerhardus	2 719	Industrial
Jet Industrial Park	7 Harold Flight Street	10 209	Industrial
JM Investments	1321 Spyker Crescent	2 700	Industrial
Karoo Junction	C/O Donkin St & Danie Theron, Beaufort West	6 899	Retail
Kimberley Building	41 du Toitspan Way	1 689	Retail
Kimberley Printing	13 Woodley Street	1 193	Parking
Kimberly Clark	Bevan Road	6 817	Industrial
Klein Brothers	52 – 62 George Street	915	Retail
Kolbenco	6 Liebenberg Ave Alrode	10 824	Industrial
La Rocca	14 Petunia Street cnr Main Road	2 935	Office

Lea Glen	3 Amanda Ave, Lea Glen	3 411	Industrial
Longmarket Street Branch	188 Longmarket Street	3 890	Mixed Use
Lynwood Botco Place	61 Kasteel Road, Lynwood Glen	493	Office
Lynwood Wapadrant	64 Lynwood Road, Lynwood Glen	1 304	Office
Maverick Corner	65 Betty Street	866	Mixed Use
McCarthy Centre – Turffontein	3 End Street	5 935	Industrial
Media Shop	138 Kelvin Shop, Morningside Manor	2 522	Office
Melville Properties	Cnr 7th Street & 2nd Avenue	1 094	Retail
Metcash Welkom	4th 11th Street	6 812	Industrial
Middelburg SAP	37 SADC Vos Street	3 400	Office
Motswedi House	495 Summit Road	1 630	Office
Nedbank Kimberley	37 Chapel Street	1 252	Office
Nelspruit Centre	Cnr Henshall & Anderson Streets	1 060	Retail
Nelspruit Ellerines 1	20 Bester Street	1 147	Retail
Nu – Payment	8 Kingfisher Avenue	1 408	Office
Oakhill	Fourways Golf Park, Roos Street	1 361	Office
Odendaalsrus Shopping Centre	66 Waterkant Street, Odendaalsrus	3 863	Retail
OK Klerksdorp	Cnr Delver, Laesk & Oliver Tambo Streets	7 931	Retail
Oudehuis Centre	122 Main Road	4 182	Mixed Use

Building name	Addresses	Rentable area (GLA) (m2 )	Property use
Parc Du Bel	19 Strand Street	2 299	Mixed Use
Parmac	24 Park Street	4 155	Industrial
Perm – Smith Street	343 Smith Street	10 177	Office
Perm Building Pietermaritzburg	234 Church Street	2 726	Office
Perm Kimberley	33 du Toitspan Way	4 967	Office
Philippi Court	Cnr New Eisleben & Lansdown Roads	1 357	Office
Plantation Road 18	18 Plantation Road	3 954	Industrial
Plantation Road 20	20 Plantation Road	4 209	Industrial
Propstars	127 Doornfontein & 6 Davies Street	6 080	Industrial
Provence House Witbank	12 Kruger Street, Witbank	5 866	Office
Rivonia Boulevard	354 Rivonia Boulevard	3 708	Office
Ronsyn Building	26 Devonshire Hill Road	2 391	Retail
Royal Palm	Umgeni Road	893	Retail
Sanlam Centre Vryburg	70 Market Street	1 905	Retail
SAPS – Mitchell's Plain	Alpha Street	3 416	Office
SAPS Worcester	Fairbairn Street	3 848	Office
Sasol Gas Total	272 Kent, Ferndale, Randburg	2 526	Office
Shoprite Boksburg	262 Commissioner Street	3 034	Retail
Simgold	Bunsen Road, Industria	15 484	Industrial
Standard Bank Blackheath	288 Weltevreden Road	2 880	Office
Star Foods	2 Cardiff Road	3 114	Industrial
Tarry's Head Office	Cnr La Rochelle & Crystal Roads	10 824	Industrial
The Arches	7 Taylor Street	2 707	Mixed Use
The Main Change	22 Kruger Street	4 072	Mixed Use
The Pond Shopping Centre	561 James Crescent, Cnr Old Pretoria Road	5 501	Retail
Thohoyandou Centre	Thohoyandou Centre	4 006	Retail
Thohoyandou Shopping Centre	Thohoyandou Shopping Centre	4 359	Retail
Town Centre Boksburg	95 Leeupoort Street	6 883	Mixed Use
Town Talk Nelspruit	17 Andrew Street	1 082	Retail
Truworths Corner	Cnr Symphony Way & Minuet Lane	520	Retail
Tsolo	Main Road, Tsolo	4 097	Retail
Virgin Active Benoni	Cnr Woburn Avenue & Pioneer Drive	3 154	Retail
Wilcon 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.

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.

7. OPTIONS OR BENEFIT DETRIMENT OF CONTRACTUAL ARRANGEMENTS

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.

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.

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

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.

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.

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 Valuation Registered Professional Associated Valuer (No. 3206) (Registered without restriction in terms of the Property Valuers Act, No. 47 of 2000)

5th Floor, North Wing Hyde Park Corner Hyde Park Sandton 2196

SCHEDULE OF PROPERTIES

No	Property name	Physical address	Registered legal description (Erf number)	Property use	inspection date Valuer's	Leasehold Freehold/	Tenure of leasehold	(GLA) (m²) Rentable area	Approximate of building age	Building grade	contravention Zoning, town planning and statutory (if any)	void/vacancy perpetual Assumed	(R) Income projection for the period 1 August 2016 to 31 July 2017	(R) Valuation as at 31 July 2016
1	101 Dorp Street GVT	101 Dorp Street	Remaining Extent of Erf 5887, Pietersburg	Office	6 June 2016	Freehold	N/A	5 093	± 30 Years	C	Educational	10.00%	R5 395 919	R42 300 000
2	105 Landdros Mare Street & 106 Mark Street	105 Landdros Mare Street & 106 Mark Street	Erf 242, Pietersburg	Retail	6 June 2016	Freehold	N/A	571	± 30 Years	C	Business 2	5.00%	R536 479	R6 300 000
3	106 Landdros Mare Street	106 Landdros Mare Street	Portion 1 of Erf 236, Pietersburg	Retail	6 June 2016	Freehold	N/A	1 200	± 30 Years	C	Business 2	5.00%	R1 098 415	R11 500 000
4	135 Pietermaritz Street	135 Pietermaritz Street	Portion 8 of Lot 2313 and Portion 7 of Lot 2313, Portion 4 of Lot 2314, Remainder of Lot 2313, Pietermaritzburg	Office	23 May 2016	Freehold	N/A	2 198	± 30 Years	C	Residential General	10.00%	R2 520 631	R23 800 000
5	137 Sivewright	131 Sivewright Avenue	Erf 1007, New Doornfontein	Office	18 May 2016	Freehold	N/A	4 518	± 30 Years	C	Business 4	15.00%	R3 203 713	R27 600 000
6	151/155 Juniper Road	151 – 155 Juniper Road	Portion 24 of Erf 2118, Durban	Office	11 May 2016	Freehold	N/A	1 561	± 30 Years	B	Shopping General	10.00%	R1 173 708	R13 800 000
7	16/18 Forge Road	16 & 18 Forge Road	Erven 99 & 101, Spartan	Industrial	11 May 2016	Freehold	N/A	3 166	± 20 Years	C	Industrial 2	5.00%	R1 004 568	R9 000 000
8	21 Dartfield (Omlap)	21 Dartfield Field	Erf 173, Eastgate Ext 12	Industrial	17 May 2016	Freehold	N/A	1 016	± 30 Years	C	Special	5.00%	R568 531	R5 800 000
9	249 Commissioner	141 Albertina Sisulu	Erven 430 & 431, City and Suburban	Industrial	18 May 2016	Freehold	N/A	1 120	± 30 Years	C	General	7.50%	R491 169	R4 200 000
10	38 Derrick Road	38 Derrick Road	Erf 167, Spartan	Industrial	11 May 2016	Freehold	N/A	3 846	± 20 Years	C	Industrial 2	2.50%	R1 319 878	R15 000 000
11	38 Prospecton Road	38 Prospection Road	Remainder of Erf 2318, Isipingo	Mixed Use	30 May 2016	Freehold	N/A	1 528	± 10 Years	B	Commercial Limited	5.00%	R1 707 450	R17 300 000
12	4 Weightman Avenue	4 Weightman Avenue	Erf 8914, Empangeni	Retail	22 May 2016	Freehold	N/A	4 171	± 20 Years	B	Commercial Special	5.00%	R3 363 933	R34 500 000
13	46 Steel Road	46 Steel Road	Erf 121, Spartan	Industrial	11 May 2016	Freehold	N/A	3 790	± 20 Years	C	Industrial 2	5.00%	R1 425 293	R16 000 000
14	9 Montague Drive	9 Montague Drive	Erf 1438, Montague Gardens	Industrial	31 May 2016	Freehold	N/A	2 649	± 20 Years	C	Industrial General	3.00%	R1 869 978	R18 400 000
15	Absa Gezina	840 Steve Biko Road, Gezina	Erven 188 & 189, Gezina	Retail	25 May 2016	Freehold	N/A	2 053	± 30 Years	C	Special	5.00%	R2 480 391	R22 400 000
16	Absa Heidelberg	42 Ueckermann, Heidelberg	Portion 2 – 4 of Erf 135, Heidelberg	Retail	17 May 2016	Freehold	N/A	777	± 20 Years	C	Business 1	10.00%	R938 620	R3 500 000
17	Absa Nigel	Cnr Hendrik Verwoerd & 2nd Ave Nigel	Erven 157 & 158, Nigel	Retail	17 May 2016	Freehold	N/A	961	± 20 Years	C	Business 1	5.00%	R995 126	R8 100 000
18	ABSA Randburg	308 Oak Avenue	Erf 972, Ferndale	Retail	23 May 2016	Freehold	N/A	1 533	± 20 Years	C	Special	10.00%	R634 869	R4 900 000
19	Bedford	4 – 6 Skeen Blvd	Erven 1018 & 1019, Bedfordview Ext 219	Office	18 May 2016	Freehold	N/A	9 095	± 20 Years	B	Business 4	15.00%	R9 246 594	R82 200 000
20	Beka Bloemfontein	82 Long Street, Hilton	Erf 15980, Bloemfontein	Industrial	27 May 2016	Freehold	N/A	400	± 20 Years	C	Commercial General	5.00%	R291 487	R2 300 000
21	Beka Durban	17 Cordova Place, Briardene Industrial Park Section 1 & 2 of Pen-Ral Park, Durban		Industrial	23 May 2016	Sectional Title	N/A	490	± 20 Years	B	Industrial Light	5.00%	R367 829	R2 800 000
22	Citizens Building Kimberley	8 – 14 Jones Road	Remaining Extent of Erf 10728, Kimberley	Retail	27 May 2016	Freehold	N/A	840	± 30 Years	C	General Business	5.00%	R632 587	R5 800 000
23	Citizens Cape Town	177 Main Road	Erf 57600, Cape Town	Retail	31 May 2016	Freehold	N/A	1 798	± 20 Years	C	Business B3 General	3.00%	R1 801 947	R17 300 000
24	CMH Spartan	60 Steel Road	Erf 135, Spartan	Industrial	11 May 2016	Freehold	N/A	2 467	± 20 Years	C	Industrial 2	5.00%	R805 719	R8 900 000
25	Corpgro Welkom	Cnr 2nd & 3rd Streets	Erven 6372 – 6374, Welkom Ext 8	Industrial	27 May 2016	Freehold	N/A	4 401	± 20 Years	C	Industrial General	20.00%	R133 628	R2 500 000

Leasehold Freehold/ inspection date Valuer's Property use Registered legal description (Erf number) Physical address Property name		Tenure of leasehold	(GLA) Rentable (m²) area	Approximate of building age	Building grade	contravention Zoning, town planning and statutory (if any)	void/vacancy perpetual Assumed	(R) Income projection for the period to 31 July 2017 1 August 2016	(R) Valuation as at 31 July 2016
Freehold 18 May 2016 Mixed Use Erf 2861, Jeppestown 65 Betty Street Maverick Corner		N/A	866	± 10 Years	B	General	10.00%	R1 271 965	R13 000 000
Freehold 18 May 2016 Industrial Erven 1106, 1107, 1108, City and Suburban X2 & Erven 1113 & 1114, City & Suburban X3 3 End Street McCarthy Centre – Turffontein		N/A	5 935	± 20 Years	B	Industrial 1	10.00%	R2 850 000	R26 700 000
Freehold 17 May 2016 Office Erf 487, Morningside Manor Ext 3 138 Kelvin Shop, Morningside Manor Media Shop		N/A	2 522	± 20 Years	B	Business 4	5.00%	R5 646 577	R49 300 000
Freehold 19 May 2016 Retail Erven 155 and 245, Melville Cnr 7th Street & 2nd Avenue Melville Properties		N/A	1 094	± 30 Years	B	Business 1	10.00%	R1 358 398	R13 600 000
Freehold 27 May 2016 Industrial Erf 9135, Welkom Ext 24 (Voorspoed Oos) 4th 11th Street Metcash Welkom		N/A	6 812	± 20 Years	B	Industrial General	7.50%	R1 598 006	R14 600 000
Freehold 27 May 2016 Office Erf 124, Middelburg 37 SADC Vos Street Middelburg SAP		N/A	3 400	± 20 Years	C	Business 1	15.00%	R1 089 265	R11 400 000
Freehold 17 May 2016 Office Erf 1351, Morningside Ext 147 495 Summit Road Motswedi House		N/A	1 630	± 20 Years	B	Business 4	7.50%	R1 542 806	R18 500 000
Freehold 2 June 2016 Office Erf 10507, Kimberley 37 Chapel Street Nedbank Kimberley		N/A	1 252	± 30 Years	C	General Business	25.00%	R665 721	R7 000 000
Freehold 7 May 2016 Retail Erf 18, Nelspruit Cnr Henshall & Anderson Streets Nelspruit Centre		N/A	1 060	± 30 Years	C	Business 1	5.00%	R1 607 548	R14 600 000
Freehold 7 May 2016 Retail Erf 39, Nelspruit 20 Bester Street Nelspruit Ellerines 1		N/A	1 147	± 30 Years	C	Business 1	5.00%	R1 068 654	R11 100 000
Freehold 17 May 2016 Office Erf 2174, Meyersdal 8 Kingfisher Avenue Nu – Payment		N/A	1 408	± 20 Years	B	Special	5.00%	R2 422 789	R21 700 000
Freehold 23 May 2016 Office Portion 2 of Erf 1213, Witkoppen Ext 54 Fourways Golf Park, Roos Street		N/A	1 361	± 20 Years	B	Special	5.00%	R1 604 039	R15 900 000
Freehold 27 May 2016 Retail Erf 3406, Odendaalrus 66 Waterkant Street, Odendaalrus Odendaalsrus Shopping		N/A	3 863	± 30 Years	C	General Business	3.00%	R2 818 612	R31 100 000
Freehold 2 June 2016 Retail Erven 891, 892, 893, 894, 895, 896, 897, 900 and 901, Klerksdorp Cnr Delver, Laesk & Oliver Tambo Streets OK Klerksdorp		N/A	7 931	± 30 Years	C	Business 1	10.00%	R2 396 537	R22 400 000
22 June 2016 Mixed Use Erf 3057, Somerset West 122 Main Road Oudehuis Centre	Freehold	N/A	4 182	± 30 years	C	General Business	5.00%	R2 852 289	R28 200 000
25 May 2046 Mixed Use Erven 6902 and 6904, Bellville 19 Strand Street Parc Du Bel	Freehold	N/A	2 299	± 20 Years	C	Office Park	5.00%	R1 449 030	R11 800 000
31 May 2016 Industrial Erven 236 – 238, Jeppestown 24 Park Street	Freehold	N/A	4 155	± 30 years	B	Industrial 1	15.00%	R782 863	R7 700 000
25 May 2016 Office Rem Ext of Ptn 3 of Erf 10658, Durban, Rem Ext of Erf 10657 and 10658, Durban, Portion 3 of Erf 10657, Durban and Ptn 7 of Erf 10658, Durban 343 Smith Street Perm – Smith Street	Freehold	N/A	10 177	± 40 years	C	General Business	15.00%	R6 222 833	R57 600 000
30 May 2016 Office Portion 36 of Erf 2523, Pietermaritzburg 234 Church Street Pietermaritzburg Perm Building	Freehold	N/A	2 726	± 40 years	C	Lanes Area Sub Zone	15.00%	R1 279 743	R11 800 000
27 May 2016 Office Erven 10312, Remainder of 10331 and Erf 10338, Kimberley 33 Du Toitspan Way Perm Kimberley	Freehold	N/A	4 967	± 30 years	C	General Business	10.00%	R2 097 841	R23 000 000
30 May 2016 Office Units 1 & 2, Nyanga Court Cnr New Eisleben & Lansdown Roads Philippi Court	Sectional Title N/A		1 357	± 10 Year	C	Commercial	5.00%	R1 744 443	R13 500 000
17 May 2016 Industrial Erf 335, Eastleigh 18 Plantation Road Plantation Road 18	Freehold	N/A	3 954	± 20 years	C	Industrial 3	5.00%	R1 206 225	R13 600 000
Freehold 17 May 2016 Industrial Erf 334, Eastleigh 20 Plantation Road Plantation Road 20		N/A	4 209	± 20 years	C	Industrial 3	5.00%	R1 540 542	R15 200 000
18 May 2016 Industrial Erven 127 – 129, New Doornfontein 127 Doornfontein & 6 Davies Street	Freehold	N/A	6 080	± 50 years	C	General	10.00%	R1 708 592	R16 200 000
27 May 2016 Office Erf 90, Witbank 12 Kruger Street, Witbank Provence House Witbank	Freehold	N/A	5 866	± 20 years	C	Business 1	10.00%	R4 263 732	R47 000 000
2 June 2016 Office Portion 3 of Erf 71, Edenburg 354 Rivonia Boulevard Rivonia Boulevard	Freehold	N/A	3 708	± 20 years	C	Business 3	10.00%	R959 483	R18 200 000

Valuation as at	(R) 31 July 2016	R31 000 000	R16 300 000	R18 900 000	R12 500 000	R27 200 000	R23 300 000	R21 800 000	R39 400 000	R20 400 000	R15 200 000	R8 500 000	R21 400 000	R44 300 000	R30 600 000	R27 500 000	R26 000 000	R22 900 000	R5 900 000	R9 900 000	R30 000 000	R25 800 000	R32 000 000
Income projection for the period 1 August 2016	(R) to 31 July 2017	R2 907 009	R1 626 064	R2 157 567	R1 093 712	R3 254 151	R2 220 956	R2 283 153	R3 714 303	R2 511 071	R1 509 431	R1 083 038	R2 661 395	R4 363 976	R2 915 753	R3 301 093	R3 145 728	R2 140 179	R485 216	R1 172 430	R3 119 317	R2 772 938	R3 808 389
Assumed	void/vacancy perpetual	4.00%	5.00%	10.00%	5.00%	4.00%	5.00%	5.00%	10.00%	5.00%	7.50%	15.00%	5.00%	10.00%	5.00%	5.00%	5.00%	10.00%	5.00%	5.00%	7.50%	2.50%	5.00%
Zoning, town planning and statutory	contravention (if any)	Business B1 General	Special Zone No. 63	Business 1	Commercial General C1	Business Zone 1	Special	Business 1	Industrial 2	Business 4	Industrial General	Industrial 3	Business 2	Educational	Special (Office & Retail)	Business 1	Business 1	Business 1	Business 1	Business 4 General	Commercial Business	such as Offices, Sports Centre, Ancillary uses Gymnasium Health Bar Retail and and	Business 2
	Building grade	C	A	C	B	B	B	C	C	C	C	C	C	B	C	B	B	C	C	C	B	B	B
Approximate	of building age	± 20 years	± 10 years	± 20 years	± 20 Years	± 20 Years	± 20 years	± 30 Years	± 40 Years	± 30 Years	± 20 Years	± 50 Years	± 30 Years	± 10 Years	± 20 Years	± 15 Years	± 15 Years	± 30 Years	± 20 Years	± 20 Years	± 10 Years	± 20 Years	± 30 Years
Rentable area	(GLA) (m²)	2 391	893	1 905	3 416	3 848	2 526	3 034	15 484	2 880	3 114	10 824	2 707	4 072	5 501	4 006	4 359	6 883	1 082	520	4 097	3 154	2 659
	Tenure of leasehold	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	N/A	50 years	50 years	N/A	N/A	N/A	30 years	N/A	N/A
	Leasehold Freehold/	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Freehold	Leasehold	Leasehold	Freehold	Freehold	Freehold	Leasehold	Freehold	Freehold
	inspection date Valuer's	31 May 2016	25 May 2016	27 May 2016	30 May 2016	30 May 2016	23 May 2016	25 May 2016	19 May 2016	23 May 2016	25 May 2016	20 May 2016	20 May 2016	18 May 2016	25 May 2016	6 June 2016	6 June 2016	25 May 2016	7 May 2016	30 May 2016	25 May 2016	25 May 2016	27 May 2016
	Property use	Retail	Retail	Retail	Office	Office	Office	Retail	Industrial	Office	Industrial	Industrial	Mixed Use	Mixed Use	Retail	Retail	Retail	Mixed Use	Retail	Retail	Retail	Retail	Office
	Registered legal description (Erf number)	Erven 153536 and 117431, Cape Town	Erven 471 & 472, Springfield	Erf 124, Vryburg	Erf 50764, Mitchells Plain	Erf 868, Worcester	Erf 1070, Ferndale	Erven 518 – 522, 596 – 598, Boksburg	Erven 69 – 81, Industria	Erf 38, Blackheath	Erf 3152, Pietermaritzburg	Remainder Extent of Erf 19, Stafford	Erf 4156, King William's Town	Erf 1258, City and Suburban		Portion 3 of Erf 29, Thohoyandou BA	Erf 72, Thohoyandou BA	Erven 1544 – 1547, 334 – 338, 419 – 423, Boksburg	Erf 406, Nelspruit	Erf 29412, Mitchells Plain	Erf 174 & Remaining Extent of Erf 175, Tsolo	Erf 35, Kleinfontein Lake	Erf 14498, Kimberley
	Physical address	26 Devonshire Hill Road	Umgeni Road	70 Market Street	Alpha Street	Fairbairn Street	272 Kent Ferndale Randburg	262 Commissioner Street	Bunsen Road, Industria	288 Weltevreden Road	2 Cardiff Road	Cnr La Rochelle & Crystal Roads	7 Taylor Street	22 Kruger Street	561 James Crescent, Cnr Old Pretoria Road Erf 346, Halfway House Ext 17	Thohoyandou Centre	Thohoyandou Shopping Centre	95 Leeupoort Street	17 Andrew Street	Cnr Symphony Way & Minuet Lane	Main Road, Tsolo	Cnr Woburn Avenue & Pioneer Drive	22 Fabricia St, Kimberly
	Property name No	Ronsyn Building 79	Royal Palm 80	Sanlam Centre Vryburg 81	SAPS – Mitchell's Plain 82	SAPS Worcester 83	Sasol Gas 84	Shoprite Boksburg 85	Simgold 86	Standard Bank Blackheath 87	Star Foods 88	Tarry's Head Office 89	The Arches 90	The Main Change 91	The Pond Shopping Centre 92	Thohoyandou Centre 93	Thohoyandou Shopping Centre 94	Town Centre Boksburg 95	Town Talk Nelspruit 96	Truworths Corner 97	Tsolo 98	Virgin Active Benoni 99	Wilcon House 100

Annexure 5

DETAILS OF THE SYNERGY PORTFOLIO

No		Address	Province	Sector	GLA (m2)	(R per/m2) Weighted average rental	Valuer	31 July 2016) Valuation (R) (as at
	Property name
1	Atlantis City Shopping Centre	Wesfleur Close, Atlantis	Western Cape	Retail	22 115	130.32	Knight Frank	302 100 000
2	Elim Hubyeni Shopping Centre	Cnr Giyani and Levuba Roads, Elim	Limpopo	Retail	11 874	83.83	Quadrant	127 500 000
		Cnr Hans Strydom Avenue and Watermeyer Street,
3	Emalahleni Highland Mews	Del Judor Extension 16, Emalanhleni	Mpumalanga	Retail	17 032	97.33	Knight Frank	224 000 000
		Cnr de Emigratie Road and Voortrekker Avenue,
4	Ermelo Game Centre	Ermelo	Mpumalanga	Retail	6 639	82.12	Quadrant	53 800 000
		Ny 1 Gugulethu Mall Ny 1 Ny 25,
5	Gugulethu Square	Gugulethu, Cape Town	Western Cape	Retail	24 955	133.17	Quadrant	415 000 000
		Erf 410, cnr Old Warmbaths Road (R101)
6	Hammanskraal Renbro Shopping Centre	and the R734, Hammanskraal Extension 1	Gauteng	Retail	13 307	112.73	Knight Frank	160 400 000
7	Hartbeespoort Sediba Shopping Centre	Die Ou Wapad, Hartebeespoort	North West	Retail	10 669	105.84	Quadrant	121 500 000
8	Hillcrest Richdens Shopping Centre	59061 Old Main Road, Hillcrest	KwaZulu-Natal	Retail	10 196	121.72	Knight Frank	137 400 000
9	KwaMashu Shopping Centre	Malandela Road, KwaMashu Unit P, Durban	KwaZulu-Natal	Retail	11 204	105.21	Knight Frank	103 300 000
		Consolidated Erf 3013, Corner Main Road
10	Makhado Nzhelele Valley Shopping Centre	and the R523 to Thohoyandou	Limpopo	Retail	5 308	95.40	Knight Frank	55 900 000
11	Phuthaditjhaba Setsing Crescent	Cnr Setai and Motlaing Road, Phuthaditjhaba	Free State	Retail	20 678	115.68	Quadrant	328 000 000
		Cnr Dorreen and Malcolm Roads,
12	Roodepoort Ruimsig Shopping Centre	Amarosa, Roodepoort	Gauteng	Retail	11 177	95.37	Knight Frank	119 400 000
13	Ulundi King Senzangakona Shopping Centre	King Senzangakhona Centre, Ulundi	KwaZulu-Natal	Retail	22 325	101.66	Knight Frank	262 300 000
		Cnr Van Reibeeckshof, Koelenhof and Delaire Roads,
14	Welgedacht Van Riebeeckshof Shopping Centre	Durban	KwaZulu-Natal	Retail	5 181	109.74	Knight Frank	64 000 000
TOTAL					192 660	110.32		2 474 600 000

Notes:

Vukile will acquire all risk and reward in respect of the Synergy portfolio with effect from 1 October 2016. The delivery and transfer of occupation and control of the Synergy portfolio to Vukile will take place on the implementation date. Registration of transfer of the properties forming part of the Synergy portfolio, in the name of Vukile, shall occur as soon as reasonably possible following the implementation date.
1. The Synergy portfolio (valued at R2 474 600 000) will be disposed of in exchange for the acquisition of the Vukile portfolio (valued at R2 431 800 000), plus a cash payment by Vukile to Synergy of R18.2 million, with interest accrued from the effective date to the implementation date. No purchase price per property is disclosed. The difference between the valuation and the effective acquisition cost is due to the independent property valuation being an open market value while the acquisition cost is a negotiated exchange.
1. Properties indicated as being valued by Knight Frank were valued by Martin Fitchet, who is an independent external valuer registered in terms of the Property Valuers Profession Act 47 of 2000. Properties indicated as being valued by Quadrant were valued by Peter Parfitt, who is an independent external valuer registered in terms of the Property Valuers Profession Act 47 of 2000.

80Annexure 6

DETAILS OF THE VUKILE PORTFOLIO

						Weighted		Valuation (R)
No	Property name	Address	Province	Sector	(m2) GLA	(per/m2) average rental	Valuer	31 July 2016) (as at
1	Cape Town Bellville Suntyger	73 Willie van Schoor Avenue, Belville	Western Cape	Office/Retail	6 344	121.70	Knight Frank	63 600 000
2	Cape Town Bellville Tijger Park	3 Tijger Park, Belville Park, Belville	Western Cacpe	Office	20 157	97.69	Quadrant	241 300 000
3	Cape Town Parow Industrial Park	Cnr Fritz Spilhaus Avenue and Jean Simonis Street, Parow	Western Cape	Industrial	19 834	39.88	Knight Frank	77 700 000
4	Durban Valley View Industrial Park	24 Otto Volek Road, New Germany, Durban	KwaZulu-Natal	Industrial	30 790	37.11	Quadrant	138 100 000
5	East London Vincent Office Park	59 Western Avenue, Vincent, East London	Eastern Cape	Office	9 040	101.37	Knight Frank	86 000 000
6	Germiston Meadowdale R24	Erf 210 Herman Road, Meadowdale, Germiston	Gauteng	Industrial	35 016	48.01	Knight Frank	177 800 000
7	Jhb Isle of Houghton	36 Boundary Road, Hougton Estate	Gauteng	Office	27 249	91.55	Quadrant	283 000 000
8	Jhb Parktown 55 Empire Road	55 Empire Road, Parktown	Gauteng	Office	5 960	90.45	Knight Frank	50 800 000
9	Midrand IBG	Road, Challenger Avenue and Pioneer Avenue, International Gateway Business Park, off New Midridge Park, Midrand	Gauteng	Office	8 515	95.49	Knight Frank	71 100 000
10	Pinetown Westmead Kyalami Industrial Park	26–30 Kyalami Road, Westmead, Pinetown	KwaZulu-Natal	Industrial	16 914	48.98	Knight Frank	89 800 000
11	Pretoria Hatfield Festival Street Offices	Cnr Arcadia and Festival Street, Hatfield, Pretoria	Gauteng	Office	5 317	91.86	Quadrant	55 000 000
12	Pretoria High Court Chambers	220 Madiba Street, Pretoria	Gauteng	Office	12 093	74.46	Knight Frank	143 900 000
13	Pretoria Lynnwood Excel Park	441 Lynwood Road, Pretoria	Gauteng	Office	3 529	71.91	Quadrant	27 900 000
14	Pretoria Lynnwood Sanlynn	Cnr of Sanlam, Alkantrand and Lynwood Streets, Pretoria	Gauteng	Office	8 316	139.44	Quadrant	145 000 000
15	Pretoria Lynnwood Sunwood Park	379 Queens Crescent Street, Pretoria East	Gauteng	Office	6 412	95.35	Quadrant	66 000 000
16	Pretoria Silverton 22 Axle Street	22 Axle Street, Silverton	Gauteng	Industrial/Office	1 817	54.76	Quadrant	11 300 000
17	Pretoria Silverton 34 Bearing Crescent	34 Bearing Crescent, Silverton	Gauteng	Industrial/Office	5 000	47.36	Quadrant	26 200 000
18	Pretoria Silverton 294 Battery Street	294 Battery Street, Silverton	Gauteng	Industrial/Office	5 787	37.59	Quadrant	23 600 000
19	Pretoria Silverton 301 Battery Street	301 Battery Street, Silverton	Gauteng	Industrial/Office	3 784	50.93	Quadrant	18 500 000
20	Pretoria Silverton 309 Battery Street	309 Battery Street, Silverton	Gauteng	Industrial/Office	3 770	47.10	Quadrant	20 900 000
21	Pretoria Silverton 330 Alwyn Street	330 Alwyn Street, Silverton	Gauteng	Industrial/Office	1 185	42.96	Quadrant	4 700 000

						Weighted		Valuation (R)
					GLA	average rental		(as at
No	Property name	Address	Province	Sector	(m2)	(per/m2)	Valuer	31 July 2016)
22	Randburg Trevallyn Industrial Park	Cnr River Road and Hyskraan, Randburg Kya Sands	Gauteng	Industrial/Office	32 006	40.99	Quadrant	144 000 000
23	Randburg Tungsten Industrial Park	5 CR Swart Drive, Randburg	Gauteng	Industrial	10 365	49.14	Quadrant	55 400 000
24	Roodepoort Robertville Industrial Park	255 Nadine Street, Roodepoort	Gauteng	Industrial	28 226	38.83	Knight Frank	92 900 000
25	Sandton Bryanston Grosvenor Shopping Centre	Cnr William Nicole Drive, Grosvenor Road and Main Road, Bryanston	Gauteng	Retail	4 585	118.93	Knight Frank	58 100 000
26	Sandton Bryanston St Andrews Complex	Sloane Street, Bryanston	Gauteng	Office	10 184	82.84	Knight Frank	86 900 000
27	Sandton Hyde Park 50 Sixth Road	Cnr 6th Avenue and 1st Road, Hyde Park, Johannesburg	Gauteng	Office	4 110	119.74	Knight Frank	54 400 000
28	Sandton Rivonia 36 Homestead Road	36 – 38 Homestead Street, Rivonia	Gauteng	Office	2 410	84.53	Quadrant	32 000 000
29	Sandton Sunninghill Place	11 Simba Road, Sunninghill	Gauteng	Office	8 139	84.40	Quadrant	85 900 000
Total					336 854	65.38		2 431 800 000

Notes:

1. Synergy will acquire all risk and reward in respect of the Vukile portfolio with effect from 1 October 2016. The delivery and transfer of occupation and control of the Vukile portfolio to Synergy will take place on the implementation date. Registration of transfer of the properties forming part of the Vukile portfolio, in the name of Synergy, shall occur as soon as reasonably possible following the implementation date.
1. The Vukile portfolio (valued at R2 431 800 000) will be disposed of in exchange for the acquisition of the Synergy portfolio (valued at R2 474 600 000), plus a cash payment by Vukile to Synergy of R18.2 million, with interest accrued from the effective date to the implementation date. No purchase price per property is disclosed. The difference between the valuation and the effective acquisition cost is due to the independent property valuation being an open market value while the acquisition cost is a negotiated exchange.
1. As at the last practicable date, Randburg Tungsten Industrial Park and Roodepoort Robertville Industrial Park are owned by MICC Properties Proprietary Limited ("MICC"), a wholly-owned subsidiary of Vukile. Such properties will be sold by MICC to Vukile on a back-to-back basis with the Vukile asset exchange, such that they form part of the Vukile portfolio to be acquired by Synergy pursuant to the transaction.
1. Properties indicated as being valued by Knight Frank were valued by Martin Fitchet, who is an independent external valuer registered in terms of the Property Valuers Profession Act 47 of 2000. Properties indicated as being valued by Quadrant were valued by Peter Parfitt, who is an independent external valuer registered in terms of the Property Valuers Profession Act 47 of 2000.

82Annexure 7

DETAILS OF THE CUMULATIVE PORTFOLIO

						Weighted	Valuation (R)
No	Property name	Address	Province	Sector	(m2) GLA	(per/m2) average rental	31 July 2016) (as at
1	101 Dorp Street GVT	101 Dorp Street	Limpopo	Office	5 093	88.36	R42 300 000
2	Mare Street & 105 Landdros	Mark Street Mare Street & 106 105 Landdros	Limpopo	Retail	571	95.50	R6 300 000
	Mark Street 106
3	Mare Street 106 Landdros	Mare Street 106 Landdros	Limpopo	Retail	1 200	98.76	R11 500 000
4	135 Pietermaritz Street	135 Pietermaritz Street	KwaZulu-Natal	Office	2 198	96.31	R23 800 000
5	137 Sivewright	131 Sivewright Avenue	Gauteng	Office	4 518	70.51	R27 600 000
6	151/155 Juniper Road	151 - 155 Juniper Road	KwaZulu-Natal	Office	1 561	110.49	R13 800 000
7	16/18 Forge Rd	16 & 18 Forge Road	Gauteng	Industrial	3 166	34.29	R9 000 000
8	21 Dartfield (Omlap)	21 Dartfield Field	Gauteng	Industrial	1 016	55.66	R5 800 000
9	249 Commissioner	141 Albertina Sisulu	Gauteng	Industrial	1 120	41.40	R4 200 000
10	38 Derrick Road	38 Derrick Road	Gauteng	Industrial	3 846	43.68	R15 000 000
11	38 Prospecton Road	38 Prospection Road	KwaZulu-Natal	Mixed Use	1 528	118.41	R17 300 000
12	Weightman Avenue 4	Weightman Avenue 4	KwaZulu-Natal	Retail	4 171	70.65	R34 500 000
13	46 Steel Road	46 Steel Road	Gauteng	Industrial	3 790	41.15	R16 000 000
14	Montague Drive 9	Montague Drive 9	Western Cape	Industrial	2 649	66.68	R18 400 000
15	Absa Gezina	840 Steve Biko Road, Gezina	Gauteng	Retail	2 053	105.12	R22 400 000
16	Absa Heidelberg	42 Ueckermann, Heidelberg	Gauteng	Retail	777	118.08	R3 500 000
17	Absa Nigel	Cnr Hendrik Verwoerd & 2nd Ave Nigel	Gauteng	Retail	961	88.52	R8 100 000
18	ABSA Randburg	308 Oak Avenue	Gauteng	Retail	1 533	38.79	R4 900 000
19	Bedford	4-6 Skeen Blvd	Gauteng	Office	9 095	93.41	R82 200 000
20	Beka Bloemfontein	82 Long Street Hilton	Free State	Industrial	400	67.22	R2 300 000
21	Beka Durban	17 Cordova Place, Briardene Industrial Park	KwaZulu-Natal	Industrial	490	92.14	R2 800 000
22	Citizens Building Kimberley	8 - 14 Jones Road	Northern Cape	Retail	840	79.58	R5 800 000
23	Citizens Cape Town	Main Road 177	Western Cape	Retail	1 480	121.37	R17 300 000
24	MH Spartan C	60 Steel Road	Gauteng	Industrial	2 467	37.42	R8 900 000
25	Welkom Corpgro	Cnr 2nd & 3rd Streets	Free State	Industrial	4 401	7.33	R2 500 000
26	Creston	49 - 51 Forge Road	Gauteng	Industrial	6 546	40.52	R24 600 000
27	Water Department Of Forestry &	2 Hargreaves Avenue	Eastern Cape	Office	3 790	95.00	R33 800 000

					GLA	Weighted average rental	Valuation (R) (as at
No	Property name	Address	Province	Sector	(m2)	(per/m2)	31 July 2016)
28	Diesel Road	12 – 14 Diesel Road	Gauteng	Industrial	7 923	37.73	R25 600 000
29	Dikai Shopping Centre	Main Road, Hazyview (R40 National Highway Cnr R536)	Mpumalanga	Retail	2 923	75.93	R19 200 000
30	Edufin PE	3 Sommers Road	Eastern Cape	Office	3 500	22.86	R12 600 000
31	Ellerines Dundee	Wilson, King Edward & Victoria Streets Cnr	KwaZulu-Natal	Retail	3 518	65.28	R20 900 000
32	Ellerines Thohoyandou	Thohoyandou Shopping Centre	Limpopo	Retail	829	81.18	R6 800 000
33	Empire Place	106 Hans van Rensburg Street	Limpopo	Office	1 066	85.68	R9 300 000
34	Motors F B	105 & 107 Hans van Rensburg Street	Limpopo	Office	4 217	55.70	R24 600 000
35	Mogul Federal	41 Anderson Street	Mpumalanga	Office	900	44.43	R3 500 000
36	Greytown Shopping Centre	Cnr Sergeant & Oakes Streets	KwaZulu-Natal	Retail	5 373	18.68	R18 700 000
37	Groblersdal Fruit & Veg City	2 van Riebeeck Street	Mpumalanga	Retail	3 980	38.86	R15 000 000
38	Herfred Pietersburg	52 Bok Street	Limpopo	Retail	2 250	38.44	R9 000 000
39	Mini Factories Hi Tech	14 – 16 Gerhardus	Gauteng	Industrial	2 719	61.38	R13 800 000
40	Jet Industrial Park	7 Harold Flight Street	Gauteng	Industrial	10 209	21.15	R16 800 000
41	M Investments J	1321 Spyker Crescent	Gauteng	Industrial	2 700	41.36	R10 700 000
42	Karoo Junction	West C/O Donkin St & Danie Theron, Beaufort	Western Cape	Retail	6 899	59.80	R29 700 000
43	Kimberley Building	Way 41 de Toitspan	Northern Cape	Retail	1 689	23.16	R1 400 000
44	Kimberley Printing	Woodley Street 13	Northern Cape	Parking	6 817	16.04	R1 100 000
45	Kimberly Clark	Bevan Road	Gauteng	Industrial	1 193	33.05	R18 000 000
46	Klein Brothers	52 - 62 George Street	Northern Cape	Retail	915	47.00	R3 700 000
47	Kolbenco	6 Liebenberg Ave Alrode	Gauteng	Industrial	13 722	21.34	R27 200 000
48	La Rocca	Main Road 14 Petunia Street cnr	Gauteng	Office	2 935	115.08	R28 500 000
49	Lea Glen	3 Amanda Ave, Lea Glen	Gauteng	Industrial	3 411	35.48	R12 600 000
50	Longmarket Street Branch	188 Longmarket Street	KwaZulu-Natal	Mixed Use	3 890	72.14	R28 800 000
51	Lynwood Botco Place	61 Kasteel Road, Lynwood Glen	Gauteng	Office	493	165.45	R7 700 000
52	Wapadrant Lynwood	64 Lynwood Road, Lynwood Glen	Gauteng	Office	1 304	135.08	R18 000 000
53	Maverick Corner	65 Betty Street	Gauteng	Mixed Use	866	79.21	R13 000 000
54	McCarthy Centre – Turffontein	3 End Street	Gauteng	Industrial	5 935	43.53	R26 700 000
55	Media Shop	Manor Morningside 138 Kelvin Shop,	Gauteng	Office	2 522	247.81	R49 300 000
56	Melville Properties	Cnr 7th Street & 2nd Avenue	Gauteng	Retail	1 094	129.20	R13 600 000
57	Welkom Metcash	4th 11th Street	Free State	Industrial	6 812	22.61	R14 600 000
58	Middelburg SAP	37 SADC Vos Street	Mpumalanga	Office	3 400	28.68	R11 400 000
59	Motswedi House	495 Summit Road	Gauteng	Office	1 630	105.21	R18 500 000

					GLA	Weighted	Valuation (R)
No	Property name	Address	Province	Sector	) (m2	) average rental (per/m2	31 July 2016) (as at
60	Nedbank Kimberley	37 Chapel Street	Northern Cape	Office	1 252	11.69	R7 000 000
61	Nelspruit Centre	Cnr Henshall & Anderson Streets	Mpumalanga	Retail	1 060	124.51	R14 600 000
62	Nelspruit Ellerines 1	20 Bester Street	Mpumalanga	Retail	1 147	36.32	R11 100 000
63	Nu – Payment	8 Kingfisher Avenue	Gauteng	Office	1 408	159.62	R21 700 000
64	Oakhill	Fourways Golf Park, Roos Street	Gauteng	Office	1 361	150.26	R15 900 000
65	Odendaalsrus Shopping Centre	Waterkant Street, Odendaalrus 66	Free State	Retail	3 863	78.75	R31 100 000
66	OK Klerksdorp	Cnr Delver, Laesk & Oliver Tambo Streets	West North	Retail	7 931	22.99	R22 400 000
67	Oudehuis Centre	Main Road 122	Western Cape	Mixed Use	4 182	72.88	R28 200 000
68	Parc Du Bel	19 Strand Street	Western Cape	Mixed Use	2 299	74.83	R11 800 000
69	Parmac	24 Park Street	Gauteng	Industrial	4 155	25.35	R7 700 000
70	Perm – Smith Street	343 Smith Street	KwaZulu-Natal	Office	10 177	64.58	R57 600 000
71	Perm Building Pietermaritzburg	234 Church Street	KwaZulu-Natal	Office	2 726	48.31	R11 800 000
72	Perm Kimberley	Way 33 Du Toitspan	Northern Cape	Office	4 967	57.64	R23 000 000
73	Philippi Court	Cnr New Eisleben & Lansdown Roads	Western Cape	Office	1 357	114.10	R13 500 000
74	Plantation Road 18	18 Plantation Road	Gauteng	Industrial	3 954	34.71	R13 600 000
75	Plantation Road 20	20 Plantation Road	Gauteng	Industrial	4 209	43.19	R15 200 000
76	Propstars	127 Doornfontein & 6 Davies Street	Gauteng	Industrial	6 080	24.83	R16 200 000
77	Witbank Provence House	Witbank 12 Kruger Street,	Mpumalanga	Office	5 866	55.73	R47 000 000
78	Rivonia Boulevard	354 Rivonia Boulevard	Gauteng	Office	3 708	39.84	R18 200 000
79	Ronsyn Building	26 Devonshire Hill Road	Western Cape	Retail	2 391	129.56	R31 000 000
80	Royal Palm	Umgeni Road	KwaZulu-Natal	Retail	893	185.29	R16 300 000
81	Sanlam Centre Vryburg	Market Street 70	Northern Cape	Retail	1 905	93.50	R18 900 000
82	Mitchell's Plain SAPS –	Alpha Street	Western Cape	Office	3 416	48.19	R12 500 000
83	Worcester SAPS	Fairbairn Street	Western Cape	Office	3 848	77.82	R27 200 000
84	Sasol Gas	272 Kent Ferndale Randburg	Gauteng	Office	2 526	89.14	R23 300 000
85	Shoprite Boksburg	262 Commissioner Street	Gauteng	Retail	3 034	64.39	R21 800 000
86	Simgold	Bunsen Road, Industria	Gauteng	Industrial	19 123	20.18	R39 400 000
87	Standard Bank Blackheath	Weltevreden Road 288	Gauteng	Office	2 880	93.03	R20 400 000
88	Star Foods	2 Cardiff Road	KwaZulu-Natal	Industrial	3 114	47.89	R15 200 000
89	Tarry's Head Office	Cnr La Rochelle & Crystal Roads	Gauteng	Industrial	10 824	10.86	R8 500 000
90	The Arches	7 Taylor Street	Eastern Cape	Mixed Use	2 707	105.16	R21 400 000
91	Main Change The	22 Kruger Street	Gauteng	Mixed Use	4 072	70.79	R44 300 000
92	The Pond Shopping Centre	561 James Crescent, Cnr Old Pretoria Road	Gauteng	Retail	5 501	55.10	R30 600 000

						Weighted	Valuation (R)
					GLA	average rental	(as at
No	Property name	Address	Province	Sector	(m2)	(per/m2)	31 July 2016)
93	Thohoyandou Centre	Thohoyandou Centre	Limpopo	Retail	4 006	85.19	R27 500 000
94	Thohoyandou Shopping Centre	Thohoyandou Shopping Centre	Limpopo	Retail	4 359	73.41	R26 000 000
95	Town Centre Boksburg	95 Leeupoort Street	Gauteng	Mixed Use	6 883	28.27	R22 900 000
96	Town Talk Nelspruit	17 Andrew Street	Mpumalanga	Retail	1 082	32.50	R5 900 000
97	Truworths Corner	Minuet Lane Way & Cnr Symphony	Western Cape	Retail	520	204.56	R9 900 000
98	Tsolo	Main Road, Tsolo	Eastern Cape	Retail	4 097	79.09	R30 000 000
99	Virgin Active Benoni	Woburn Avenue & Pioneer Drive Cnr	Gauteng	Retail	3 154	82.54	R25 800 000
100	Wilcon House	22 Fabricia St Kimberly	Northern Cape	Office	2 659	140.08	R32 000 000
Total					353 590	63.0	1 893 300 000

Notes:

All risk and all benefit attaching to the Cumulative portfolio will be acquired by Synergy on the effective date.
As the properties are being acquired by Synergy through its acquisition of 100% of the issued shares in Cumulative, no purchase price per property has been ascribed. Any difference between the valuation and the effective acquisition cost is due to the independent property valuation being an open market value while the acquisition cost is a negotiated cost in the context of the broader transaction.
All the properties were valued by Theuns Behrens of Real Insight, who is an independent external valuer registered in terms of the Property Valuers Profession Act 47 of 2000.

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

	Forecast for the six months to	Forecast for the year ending
R'000	30 September 2016	30 September 2017
Propery rental revenue and recoveries	178 396	702 054
Straight-line rental income accrual	(426)	3 174
Gross property revenue	177 970	705 228
Property expenses	(77 935)	(274 007)
Net profit from property operations	100 035	431 222
Corporate administrative expenses	(1 647)	(10 283)
Gain on bargain purchase	–	218 319
Finance income	466	18 148
Operating profit before finance costs	98 854	657 405
Finance charges	(46 018)	(93 705)
Profit before taxation	52 836	563 700
Taxation	–	–
Profit for the period/year	52 836	563 700
OTHER COMPREHENSIVE INCOME
Items 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

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 Adjusted for:	52 836	345 381
– Straight-line rental income accrual	426	(3 174)
Profit available for distribution for the period/year	53 262	342 207
Number of shares in issue
A shares in issue	47 352 203	47 352 203
B shares in issue	106 352 670	400 710 459
Total weighted average number of shares in issue	153 704 873	448 062 662
Earnings and diluted earnings per combined share (cents)	34.37	125.81
Earnings and diluted earnings per A share (cents)	34.37	125.81
Earnings and diluted earnings per B share (cents)	34.37	125.81
Headline and diluted headline earnings per combined share
(cents)	34.37	77.08
Headline and diluted headline earnings per A share (cents)	34.37	77.08
Headline and diluted headline earnings per B share (cents)	34.37	77.08
Distributable income per A share (cents)	49.69	101.87
Distributable 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.
1. Synergy will not acquire or dispose of any properties during the forecast periods other than acquisitions and disposals contemplated as part of the transaction.
1. 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.
1. Turnover rental (rental income based on the actual turnover of the tenant) has not been included in the forecast.
1. 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.
1. 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.
1. 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.
1. No fair value adjustments to investment properties, other than the adjustment as a result of straight-line rental accrual have been provided for.
1. 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.
1. 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:

1. There will be no unforeseen economic factors that will affect the lessees' abilities to meet their commitments in terms of existing lease agreements.
1. Consumption based recoveries are consistent with the independent property valuers' property income statements.
1. The only item of expenditure forecast to increase by greater than 15% is electricity.
1. Material items of expenditure are in respect of rates and taxes and municipal expenses.

INDEPENDENT REPORTING ACCOUNTANTS' LIMITED ASSURANCE REPORT ON THE FORECAST STATEMENTS OF COMPREHENSIVE INCOME IN RESPECT OF SYNERGY

The board of directors Synergy Income Fund Limited One-on-Ninth Corner Glenhove Road and Ninth Street Melrose Estate 2196

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 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.

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 Stoler Director

Practice number 903485E Registered Auditors Chartered Accountants (SA) Wanderers Office Park 52 Corlett Drive Illovo, 2196

D STATE ATE D OLI NS O MA C O FOR PR	OF FI NT ME	NCIAL P NA	N I O OSITI	RESPECT N	RGY OF SYNE
responsibility of the directors of Synergy and has been provided for illustrative purposes only to provide information about how the transaction may have affected the financial position of Synergy, assuming the transaction was implemented on 31 March 2016, and because of its nature, may not fairly represent the financial position of the Synergy shareholders after the transaction. Set out below is the pro forma consolidated statement of financial position of Synergy reflecting the effects of the transaction.						The pro forma consolidated statement of financial position is the
The independent reporting accountants' assurance report on the pro forma consolidated statement of financial position in respect of the transaction is set out in Annexure 11.
The consolidated pro forma financial information has been prepared in terms of IFRS, the company as set out in Annexure 13.						The Guide on Pro Forma Financial Information issued by SAICA and the accounting policies of
Synergy
Pro forma statement of financial position as at 31	March 2016
R000	Before	Property fair value Synergy Investment adjustment	Disposal of portfolio to Vukile	Acquisition Vukile portfolio of	Cumulative acquisition	M acquisition VA	Other	after the Pro forma adjustments
Note	Note 1	Note 2	Note 3	Note 4	Note 5	Note 6	Note 7
ASSETS
Non-current assets	2 442 539	33 026	(2 474 600)	2 431 800	1 893 300	154 985	–	4 481 050
Investment property and related receivables	2 441 574	33 026	(2 474 600)	2 431 800	1 893 300	–	–	4 325 100
– Investment properties	2 371 602	33 026	(2 404 628)	2 431 800	1 893 300	–	–	4 325 100
– Straight-line rental income adjustment	69 972	–	(69 972)	–	–	–	–
Derivative financial instruments	622	–	–	–	–	–	–	622
Deferred tax assets	343	–	–	–	–	–	–	343
Intangibles and goodwill	–	–	–	–	–	154 985	–	154 985
Current assets	53 055	–	–	18 200	162 480	5 595	(12 437)	226 893
Trade and other receivables	27 298	–	–	–	162 480	4 131	–	193 909
Derivative financial instruments	141	–	–	–	–	–	–	141
Taxation	–	–	–	–	–	123	–	123
Cash and cash equivalents	25 616	–	–	18 200	–	1 341	(12 437)	32 720
Total assets	2 495 594	33 026	(2 474 600)	2 450 000	2 055 780	160 580	(12 437)	4 707 944

– – – – – – Note 6 5 239 5 239 160 580 22 945 522 155 341 155 341 2 055 780 – – – – – – 2 055 780 – Note 5 218 319 271 412 267 1 837 461 (24 600) (24 600) (24 600) – – – – – – – – Note 4 – – – – – – – – – – – Note 3 Note 2 33 026 – 33 026 – – – – – – 33 026 – 1 463 357 953 410 467 926 976 954 976 016 938 55 283 55 283 2 495 594 Note 1 47 352 203 106 352 670 11.69 8.55 11.69 8.55 42 021 Net tangible asset value per A share (ZAR) Net tangible asset value per B share (ZAR) Net asset value per A share (ZAR) Net asset value per B share (ZAR) Derivative financial instruments ND LIABILITIES Number of A shares in issue Number of B shares in issue Total equity and liabilities Non-distributable reserves Interest-bearing liabilities Trade and other payables Non-current liabilities Current liabilities Retained earnings Stated capital Equity Note	Other	after the Pro forma adjustments
EQUITY A	Note 7
	(12 437)	3 670 468
	(12 437)	2 933 776
	–	268 766
	–	467 926
	–	976 954
	–	976 016
	–	938
	–	60 522
	–	60 522
	(12 437)	4 707 944
	–	47 352 203 400 710 459 11.69 7.78 11.69 7.39

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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. Transaction costs amounting to R12.4 million have been capitalised to stated capital.
1. 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.
1. The effective date of the disposal to Vukile, acquisition of Vukile portfolio and VAM are all assumed to be 1 October 2016.
1. Save for the adjustments set out above, there are no other material events requiring adjustments to the pro forma statement of financial position.

INDEPENDENT REPORTING ACCOUNTANTS' ASSURANCE REPORT ON THE COMPILATION OF THE PRO FORMA FINANCIAL INFORMATION OF SYNERGY

The Board of Directors Synergy Income Fund Limited One-on-Ninth Corner Glenhove Road and Ninth Street Melrose Estate 2196 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.

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 Stoler Director

Practice number 903485E Registered Auditors Chartered Accountants (SA) Wanderers Office Park 52 Corlett Drive Illovo, 2196

INDEPENDENT REPORTING ACCOUNTANTS' REVIEW REPORT ON THE VALUE AND EXISTENCE OF THE CUMULATIVE AND VUKILE PORTFOLIOS

The Board of Directors Synergy Income Fund Limited One-on-Ninth Corner Glenhove Road and Ninth Street Melrose Estate 2196 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.

Yours faithfully

Grant Thornton Johannesburg

Ryan Stoler Director

Practice number 903485E Registered Auditors Chartered Accountants (SA) Wanderers Office Park 52 Corlett Drive Illovo, 2196

HISTORICAL FINANCIAL INFORMATION OF SYNERGY

STATEMENT OF FINANCIAL POSITION

	Note	31 March 2016 R000	31 March 2015 R000	30 June 2014 R000
Assets
Non-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	2 403 467
Straight-line rental income adjustment	3.3	69 972	18 127	18 633
Derivative financial instruments	9	622	–	137
Deferred tax asset	4	343	282	85
Current assets		53 055	27 642	25 546
Trade and other receivables	5	27 298	21 622	21 324
Derivative 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 liabilities
Shareholders' interest		1 463 357	460 591	496 205
Stated capital	7	953 410	1 537	1 537
Retained earnings		42 021	459 054	494 668
Non-distributable reserves		467 926	–
Non-current liabilities		976 954	1 922 555	1 862 455
Borrowings	8	976 016	968 658	909 044
Linked debentures		–	952 971	952 971
Derivative financial instruments	9	938	926	440
Current liabilities		55 283	66 678	89 207
Trade and other payables	10	55 283	41 288	36 217
Debenture interest payable		–	25 307	52 990
Derivative 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	153 704 873
A shares		47 352 203	47 352 203	47 352 203
B shares		106 352 670	106 352 670	106 352 670
Net asset value per combined share/linked
unit (cents)*		952	920	9.43
Net asset value per A share/linked unit (cents)*^		1 169	1 193	10.99
Net asset value per B share/linked unit (cents)*		855	798	8.73
Fair value per share represented by the market price at 31 March (cents)
Fair value of A share/linked unit*		1 180	1 210	1 100
Fair value of B share/linked unit*		700	750	745

		2016	2015*	2014
		12 months	9 months	12 months
	Note	R000	R000	R000
Property revenue		347 654	241 830	303 111
Straight-line rental income accrual		51 845	(505)	560
Gross property revenue		399 499	241 325	303 670
Property expenses		(148 380)	(93 693)	(115 265)
Administration costs		–	–	(14 300)
Net profit from property operations		251 119	147 632	174 105
Corporate administrative expenses		(3 210)	(14 515)	–
Finance income	12	1 628	915	–
Operating profit before finance costs		249 537	134 032	174 105
Finance costs	13	(84 908)	(58 761)	(71 812)
Operating profit after finance costs		164 629	75 271	102 293
Debenture 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)	(29
Gain on the ineffective portion of fair value of derivative
financial instruments		225	–	1 731
Gross 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)	196 718
Taxation	14	61	197	(294)
Profit/(loss) for the year/period		107 216	(35 615)	196 424
Other comprehensive income
Cash flow hedges – current period gains (net of taxation)		609	–
Total comprehensive income/(loss) for the year/period		107 825	(35 615)	196 424
Earnings/(loss) and diluted earnings/(loss) per combined share
(cents)^		69.75	(23.17)	127.79
Earnings/(loss) and diluted earnings/(loss) per A share (cents)^		69.75	(23.17)	127.79
Earnings/(loss) and diluted earnings/(loss) per B share (cents)^		69.75	(23.17)	127.79
Headline earnings per combined share (cents)^		107.29	(1.13)	0.91
Headline earnings per A share (cents)^		107.29	66.53	87.70
Headline earnings per B share (cents)^		107.29	40.52	58.48
Total weighted average number of shares in issue at 31 March^		153 704 873	153 704 873	153 704 873
A shares in issue^		47 352 203	47 352 203	47 352 703
B shares in issue^		106 352 670	106 352 670	106 352 670

STATEMENTS OF PROFIT/(LOSS) AND OTHER COMPREHENSIVE INCOME

* 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.

RECONCILIATION OF PROFIT/(LOSS) TO HEADLINE EARNINGS AND TO PROFIT AVAILABLE FOR DISTRIBUTION

	Note	2016 12 months R000	2015* 9 months R000	2014 12 months R000
Profit/(loss) for the year/period		107 216	(35 615)	196 424
Adjusted for:				102 322
Debenture interest		–	76 332	298 746
Earnings		107 216	40 717
Net change in fair value of investment properties		57 699	33 877	(195 022)
Headline earnings		164 915	74 594	103 724
Adjusted for:
Amortisation of loan raising costs		754	556	594
Straight-line rental income accrual		(51 845)	505	(560)
Other capital items		–	169
Deferred 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.

STATEMENT OF CHANGES IN EQUITY

		Stated capital	Retained earnings	Non distributable reserves	Total
	Note	R000	R000	R000	R000
Balance at 30 June 2014		1 537	494 668	–	496 205
Total comprehensive income for the period		–	(35 614)	–	(35 614)
Balance at 31 March 2015		1 537	459 054	–	460 591
Profit for the year		–	107 216	–	107 216
Dividends 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	–	–	952 971
Costs of conversion of debentures	7	(1 098)	–	–	(1 098)
Other comprehensive income
Revaluation of cash flow hedges		–	–	609	609
Balance at 31 March 2016		953 410	42 021	467 926	1 463 357

STATEMENT OF CASH FLOWS

	Note	2016 R000	2015 R000	2014 R000
Cash flows from operating activities
Cash generated from operations	16.1	204 466	138 228	179 727
Finance income	12	1 628	915	939
Interest 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 activities
Additions 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 activities
Financial liabilities raised		6 521	59 058	337 563
Costs 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 STATEMENTS

for 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.

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.

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.

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.

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.

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.

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.

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:

	2016	2015	2014
	Level 3	Level 3	Level 3
	R000	R000	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.

		2016 12 months R000	2015 9 months R000	2014 12 months R000
	INVESTMENT PROPERTIES AND RELATED RECEIVABLES
	Stated at fair value Property acquisitions and development cost Capital expenditure and tenant installation Lease commissions	1 956 741 399 165 15 696	1 935 441 456 864 11 468	1 905 460 490 741 7 266
Fair value		2 371 602	2 403 773	2 403 467
	Straight-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 properties Investment 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 Capital expenditure and tenant installations	– 21 300	2 422 100 –	1 877 074
	– Additions – Acquisitions Revamping, Tenant installations and other capital expenses Increase/(decrease) in straight-lining receivable	– 21 300 51 845 4 228	29 981 6 000 23 981 (505)	345 417 339 395 6 021 560
	Increase in deferred lease incentive expense Movement in fair value adjustment – Fair value adjustment	(57 699) (5 854) (51 845)	4 202 (33 878) (34 383)	9 027 – 195 022
	– Straight-line adjustment		505
	Investment properties closing balance	2 441 574	2 421 900	2 422 100
	Operating lease rentals Non-cancellable operating rentals are receivable as follows:
	Less than one year Between one and five years	215 522 421 010	225 241 479 722	212 111 473 624
3.3	More than five years Straight-line rental income adjustment	55 939	64 008	53 232
	Balance 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

	2016 12 months R000	2015 9 months R000	2014 12 months R000
DEFERRED TAX
Balance 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	85
Comprising
Fair value of interest rate swaps	–	282	85
Deferred 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
TRADE AND OTHER RECEIVABLES
Gross rental receivables	13 697	8 780	8 344
Allowance for impairment of receivables	(5 232)	(4 455)	(3 490)
Deposits	2 676	2 468	2 149
Other 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.

		2016	2015	2014
		12 months	9 months	12 months
		R000	R000	R000
6.	CASH AND CASH EQUIVALENTS
	Cash on call*	14 321	3 894	3 194
	Current 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).

	2016 12 months R000	2015 9 months R000	2014 12 months R000
STATED CAPITAL 7.
Authorised
1 000 000 000 A ordinary no par value shares
2 000 000 000 B ordinary no par value shares
Issued
47 352 203 (2015: 47 352 203) A shares at R0.01	474	474	473
106 352 670 (2015: 106 352 670) B shares at R0.01	1 063	1 063	1 063
Capital 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	153 704 873
A shares	47 352 203	47 352 203	47 352 203
B shares	106 352 670	106 352 670	106 352 670
Net asset value per combined share/linked unit (cents)	952	920	943
Net asset value per A share/linked unit (cents)^ Net asset value per B share/linked unit (cents) Fair value per share/linked unit represented by the market price at 31 March (cents)	1 169 855	1 193 798	1 099 873
Fair value of A share/linked unit	1 180	1 210	1 100
Fair 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.

	Interest rate %	Expiry date of interest rate	2016 R000	2015 R000	2014 R000
BORROWINGS
Total financial liabilities			976 016	968 658	909 044
Non-current financial liabilities			977 190	970 578	910 878
Loan raising costs			(1 174)	(1 920)	(1 834)
Financial liabilities consist of the following:
Nedbank Limited (Nedbank) 8.1 amounts included in non-current liabilities amounts included in current liabilities			435 690 –	438 477 –	438 363 –
Nedbank facilities and loan balances consist of the following:
Nedbank facility A (expiry June 2017)
	Prime less
variable portion	150 bps	June 2017	125 008	126 514	126 377
fixed portion in terms of swap (Nedbank)	7.08%	June 2017	60 000	60 000	60 000
fixed 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 BA Erf 12050 Phuthaditjhaba Erf 1077 Phuthaditjhaba-B Erf 291 Phuthaditjhaba-D
Nedbank facility B (expiry October 2018)
	Prime less
variable portion		150 bps October 2018	110 682	201 963	201 987
fixed 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

	Interest rate %	Expiry date of interest rate	2016 R000	2015 R000	2014 R000
Standard Bank of South Africa Limited (Standard Bank)
amounts included in non-current
liabilities			276 500	265 163	205 578
amounts included in current liabilities			–	–	–
Standard Bank facilities and loan balances consist of the following:
Standard Bank facility A (expiry September 2019)
	prime less	September
variable portion A	110 bps	2019	37 500	76 163	66 578
	three-month
	Jibar plus	September
variable portion B	235 bps	2019	19 000	19 000	19 000
fixed portion in terms of swap
(Standard Bank)	10.20%	June 2017	80 000	80 000	80 000
fixed portion in terms of swap (Standard Bank)	8.88%	June 2016	40 000	40 000	40 000
fixed portion in terms of swap		September
(Standard Bank)	10.99%	2020	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)
	prime less	September
variable portion	160 bps	2017	10 000	50 000	201 987
fixed 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 Township

Erven 18 – 25, 51 – 52 and 695 all of KwaMashu Plaza

Notarially tied Erf 103 Amarosa Extension 6 Township and Portion 497 of the Farm Wilgespruit

Portion 48 (a portion of Portion 6), erven 431, 450, 524 and all of the Farm Albinia No 957

Erf 3 Hubyeni Township

Erf 15288 Newcastle

		Interest rate %	Expiry date of interest rate	2016 R000	2015 R000	2014 R000
8.3	FirstRand Bank Limited (RMB)
	amounts included in non-current
	liabilities			265 000	266 938	266 937
	amounts included in current liabilities			–	–	–
	RMB facilities and loan balances consist of the following: RMB facility (expiry May 2017)
		one-month
		Jibar plus
	variable portion	230 bps	May 2017	28 295	30 233	30 732
	fixed portion (RMB)	9.14%	May 2017	90 000	90 000	90 000
	fixed 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
DERIVATIVE FINANCIAL INSTRUMENTS
Assets
Interest rate swaps – fair value hedges	763	–	–
Total	763	–	–
Less: Non-current portion
Interest rate swaps – fair value hedges	622	–	–
	622	–	–
Current portion	141	–	–
Liabilities
Interest rate swaps – fair value hedges	938	1 009	304
Total	938	1 009	304
Less: Non-current portion
Interest 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.

		2016 R000	2015 R000	2014 R000

10.	TRADE AND OTHER PAYABLES Trade creditors	4 951	4 301	3 138
	Rental received in advance	6 161	6 550	5 206
	Interest payable accrual	2 437	–
	Operating expense accruals	26 846	16 457	17 264
	VAT payable	2 811	1 833
	Tenant deposits	12 077	12 147	10 607
		55 283	41 288	36 217
11.	PROFIT/(LOSS) BEFORE TAXATION IS STATED AFTER
	RECOGNISING
	Audit 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 INCOME
	Interest received on bank balances outstanding	1 209	481	621
	Interest on debtors	419	434	318
		1 628	915	939
13.	FINANCE COSTS
	Interest paid on loans	83 955	57 668	67 993
	Occupational interest paid	–	483	4 169
	Amortisation of loan raising costs	754	556	594
	Other interest paid	199	54	-
		84 908	58 761	72 757
14.	TAXATION
	South 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	0.15
	Permanent differences – fair value adjustments	(3.57)	(33.19)	27.76
	REIT dividend	29.67	59.68
	Prior 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

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
UNIT	BASIC AND DILUTED EARNINGS/(LOSS) PER SHARE/LINKED
15.1	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)	127.79
	The 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 Fair value adjustments to investment properties	107 216 57 699	(35 615) 33 877	196 423 (195 022)
	Headline earnings/(loss) Interest paid to debenture holders	164 915 –	(1 738) 76 332	1 401 102 322
	Headline earnings – combined share/linked unit	164 915	74 594	103 724
	Headline earnings/(loss) per combined share/linked unit (cents) Headline earnings per A share/linked unit (cents)	107.29 107.29	(1.13) 66.53	0.91 87.70
	Headline earnings per B share/linked unit (cents)	107.29	40.52	58.48
15.3	Distributable earnings Headline earnings to shareholders/linked shareholders Amortisation of loan raising costs Straight-line rental income accrual Other capital items Deferred tax Ineffective gain on fair value of derivative financial instruments	164 915 754 (51 845) – (61) (225)	74 594 556 505 169 – –	103 724 594 (560) – –
	Changes in fair value of swaps (net of deferred taxation) Changes in fair value of swaps Deferred taxation	– – –	508 705 (197)	(1 436) (1 731) 294
	Distributable earnings	113 538	76 332	102 322

		2016 R000	2015 R000	2014 R000
16.	NOTES TO THE STATEMENT OF CASH FLOWS
16.1	Cash generated from operations
	Profit before taxation	107 155	(35 812)	196 718
	Adjusted for:
	Finance income	(1 628)	(915)	(939)
	Finance costs	84 908	135 093	175 079
	Debenture interest	–	76 332	102 322
	Other interest			72 757
	Borrowing costs	84 908	58 761
	Straight-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	6 182
	Increase in trade and other receivables	(5 676)	(297)	2 665
	Increase in trade and other payables	13 995	5 072	3 516
	Cash generated from operations	204 466	138 228	179 727
16.2	Interest paid
	Interest charge per statement of profit or loss and other
	comprehensive income	84 908	58 761	175 079
	Less: 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 paid
	Dividends paid	56 932	–	–
	Total dividends paid	56 932	–	–
	Total interest and dividends paid	166 393	162 220	–

Properties owned by Synergy at 31		March 2016.
Property	Province	(m²) GLA	(Rm) Revenue	(Rm) Property operating costs	Net operating income* (Rm)	(%) Retail vacancy	Average (R/m²) m²# rental per gross	of acquisition Effective date	(Rm) Valuation	Address
Gugulethu Square	Western Cape	25 322	40.6	9.4	31.2	0.0	133	30 August 2012	429.2	Corner Steve Biko NY6, Gugulethu, Street, NY3 and Cape Town
Setsing Crescent Phuthaditjhaba	Free State	21 538	29.6	5.7	23.9	0.0	116	23 August 2012	331.0	Corner Setai and Motloung Road, Phuthaditjhaba
Shopping Centre Atlantis City	Western Cape	22 115	33.5	3.9	29.6	6.0	130	1 September 2013	278.9	Wesfleur Circle, Atlantis 8
Shopping Centre Senzangakhona Ulundi King	KwaZulu Natal	22 365	26.4	6.4	20.0	1.6	102	16 February 2012	263.1	Magogo Dinizulu Highway Street, Ulundi Corner King and Princess
Emalahleni Highland Mews	Mpumalanga	17 032	17.4	1.9	15.5	7.4	97	1 June 2012	209.6	Strydom Drive and Watermeyer Street, Corner Hans Emalahleni
Renbro Shopping Hammanskraal Centre	Gauteng	13 308	15.8	3.2	12.6	11.1	113	1 June 2012	147.6	Road, Hammanskraal Warmbaths Old
Hillcrest Richdens Shopping Centre	KwaZulu Natal	10 196	12.9	3.4	9.5	5.7	122	May 2012 24	121.6	Main Road, Hillcrest 59 – 61 Old
Hartbeespoort Sediba Shopping Centre	West North	10 887	11.6	3.2	8.4	11.1	106	7 October 2011	119.8	Wapad, Hartbeespoort Die Ou

SEGMENTAL INFORMATION

Property	Province	GLA (m²)	Revenue (Rm)	Property operating (Rm) costs	Net operating income* (Rm)	(%) Retail vacancy	Average (R/m²) m²# rental per gross	of acquisition Effective date	(Rm) Valuation	Address
Roodepoort Ruimsig Shopping Centre	Gauteng	11 177	11.6	1.9	9.7	4.9	95	22 December 2011	113.9	Amarosa, Roodepoort Corner Doreen and Malcolm Roads,
Mashu Shopping Centre Kwa	KwaZulu Natal	11 204	13.2	4.3	8.9	5.6	105	25 October 2011	106.7	Mandela Road Mashu 300 Kwa
Shopping Centre Elim Hubyeni	Limpopo	12 686	12.5	2.0	10.5	0.7	84	1 June 2012	104.4	Corner R578 and R528 Elim
Shopping Centre Welgedacht Van Riebeeckshof	Western Cape	5 181	6.9	1.2	5.7	3.1	110	1 June 2012	68.4	Riebeeckshof Roads, Corner Koelenhof, Delaire and Welgedacht
Newcastle Taxi City Shopping Centre	KwaZulu Natal	5 006	6.5	1.6	4.9	5.7	110	6 December 2011	55.7	Corner Allen and Kirkland Streets, Newcastle
Makhado Nzhelele Valley Shopping Centre	Limpopo	5 308	6.1	1.2	4.9	0.0	95	1 June 2012	51.2	Main Road and R523, Dzanani Corner
Ermelo Game Centre	Mpumalanga	6 639	5.4	1.4	4.0	15.7	82	1 June 2012	40.5	Corner De Emigratie Voortrekker Avenue, Road and Ermelo
		199 964	250.0	50.7	199.3	4.5	110		2 441.6
* Net operating income is shown net of interest. # Base rent excluding recoveries.
A major revenue provider for Synergy is Spar Group Limited, accounting for 19.1					% (2015: 17.11		%) of Synergy's revenue.

Revenue attributable to the Spar Group Limited in the period ended 31 March 2016 is R37.2 million (2015: R41.3 million).

Property	Province	GLA (m²)	Revenue (Rm)	Property operating (Rm) costs	Net operating income* (Rm)	(%) Retail vacancy	Average (R/m²) m²# rental per gross	of acquisition Effective date	(Rm) Valuation	Address
Gugulethu Square Shopping Centre	Western Cape	25 322	38.5	16.3	22.2	0.0	127	30 August 2012	399.1	Corner Steve Biko NY6, Gugulethu, Street, NY3 and Cape Town
King Senzangakhona Shopping Centre	KwaZulu Natal	22 325	21.3	6.3	15.0	1.6	101	16 February 2012	235.2	Magogo Dinizulu Highway Street, Ulundi Corner King and Princess
Shopping Centre Atlantis City	Western Cape	22 114	31.4	10.2	21.2	5.1	125	1 September 2013	310.0	Wesfleur Circle, Atlantis 8
Setsing Crescent Shopping Centre	Free State	21 538	28.0	8.8	19.2	2.4	116	23 August 2012	298.2	Corner Setai and Motloung Road, Phuthaditjhaba
Shopping Centre Mews Highland	Mpumalanga	17 032	20.0	5.5	14.5	6.6	103	1 June 2012	210.9	Strydom Drive and Watermeyer Street, Corner Hans Emalahleni
Renbro Shopping Centre	Gauteng	13 308	17.7	8.0	9.7	12.0	113	1 June 2012	167.8	Road, Hammanskraal Warmbaths Old
Hubyeni Shopping Centre	Limpopo	12 685	11.8	4.9	6.9	0.7	87	1 June 2012	110.0	Corner R578 and R528, Elim
Mashu Shopping Centre	KwaZulu Natal	11 204	12.6	6.4	6.2	6.1	102	25 October 2011	107.2	Malandela Road, Mashu 300 Kwa
Ruimsig Shopping Centre	Gauteng	11 178	13.2	6.2	7.0	4.7	99	22 December 2011	117.5	Amarosa, Roodepoort Corner Doreen and Malcolm Roads,
Sediba Shopping Centre	West North	10 887	12.2	6.7	5.5	16.4	114	7 October 2011	122.9	Wapad, Hartbeespoort Die Ou

Property	Province	GLA (m²)	Revenue (Rm)	Property operating (Rm) costs	Net operating income* (Rm)	(%) Retail vacancy	Average (R/m²) m²# gross rental per	of acquisition Effective date	(Rm) Valuation	Address
Hillcrest Richdens Village Shopping Centre	KwaZulu Natal	10 269	11.9	4.8	7.1	8.6	127	May 2012 24	113.5	Main Road, Hillcrest 59 – 61 Old
Shopping Centre Ermelo Game	Mpumalanga	6 639	4.6	2.2	2.4	16.9	83	1 June 2012	58.1	Corner De Emigratie Voortrekker Avenue, Road and Ermelo
Shopping Centre Nzhelele Valley	Limpopo	5 308	5.9	2.2	3.7	5.7	98	1 June 2012	55.7	Main Road and R523, Dzanani Corner
Van Riebeeckshof Shopping Centre	Western Cape	5 181	7.4	3.6	3.8	0.0	108	1 June 2012	62.5	Riebeeckshof Roads, Corner Koelenhof, Delaire and Welgedacht
Taxi City Shopping Centre	KwaZulu Natal	5 006	4.8	1.6	3.2	2.3	114	6 December 2011	53.4	Corner Allen and Kirkland Streets, Newcastle
		199 996	241.3	93.7	147.6		110		2 422.0
*Net operatin g income is shown net of interest

MENTS
























FINANCIAL INSTRU



18.

Exposure to market, credit and liquidity risks arise in the normal course of the company's business. Derivative financial instruments are used as and when required to hedge exposure to fluctuations in interest rates.

18.1 Market risk

18.1.1 Interest rate risk

The company adopts a policy of ensuring that an appropriate amount of its exposure to changes in interest rates on borrowings is on a fixed basis. Interest rate swaps have been entered into to achieve an appropriate mix of fixed and floating rate exposure. At the reporting date, the company had entered into the following interest rate swaps with respect to the following facilities:

			Fair value	Fair value	Fair value
			March at 31	March at 31	at 30 June
	Maturity	Fixed rate %	2016 R000	2015 R000	2014 R000
Asset
Nedbank facility
– swap (Nedbank)	4 July 2016	6.59	82	–	-
– swap (Nedbank)	1 June 2017	7.075	291	–	-
Standard Bank facility
– swap (Standard Bank)	30 June 2016	9.15	59	–	–
– swap (Standard Bank)	30 September 2019	10.20	331	–	–
Fair value asset			763	–	–
– amounts included in non-current assets			622	–
– amounts included in current assets			141	–
Liability
Nedbank facility
– swap (Nedbank)	1 June 2015	7.60	–	(14)	(41)
– swap (Nedbank)	4 July 2016	6.59	–	(91)	(96)
– swap (Nedbank)	1 June 2017	7.65	(7)	–	–
– swap (Nedbank)	19 February 2019	10.49	(109)	–	–
– swap (Nedbank)	19 February 2019	9.915	(226)	–	–
Standard Bank facility
– swap (Standard Bank)	30 June 2015	8.88	–	(68)	113
– swap (Standard Bank)	30 June 2017	9.50	–	(835)	327
– swap (Standard Bank)	1 July 2019	10.76	(187)	–	–
– swap (Standard Bank)	1 September 2020	10.99	(409)	–	–
Fair value liability			(938)	(1 008)	304
– amounts included in non-current liabilities			(938)	(926)
– amounts included in current liabilities			–	(82)

		Effective interest	Carrying	0 – 12	1 – 4	More than
	Note	rate %	amount R000	months R000	years R000	4 years R000
Effective interest rates and repricing 18.1.1.1
At the reporting date Synergy's interest
rate profile was:
March 2016 31
Cash and cash equivalents
– cash on call	6	6.20	14 286	14 286	–	–
– current accounts	6	3.55	11 330	11 330	–	–
Financial liabilities
Nedbank facility A
– variable portion	8.1	9.00	(125 008)	–	(125 008)	–
– swap (Nedbank)	8.1	7.08	(60 000)	–	(60 000)	–
– swap (Nedbank)	8.1	7.65	(50 000)	–	(50 000)	–
Nedbank facility B
– variable portion	8.1	9.00	(110 682)	–	(110 682)	–
– swap (Nedbank)	8.1	10.49	(40 000)	–	(40 000)	–
– swap (Nedbank)	8.1	9.92	(50 000)	–	(50 000)	–
Standard Bank facility A
– variable portion A	8.2	9.40	(37 500)	–	(37 500)	–
– variable portion B	8.2	9.58	(19 000)	–	(19 000)	–
– swap (Standard Bank)	8.2	8.88	(40 000)	(40 000)	–	–
– swap (Standard Bank)	8.2	10.99	(50 000)	–	–	(50 000)
– swap (Standard Bank)	8.2	10.20	(80 000)	–	–	(80 000)
Standard Bank facility B
– variable portion	8.2	8.90	(10 000)	–	(10 000)	–
– swap (Standard Bank)	8.2	10.76	(40 000)	–	(40 000)	–
MB facility R
– variable portion	8.3	9.33	(28 295)	–	(28 295)	–
– fixed portion (RMB)	8.3	9.14	(90 000)	–	(90 000)	–
– fixed portion (RMB)	8.3	8.36	(146 705)	–	(146 705)	–
Debentures		–	–	–	–	–
			(951 574)	(14 384)	(807 190)	(130 000)

		Effective
		interest	Carrying	0 – 12	1 – 4	More than
		rate	amount	months	years	4 years
	Note	%	R000	R000	R000	R000
At the reporting date Synergy's interest
rate profile was:
March 2015 31
Cash and cash equivalents
– cash on call	6	4.950	3 894	3 894	–	–
– current accounts	6	3.750	2 126	2 126	–	–
Financial liabilities
Nedbank facility A
– variable portion	8.1	7.750	(126 514)	–	(126 514)	–
– swap (Nedbank)	8.1	7.600	(60 000)	–	(60 000)	–
– swap (Nedbank)	8.1	7.970	(50 000)	–	(50 000)	–
Nedbank facility B
– variable portion	8.1	7.750	(201 963)	–	(201 963)	–
Standard Bank facility A
– variable portion A	8.2	8.150	(76 163)	–	–	(76 163)
– variable portion B	8.2	8.450	(19 000)	–	–	(19 000)
– swap (Standard Bank)	8.2	9.500	(80 000)	–	–	(80 000)
– swap (Standard Bank)	8.2	8.880	(40 000)	–	–	(40 000)
Standard Bank facility B
– variable portion	8.2	7.6500	(50 000)	–	(50 000)	–
MB facility R
– variable portion	8.3	8.510	(30 233)	–	(30 233)	–
– fixed portion (RMB)	8.3	9.140	(90 000)	–	(90 000)	–
– fixed portion (RMB)	8.3	8.360	(146 705)	–	(146 705)	–
Debentures		Variable	(952 971)	–	–	(952 971)
			(1 917 530)	6 020	(755 415)	(1 168 135)

		Effective
		interest	Carrying	0 – 12	1 – 4	More than
		rate	amount	months	years	4 years
	Note	%	R000	R000	R000	R000
30 June 2014
Cash and cash equivalents
– cash on call	6	4.700	3 194	3 194	–	–
– current accounts	6	3.500	1028	1 028	–	–
Financial liabilities
Nedbank facility A
– variable portion	8.1	7.500	(126 377)	–	(126 377)	–
– swap (Nedbank)	8.1	7.900	(60 000)	–	(60 000)	–
– swap (Nedbank)	8.1	8.360	(50 000)	–	(50 000)	–
Nedbank facility B
– variable portion	8.1	7.500	(201 987)	–	(201 987)	–
Standard Bank facility A
– variable portion A	8.2	8.200	(66 578)	–	(66 578)	–
– variable portion B	8.2	8.405	(19 000)	–	(19 000)	–
– swap (Standard Bank)	8.2	9.830	(80 000)	–	(80 000)	–
– swap (Standard Bank)	8.2	9.210	(40 000)	–	(40 0000)	–
MB facility R
– variable portion	8.3	8.356	(30 232)	–	(30 232)	–
– fixed portion (RMB)	8.3	9.440	(90 000)	–	(90 000)	–
– fixed portion (RMB)	8.3	8.660	(146 705)	–	(146 705)	–
Debentures		Variable	(952 971)	–	–	(952 971)
			(1 859 627)	4 222	(910 878)	(952 971)

		2016	2015	2014
		R000	R000	R000
Credit risk
18.2.1	The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Credit exposure
	Derivative financial assets – financial instruments	-	-	137
	Tenant and related receivables (net of allowance for bad debts)	10 594	4 325	4 854
	Other receivables	16 157	15 843	16 470
	Cash and cash equivalents	25 616	6 020	4 222
		52 367	26 188	25 683
18.2.2	Impairment losses
	The ageing of tenant and related receivables past due but not yet impaired at the reporting date was:
	Past due 1 – 30 days	3 942	3 508	3 850
	Past due 31 – 60 days	1 511	99	130
	Past due 61 – 120 days	1 573	56	66
	Past due > 120 days	3 568	662	807
Total		10 594	4 325	4 854
as follows:	The movement in the allowance for impairment in respect of tenant and related receivables during the year/period was
	Balance at the beginning of the year/period	(4 455)	(3 490)	(2 688)
	Impairment loss recognised	(1 529)	(1 399)	(3 012)
	Bad debts written off	752	434	2 211
	Balance at the end of the year/period	(5 232)	(4 455)	(3 490)

18.1.1.2 Sensitivity analysis

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 2016
Non-derivative financial liabilities
Financial 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 liabilities
Financial instruments	938	–	(141)	(622)	–
31 March 2015
Non-derivative financial liabilities
Financial 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	–	–	–	952 971
Debenture interest payable	25 307	25 307	–	–	–
Derivative financial liabilities
Financial instruments	1 008	82	91	835	–
30 June 2014
Non-derivative financial liabilities
Financial 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	–	–	–	952 971
Derivative 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	1 210 950
Total 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

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
Assets
Derivative financial
instruments	–	763	763	–	–	–
Total	–	763	763	–	–	–
Liabilities
Derivative 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.

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-thecounter 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 2016
Trade and other receivables	–	27 298	–	27 298	27 298
Cash and cash equivalents	–	25 616	–	25 616	25 616
Interest-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 2015
Trade and other receivables	–	20 168	–	20 168	20 168
Cash and cash equivalents	–	6 020	–	6 020	6 020
Linked 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)
2014
Trade and other receivables	–	21 324	–	21 324	21 324
Cash and cash equivalents	–	4 222	–	4 222	4 222
Linked debentures	–	–	(952 971)	(952 971)	(952 971)
Interest-bearing borrowings	–	–	(909 044)	(909 044)	(909 044)
Interest rate swaps (level 2)	137	–	–	137	137
Interest 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 TRANSACTIONS

19.1 Identity of related parties

Common directorship and shareholding (related entity) – Vukile Asset Management (Pty) Ltd Directors as listed in the directors' report

Shareholder with control – Vukile Property Fund Limited

			2016 R000	2015 R000	2014 R000

19.2	Related entity Vukile Asset Management (Pty) Ltd
	Amount 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 Limited
	Debenture 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	2 503
	Amount included in trade receivables (receivable in 30 days)				–
	Property and asset management fees paid to related entity			19 273	24 140
	Acquisition fees paid to related entity				3 350
	Leasing commission paid to related entity			4 460	3 155
	Liberty Group Limited:
	Debenture interest Amount included in debenture interest payable				3 886 2 013
	Vukile Property Fund Limited:
	Debenture interest			42 778	30 109
	Amount included in debenture interest payable			13 867	15 706

		Direct beneficial	Indirect	Total	%
19.3	Directors' and officers' shareholdings
	31 March 2016
	Synergy A shares
	SJ Segar	58 706	13 000	71 706	0.15
	Synergy B shares
	SJ Segar	116 428	–	116 428	0.11
	LG Rapp	–	–	–	–
	GS Moseneke	200	–	200	0.00
	MJ Potts	19 850	–	19 850	0.02
	RC Hawton	100	–	100	0.00
	Total	195 284	13 000	208 284	0.14
	31 March 2015
	Synergy A shares
	SJ Segar	58 706	13 000	71 706	0.15
	Synergy B shares
	SJ Segar	116 428	–	116 428	0.11
	Total	175 134	13 000	188 134	0.26
	30 June 2014
	Synergy A linked units
	U Meyer	–	–	–	–
	SJ Segar	58 706	13 000	71 706	0.15
	Synergy B linked units
	WM Brooks	–	300 000	300 000	0.28
	U Meyer	–	981 300	981 300	0.92
	SJ 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.

19.4 Directors' remuneration

19.4.1 Non-executive

Non-executive directors' remuneration for services as director are as follows:

	1 376	929	1 285
U Meyer	–	92	119
AS Ramsden	–	21	238
MM Mdlolo	–	137	130
MJ Potts*	144	11	–
LG Rapp*	264	21	–
I Zwarenstein (four months pro rata fees)	80	–	–
SJ Segar	240	172	216
LX Mtumtum	336	237	281
MJ Kuscus	312	238	302
	R000	R000	R000
	2016	2015	2014

* 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 Executive

Executive 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.

	Salary R000	Bonus R000	Total remuneration R000
31 March 2016
GS Moseneke	1 297	1 335	2 632
RC Hawton	1 250	58	1 308
	2 547	1 393	3 940
31 March 2015
WM Brooks^	1 192	3 327	4 519
A Raubenheimer^	963	439	1 402
	2 155	3 766	5 921
30 June 2014
WM Brooks	1 485	2 830	2 978
U Meyer (Resigned as an executive director effective
1 August 2013)	30	366	396
A 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 contracts

There are no fixed-term service contracts for executive or non-executive directors.

20. CAPITAL MANAGEMENT

The group's capital management objectives are: To ensure the group's ability to continue as a going concern. 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:

	2016 R000	2015 R000
Total equity Cash flow hedges Cash and cash equivalents	1 463 357 175 (25 616)	1 413 562* 1 008 (6 020)
Capital	1 437 916	1 408 550
Total equity Borrowings	1 463 357 976 016	1 413 562* 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 amendments	Annual periods on/or beginning after
IFRS 5	Non-current Assets Held for Sale and Discontinued Operations	1 July 2016
	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.

Standard	Details of amendments	Annual 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 Instruments IFRS 9 Financial Instruments (2014) replaces IAS 39 Financial Instruments: Recognition and Measurement.	1 January 2018
IFRS 15	Revenue from Contracts with Customers New 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	Leases IFRS 16 will require lessees to account for leases "on-balance sheet" by recognising a "right-of-use" asset and a lease liability.	1 January 2019
	IFRS 16 also:
	Changes the definition of a lease Sets requirements on how to account for the asset and liability, including complexities such as non-lease elements, variable lease payments and option periods Provides exemptions for short-term leases and leases of low value assets Changes the accounting for sale and leaseback arrangements Largely retains IAS 17's approach to lessor accounting Introduces new disclosure requirements.
IAS 1	Presentation of Financial Statements Amendments 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 Statements Amendments 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 Reporting Annual 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	1 July 2016

statements and at the same time, or the interim financial statements will be incomplete.

	material assets, including immovable properties, subsidiaries and investments, acquired by the Synergy group during the three years preceding the last practicable date, are set out in Annexure 8 of the revised listing particulars. M equity, the Vukile portfolio and the Cumulative equity are detailed in the table below. Details of all other
Entity which acquired/will acquire the asset Description	M equity Synergy VA
Date of acquisition	1 October 2016
Consideration	22 945 522 "B" shares
– Valuation
Goodwill paid and manner in which it was accounted for	See paragraph 11.5 of the circular
Loans incurred to finance acquisition	N/A
Nature of asset acquired	100% of shares and claims
Name of vendor	Vukile
Address of vendor	Melrose Estate One-on-Ninth, corner Glenhove Road and Ninth Street,
Price paid by vendor and date of acquisition by vendor if within preceding three years Name and address of the vendor shareholder	Vukile's issued share capital is listed on the JSE May 2015 R106 million; 1
Description	Vukile portfolio, being properties set out in Annexure 6
Entity which acquired/will acquire the asset	Synergy
Date of acquisition	1 October 2016
Consideration	of the Vukile portfolio and a cash payment of R18.2 million, plus interest accruing from Synergy will transfer the Synergy portfolio to Vukile in consideration for the acquisition
Valuation	the effective date to the implementation date. R 2 431 800 000
Goodwill paid and manner in which it was accounted for	N/A
Loans incurred to finance acquisition	N/A
Nature of asset acquired	Rental enterprises
Name of vendor	Vukile
Address of vendor	Melrose Estate One-on-Ninth, corner Glenhove Road and Ninth Street,
Price paid by vendor and date of acquisition by vendor if within preceding three years Name and address of the vendor shareholder	Pretoria Silverton 294 Battery Street was acquired by Vukile in August 2015, for R21 744 000 Pretoria Silverton 34 Bearing Crescent was acquired by Vukile in August 2015, for R23 930 000 Pretoria Silverton 22 Axle Street was acquired by Vukile in August 2015, for R11 226 000 Vukile's issued share capital is listed on the JSE
	Pretoria Silverton 301 Battery Street was acquired by Vukile in August 2015, for R20 409 000 Pretoria Silverton 309 Battery Street was acquired by Vukile in August 2015, for R18 204 000

Description	Cumulative equity
Entity which acquired/will acquire the asset	Synergy
Date of acquisition	1 October 2016
Consideration	271 412 267 "B" shares
Valuation	R2 055 780 000 (see paragraph 11.6)
Goodwill paid and manner in which it was accounted for	N/A
Loans incurred to finance acquisition	N/A
Nature of asset acquired	100% of shares and claims
Name of vendors	Mark Kaplan (and other Arrowhead, Vividend, Gerald Leissner, Imraan Suleman,
	executives, as defined, if any)
Address of vendors	Melrose Arch Melrose Boulevard, 2nd Floor, 18
Name and address of the vendor shareholder	Arrowhead's issued share capital is listed on the JSE
	Arrowhead is the sole shareholder of Vividend
Price paid by vendors and date of acquisition by vendor if within preceding three years	349 267 564 Cumulative shares were acquired by Arrowhead at R5.00 per share, in
	consideration for the sale to Cumulative of a portfolio of properties valued at R1 746 837 820
	24 629 714 Cumulative shares were acquired by Vividend at R5.00 per share, in
	consideration for the sale to Cumulative of a portfolio of properties valued at R123 148 547
	As at the last practicable date, no executives own Cumulative shares. However, additional

Cumulative shares will be issued to the executives prior to the implementation date, as

further detailed in paragraph 18

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

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.

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.

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;
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.

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.
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.
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
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.
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;
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.

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.

Synergy Income Fund Limited

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

	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.
1. Synergy shareholders are referred to page 4 of the circular for information on the action required to be taken by them.
1. 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.

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.

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.

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.

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.

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.

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

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 [email protected] 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.

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.
1. 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 Limited 26 September 2016

Registered office One-on-Ninth Corner Glenhove Road and Ninth Street Melrose Estate 2196

Synergy Income Fund Limited

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

the chairman of the general meeting

as 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	B
Special resolution 1: Issue of shares in terms of the VAM internalisation
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
Special resolution 3: Revocation of special resolution 2 in the event of the Vukile asset exchange lapsing
Special resolution 4: Issue of shares in terms of the Cumulative acquisition
Special resolution 5: Change of name
Special resolution 6: Amendment of the MoI
Ordinary resolution 1: VAM internalisation
Ordinary resolution 2: Acquisition of the Vukile portfolio
Ordinary resolution 3: Disposal of the Synergy portfolio
Ordinary resolution 4: Cumulative acquisition
Ordinary resolution 5: Waiver of mandatory offer by independent "A" shareholders
Ordinary resolution 6: Waiver of mandatory offer by independent "B" shareholders
Ordinary resolution 7: Election of Gerald Leissner as a director
Ordinary resolution 8: Election of Gregory Kinross as a director
Ordinary resolution 9: Election of Clifford Abram as a director
Ordinary resolution 10: Election of Ayesha Rehman as a director
Ordinary resolution 11: Election of Mervyn Serebro as a director
Ordinary resolution 12: Authority to give effect to resolutions

* One vote per share held by shareholders, recorded in the registers on the voting record date

Unless 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.

Please read notes on the reverse side hereof

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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. 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.
1. A proxy may not delegate his/her authority to act on behalf of the shareholder, to another person.
1. 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.
1. 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 [email protected] 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.
1. 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.
1. The aforegoing notes include a summary of the relevant provisions of section 58 of the Companies Act, as required in terms of that section.

AI assistant

FAIRVEST LIMITED — Proxy Solicitation & Information Statement 2016

48720_rns_2016-10-07_84555e94-6a89-449c-9659-26c8d9832d13.pdf

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Action required

Synergy Income Fund Limited

CIRCULAR TO SYNERGY SHAREHOLDERS

CORPORATE INFORMATION

Registered office of Synergy

Corporate advisor

Independent expert

Independent reporting accountants

Independent property valuer

Transfer Secretaries

Vukile Asset Management Proprietary Limited

Date and place of incorporation of VAM

Company secretary

Sponsor

Attorneys and competition law advisors

Independent property valuer

Independent property valuer

Cumulative Properties Limited

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

Date and place of incorporation of Cumulative

TABLE OF CONTENTS

ACTION REQUIRED BY SYNERGY SHAREHOLDERS

THE GENERAL MEETING

IMPLEMENTATION OF THE TRANSACTION

ELECTRONIC PARTICIPATION

VOTING PROCEDURE AND QUORUM FOR THE GENERAL MEETING

SALIENT DATES AND TIMES

2016

Notes:

DEFINITIONS AND INTERPRETATIONS

Directors

CIRCULAR TO SYNERGY SHAREHOLDERS PART I: THE TRANSACTION

1. INTRODUCTION

2. RATIONALE FOR THE TRANSACTION

3. STRATEGY AND PROSPECTS

4. MECHANICS OF THE TRANSACTION

4.8 The VAM internalisation

4.9 The Vukile asset exchange

4.10 The Cumulative acquisition

4.10.2 Waiver of mandatory offer

4.10.2.1 Details of waiver of mandatory offer

4.11 Change of name

4.12 MoI amendment

4.13 Reconstitution of the board of directors

4.14 Conditions precedent

4.15 Approval required

4.16 Independent expert report

4.17 Affected transaction considerations in respect of the Vukile asset exchange

5. SECTION 164 APPRAISAL RIGHTS

6. SECTION 115 OF THE COMPANIES ACT

7. THE GENERAL MEETING

PART II: PROPERTY INFORMATION THE SYNERGY PORTFOLIO

8. THE SYNERGY PORTFOLIO

8.2 Analysis of the Synergy portfolio

8.2.2 Sectoral profile

8.2.4 Vacancy profile

8.3 Valuation reports

9. THE VUKILE PORTFOLIO

9.1 Overview of the Vukile portfolio

9.2 Analysis of the Vukile portfolio

9.2.3 Tenant profile

9.2.5 Lease expiry profile

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

9.3 Valuation reports

10. THE CUMULATIVE PORTFOLIO

10.1 Overview of the Cumulative portfolio

10.2 Analysis of the Cumulative portfolio

10.2.1 Geographic profile

10.3 Valuation reports

11. VENDORS

PART III: FINANCIAL INFORMATION

12. FORECAST STATEMENTS OF COMPREHENSIVE INCOME IN RESPECT OF SYNERGY

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

14. HISTORICAL FINANCIAL INFORMATION IN RESPECT OF SYNERGY

PART IV: GENERAL

15. STATEMENT AS TO LISTING ON THE JSE

FAIRVEST LIMITED Proxy Solicitation & Information Statement 2016