NOTICE OF GENERAL MEETING OF SHAREHOLDERS

Transcription

1 DIPULA INCOME FUND LIMITED (Registration number 2005/013963/06) JSE share code: DIA ISIN: ZAE JSE share code: DIB ISIN: ZAE (Approved as a REIT by the JSE) ( Dipula or the company ) NOTICE OF GENERAL MEETING OF SHAREHOLDERS Notice is hereby given that a general meeting of Dipula shareholders will be held at Block B Dunkeld Park, 6 North Road, Dunkeld West, Johannesburg on Thursday, 14 December 2017, for the purpose of considering and, if deemed fit, passing with or without modification, 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, driver s licences 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 3.2 of the notice, save for any such condition precedent relating to the passing of such resolution.

2 SALIENT DATES AND TIMES 2017 Record date for receipt of notice of the general meeting Last day to trade in order to be eligible to participate in and vote at the general meeting Record date for purposes of voting at the general meeting ( voting record date ) General meeting held at 10:00 Results of the general meeting announced on SENS Results of the general meeting published in the press Friday, 10 November Tuesday, 5 December Friday, 8 December Thursday, 14 December Thursday, 14 December Friday, 15 December Note: 1. All dates and times in this notice 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.

3 DEFINITIONS AND INTERPRETATION In this notice and the annexure 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-day VWAP A share A shareholder 30-day volume weighted average price per share; an A ordinary share of no par value in the share capital of Dipula; the holder of an A share; acquisition cost the aggregate acquisition cost in the amount of R ; asset manager or DAMT asset management agreement or AMA audited accounts B share B shareholder board or directors or board of directors business day The Dipula Asset Management Trust (Master s reference No. IT8900/06); the agreement entered into between Dipula and DAMT on 11 August 2011, in respect of asset management of the Dipula portfolio; the signed audited financial statements of the asset manager as at and in respect of the financial period ended 28 February 2017; a B ordinary share of no par value in the share capital of Dipula; the holder of a B share; cash consideration R ; certificated shareholders certificated shares the board of directors of Dipula as set out on page 4 of this notice; 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 notice should fall on a day which is not a business day, the relevant date will be extended to the next succeeding business day; shareholders who hold 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; Companies Act the Companies Act, No.71 of 2008; company secretary the company secretary of Dipula; conditions precedent the conditions precedent to which the transaction is subject, as set out in paragraph 3.2; consideration shares CPI CSDP dematerialise or dematerialisation dematerialised shareholders dematerialised shares B shares, being equivalent of R calculated using the 30-day VWAP at the effective date; Consumer Price Index as published monthly by Statistics South Africa; 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; 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; shareholders who hold 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; 1

4 Dijalo Dijalo Asset Management Proprietary Limited, (Registration number 2005/003072/07), a limited liability private company duly incorporated in the Republic of South Africa; Dipula or the company Dipula directors or board of directors documents of title disposal of beneficiary interests agreement or transaction agreement Dipula Income Fund Limited (Registration number 2005/013963/06), a limited liability public company duly incorporated in South Africa, the issued shares of which are listed on the JSE and its registered address at Block B Dunkeld Park, 6 North Road, Dunkeld West, Johannesburg, 2196; the board of directors of Dipula; practical effective date 1 September 2017; enterprise value share certificates, certified transfer deeds, balance receipts and any other documents of title to shares; the disposal of beneficiary interests agreement entered into between Dipula, DAMT and the vendors on 20 October 2017, in respect of the internalisation and in terms whereof 100% of the investment units of DAMT shall be disposed of by the vendors to Dipula; the aggregate of Dipula s market capitalisation and borrowings; Financial Markets Act the Financial Markets Act, No. 19 of 2012; financial year general meeting implementation date the financial year of Dipula, ending on 31 August; the general meeting of Dipula shareholders to be held at 10:00 on Thursday, 14 December 2017 at Block B Dunkeld Park, 6 North Road, Dunkeld West, Johannesburg, for the purpose of considering and, if deemed fit, passing the resolutions set out in this notice; the date on which the transaction will be implemented, being the fifth business day following the fulfilment or waiver of the last of the conditions precedent; independent expert or Mazars Mazars Corporate Finance Proprietary Limited (Registration number 2003/029561/07), 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 Dipula shareholders in relation to the transaction and its registered address at Mazars House, Rialto Road, Grand Moorings Precinct, Century City, 7441; investment units JSE JSE Listings Requirements a unit entitling the holder thereof to: a pro rata share of the net income of the asset manager from time to time; and a pro rata share of the capital of the asset manager, consisting of assets or funds held from time to time as capital assets and administered by the trustees for the time being of the asset manager; 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; the Listings Requirements published by the JSE from time to time; MAP Mergence Africa Properties Proprietary Limited, (Registration number 2005/005391/07), a limited liability private company duly incorporated in the Republic of South Africa; notice own name dematerialised shareholders press pro forma accounts R or Rand or ZAR this notice of general meeting to Dipula shareholders dated 15 November 2017, including all annexures and the form of proxy; dematerialised shareholders who/which have elected own name registration; the Business Day newspaper; the unaudited pro forma balance sheet of the asset manager as at the effective date; South African Rand, the lawful currency of South Africa; 2

5 REIT register SENS shareholders or Dipula shareholders shares or Dipula shares small related party acquisition Strate 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; the securities register of the company; the Stock Exchange News Service of the JSE; collectively, A shareholders and B shareholders, or either of them, as the context may require; collectively, A shares and B shares, or either of them, as the context may require; an acquisition from a related party of which the consideration payable is or is anticipated to constitute less than or equal to 5%, but exceed 0.25% of the market capitalisation of the company, as contemplated in the JSE Listings Requirements; 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; internalisation or transaction the effective internalisation of Dipula s asset management function through the disposal of 100% of the investment units held by the vendors in the asset manager to Dipula, in respect of which Dipula will incur the acquisition cost, with effect from the practical effective date; 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 South Africa, full details of which are set out in the Corporate Information section; VAT value added tax as defined in the Value Added Tax Act, No. 89 of 1991; vendors vendors proportions voting record date the beneficiaries of the asset manager being Dijalo and MAP; the proportions in which the vendors hold the investment units, being in respect of: Dijalo, 50%; and MAP, 50%; the business day on which shareholders must be recorded in the register in order to participate in and vote at the general meeting; 3

6 Directors Zanele Matlala (Independent Non-executive Chairman) Izak Petersen (Chief Executive Officer) Ridwaan Asmal (Financial Director) Saul Gumede (Executive Director) Brian Azizollahoff (Independent Non-executive Director) Younaid Waja (Independent Non-executive Director) Eltie Links (Independent Non-executive Director) Syd Halliday (Independent Non-executive Director) DIPULA INCOME FUND LIMITED (Registration number 2005/013963/06) JSE share code: DIA ISIN: ZAE JSE share code: DIB ISIN: ZAE (Approved as a REIT by the JSE) ( Dipula or the company ) NOTICE OF GENERAL MEETING TO DIPULA SHAREHOLDERS 1. INTRODUCTION 1.1 Dipula owns a sectorally and geographically diversified portfolio valued at approximately R7 billion, including retail, industrial and offices in all nine provinces of South Africa. Dipula shares trade under JSE share codes DIA and DIB. The A shares are entitled to a preferred dividend with a growth rate calculated at lower of 5% and CPI while the B shares receive the remaining net dividend declared. 1.2 As announced on SENS on 16 October 2017, Dipula has entered into the transaction agreement, in terms of which Dipula will internalise its asset management function through the disposal of 100% of the investment units held by the beneficiaries of DAMT (being the vendors) to Dipula. The acquisition cost to be incurred by Dipula will comprise of the issue of B shares for the equivalent of R and a cash payment of R , as more fully described in paragraph 3; 1.3 The purpose of this notice is to: provide Dipula 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 give notice convening the general meeting at which the resolutions necessary to approve and implement the transaction, as more fully detailed in this notice, will be considered and, if deemed fit, approved with or without modification. 1.4 The transaction, if implemented, will constitute a small related party acquisition in terms of the JSE Listings Requirements and the requisite fairness opinion has been included as Annexure 1 of this notice. 2. RATIONALE FOR THE TRANSACTION 2.1 The primary rationale for internalising the management function of Dipula is to better align the interests of management and shareholders in line with international best practice. 2.2 In addition to the above, the following factors support the internalisation: 4

7 2.2.1 The saving as a result of the internalisation as determined with reference to DAMT s budget for the period ending 31 August 2018 is approximately R15 million which the board expects to be marginally accretive from a dividend per share perspective in the short term. The accretive effect would become more material in the medium to long term as Dipula grows, which is not unrealistic having regard to its executable short- to medium-term acquisition pipeline The consideration shares and management shares issued to incumbent management will be B shares: which enhances alignment and effective management incentivisation in that the B shares represent more leveraged exposure to the equity performance of Dipula; which are the more illiquid of Dipula s two share classes in issue. The illiquidity of both of Dipula s share classes is, in the board s view, a factor that Dipula and its management should seek to address for the benefit of existing and prospective shareholders; and the issuance of B shares creates additional capacity to issue A shares as a source of capital, if required The inflexibility and entrenched nature of external management is an impediment to corporate action The original rationale for an external management function was that it would be advantageous regarding dealings with empowerment sensitive tenants. This has ceased to be of much relevance to Dipula as a result of: a reweighting of Dipula s portfolio to retail; and reduced emphasis on empowered external managers by empowerment sensitive tenants with more holistic ownership and management criteria expected to be applied going forward. 3. MECHANICS OF THE TRANSACTION Dipula has entered into the transaction agreement with the vendors and asset manager whereby the vendors will dispose of 100% of the units held by the vendors in the asset manager to Dipula with effect from the practical effective date. The acquisition cost will be settled as set out in paragraph 3.1 below, with practical effect from 1 September As a consequence of the internalisation, all of Dipula s executive management and key staff will either be formally employed by the asset manager or render services to the asset manager. More specifically the transaction will be implemented as follows: 3.1 Acquisition cost The acquisition cost will be settled on the implementation date as follows: Consideration shares The allotment and issue of B shares, being equivalent to R (65% of aggregate consideration) issued at the 30-day VWAP of B ordinary shares as at the practical effective date Cash consideration R (35% of aggregate consideration). Interest of 9,5% will be earned on the acquisition cost for the period between the practical effective date and the implementation date, and will be payable on the implementation date, in cash. 3.2 Conditions precedent The internalisation remains subject to Dipula shareholders approving the issue of shares to related party vendors by way of special resolution passed in terms of section 41(1) of the Companies Act. 3.3 Elections pertaining to consideration shares The consideration shares received by the vendors upon implementation of the internalisation will be subject, at the election of the vendor, to either: a restriction on trading the consideration shares for a period of two years from the effective date ( lock-in election ); or 5

8 3.3.2 the entering into an arrangement whereby: 3.4 Other material terms all consideration shares not subject to the lock-in election will be placed in a pool administered by a broker or CSDP nominated by the board (the pool administrator ); the pool administrator will sell shares in the pool on the instruction of vendors under a responsible dealing mandate which will include restrictions on the sale of shares to competitors and a maximum discount of 5% to the 30-day volume weighted average price; and the proceeds of the share sales will be distributed to vendors on settlement of trades As compensation for the contracted minimum employment period and undertaking the lockin election in respect of their respective entitlement to consideration shares, it is proposed to award Izak Petersen and Ridwaan Asmal a fully funded, one-off issue of Dipula B ordinary shares equivalent to c. R and c. R respectively (the management shares ) based on the 30-day VWAP as at the practical effective date Interest of 9.5% will be earned on the abovementioned issue prices of the management shares for the period between the effective date and the implementation date, and will be payable on the implementation date, in cash On implementation of the internalisation Saul Gumede will retire from his position as a director of Dipula The agreement in respect of the internalisation contains warranties and indemnities which are normal for an acquisition of this nature, including: 3.5 Sources of funding The actual expenditure of the asset manager for the 2018 financial year will not materially vary from the projected expenditure in the asset manager s 12-month projected budget commencing on the effective date; and The asset manager does not have any liabilities (whether actual, or contingent) other than: those liabilities which are brought to account or fully provided for in the pro forma accounts prepared as at the effective date and in the case of contingent liabilities referred to by way of appropriate notes in the pro forma accounts; and liabilities incurred in the normal and ordinary course of its business during the period from the date to which the audited accounts prepared for the period ending on the effective date, and brought to account or fully provided for in the pro forma accounts and in the case of contingent liabilities referred to by way of appropriate notes in the pro forma accounts. The cash consideration, and accrued interest as contemplated in paragraphs 3.1 and above, will be funded through cash resources and/or debt facilities. 4. DETERMINATION OF THE ACQUISITION COST 4.1 In terms of the AMA, Dipula is entitled to internalise its asset management function through the exercise of an option to acquire the asset manager on 12 months written notice, which notice may not be given within the first six years of the commencement date of the asset management agreement. The option became exercisable on 11 August Should the option be exercised, the acquisition cost payable for the asset manager would be the equivalent of fair market value as agreed by the parties or, failing agreement, as determined by an independent merchant bank. 4.2 In order to effect the internalisation without the delay of a 12-month notice period, it is proposed to be implemented not as provided for in terms of the asset management agreement, but in terms of an arm s length agreement, with the acquisition cost payable for the asset manager to be fair value as agreed by the parties and confirmed by an independent expert. 6

9 4.3 As a basis for the agreement of the acquisition cost, the parties considered the following: an initial valuation of the asset manager in terms of the formula contained in the asset management agreement applicable in the event of termination by Dipula of the asset management agreement. The calculation is essentially the present value of future management fees with the following key inputs as prescribed in terms of the asset management agreement: a base monthly management fee determined with reference to the fee formula of 0.3% of Dipula s aggregate market capitalisation and total borrowings; the base management fee grown over the termination period in line with the annual average growth rate in Dipula s aggregate market capitalisation and borrowings for the 36-month period preceding the termination date; the tenor of the forecasted management fees is calculated as a period of three years plus the remaining period of the first seven years of the agreement; and the discount factor as determined with reference to the 10-day volume weighted average price for both the Dipula A and Dipula B shares as well as the budgeted 12-month forward distribution per share a comparison to precedent transactions within the sector; and a calculation of the impact of the internalisation on the forward distribution per share which indicated that the internalisation would be marginally accretive. 4.4 It is the view of the Dipula board of directors that implementing the internalisation in terms of an armslength agreement at this stage, rather than through the exercise of the option granted in terms of the asset management agreement, which is subject to a 12-month notice period, allows Dipula to benefit from the expected savings detailed under paragraph of this notice and also caters for any potential material increase in share price or conclusion of any material acquisition by Dipula during the notice period, which would likely result in an acquisition cost that is dilutive to shareholders. 4.5 In considering the proposed acquisition cost for the internalisation, the Dipula board of directors has taken into account the proposed award of the management shares as additional value in the amount of R and considers the aggregate of the internalisation price and the management shares to be fair and reasonable in the circumstances. 4.6 The independent expert has evaluated the fairness of the internalisation and allocation of the management shares as a composite transaction and found it to be fair to Dipula shareholders. 5. DIRECTORS INTERESTS 5.1 Directors interests in Dipula shares Set out below are the interests of directors of Dipula in Dipula A shares as at 31 October 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 Total shares held % of A shares % of total shares NS Gumede IS Petersen Y Waja Total

10 5.1.2 Set out below are the interests of directors of Dipula in Dipula B shares as at 31 October Direct and indirect beneficial interests are disclosed. In addition, interests of associates of directors, where such director has no beneficial interest, are separately disclosed. Director Direct beneficial Indirect beneficial Total shares held % of A shares % of total shares NS Gumede IS Petersen Y Waja Total Directors interests in transactions Save in respect of the directors interests in Dipula shares, as set out in paragraph 5.1 above and the executives entitled to consideration shares in terms of the transaction: no director of Dipula will benefit, directly or indirectly, in any manner as a consequence of the implementation of the transaction; and no director of Dipula has or had any material beneficial interest, direct or indirect, in transactions that were effected by Dipula during the current or immediately preceding financial year or during an earlier financial year and which remain in any respect outstanding or unperformed. 6. EXECUTIVE EMOLUMENTS 6.1 Izak Petersen (CEO) In terms of the service agreement entered into between the asset manager and Mergence Africa Holdings Proprietary Limited (the service provider ), the asset manager will pay as consideration for the services a fixed fee of R per month and the service provider may receive a discretionary annual performance incentive dependent on the performance of the service provider and Dipula. Izak Petersen shall be the designated person to provide the agreed services to Dipula. 6.2 Ridwaan Asmal (Financial Director) The annual cost to company of the remuneration package amounts to R excluding any bonuses which would be dependent on personal and company performance. The Dipula remuneration committee will determine the required thresholds for the performance incentives post the implementation of the internalisation. 7. CATEGORISATION 7.1 The internalisation constitutes a small related party transaction in terms of section 10.7 of the JSE Listings Requirements and accordingly does not require approval of shareholders. 7.2 Pursuant to the internalisation, consideration shares will be issued to Izak Petersen, Saul Gumede, Ridwaan Asmal and Jujdeeshin Junkoon or persons related to them. The issue of the consideration shares pursuant to the proposed internalisation accordingly constitutes an issue of shares to (i) a director and/or a prescribed officer of Dipula, as contemplated in section 41(1)(a) of the Companies Act and (ii) a person(s) related or inter-related to a director and/or prescribed officer of Dipula, as contemplated in section 41(1)(b), read with section 2, of the Companies Act, which issue requires the approval of shareholders of Dipula shareholders. 7.3 Moreover, the proposed allocation of management shares constitutes an issue of shares to directors of Dipula, as contemplated in section 41(1)(a) in the Companies Act, which issue requires the approval of shareholders of Dipula shareholders. 8

11 8. DIRECTORS RESPONSIBILITY STATEMENT The members of the independent board, whose names are given on page 4 of this notice, collectively and individually, and in respect of only the information included in this notice: 8.1 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 8.2 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. 9. OPINION AND RECOMMENDATION 9.1 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 Dipula shareholders and, accordingly, recommends that Dipula shareholders vote in favour of the resolutions to be proposed at the general meeting. The 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. 9.2 Those members of the independent board that hold a beneficial interest in Dipula shares intend voting in favour of the transaction and all resolutions to be proposed at the general meeting. 9

12 RESOLUTIONS SPECIAL RESOLUTION 1: ISSUE OF SHARES TO DIRECTORS OR PRESCRIBED OFFICERS OR THEIR RELATED PARTIES IN TERMS OF INTERNALISATION Resolved that, subject to the adoption of Special Resolution 2 and Special Resolution 3, and in terms of section 41(1) of the Companies Act, the issue of the consideration shares to Izak Petersen, Saul Gumede, Ridwaan Asmal and Jujdeeshin Junkoon or persons related to them, pursuant to the implementation of the internalisation, 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 consideration shares to Izak Petersen, Saul Gumede, Ridwaan Asmal and Jujdeeshin Junkoon or persons related to them, in terms of the internalisation, constitutes the issue of shares to (i) a director and/or a prescribed officer of Dipula, as contemplated in section 41(1)(a) of the Companies Act and (ii) person(s) related or inter-related to Dipula, 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 Dipula shareholders. The effect of Special Resolution 1 will be that Dipula is authorised to issue the consideration shares to the aforementioned persons as contemplated in the disposal of beneficiary interests agreement. SPECIAL RESOLUTION 2: ISSUE OF SHARES TO IZAK PETERSEN IN TERMS OF THE ALLOCATION OF MANAGEMENT SHARES Resolved that, subject to the adoption of Special Resolution 1 and Special Resolution 3, and in terms of section 41(1) of the Companies Act, the issue of the management shares to Izak Petersen pursuant to the allocation of the management shares, 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. Reason and effect The issue of the consideration shares to Izak Petersen constitutes the issue of shares to a director of Dipula, as contemplated in section 41(1) of the Companies Act. Accordingly, such issue of shares is required to be approved by a special resolution of Dipula shareholders. The effect of Special Resolution 2 will be that Dipula is authorised to issue to Izak Petersen his applicable proportion of the management shares. SPECIAL RESOLUTION 3: ISSUE OF SHARES TO RIDWAAN ASMAL IN TERMS OF THE ALLOCATION OF MANAGEMENT SHARES Resolved that, subject to the adoption of Special Resolution 1 and Special Resolution 2, and in terms of section 41(1) of the Companies Act, the issue of the management shares to Ridwaan Asmal pursuant to the allocation of the management shares, be and is hereby authorised. 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 and effect The issue of the consideration shares to Ridwaan Asmal constitutes the issue of shares to a director of Dipula, as contemplated in section 41(1) of the Companies Act. Accordingly, such issue of shares is required to be approved by a special resolution of Dipula shareholders. The effect of Special Resolution 3 will be that Dipula is authorised to issue to Ridwaan Asmal his applicable proportion of the management shares. 10

13 VOTING, QUORUM AND SHAREHOLDERS INSTRUCTIONS VOTING AND QUORUM The quorum requirement for the general meeting to begin or for a matter to be considered is at least three shareholders present in person. In addition: the general meeting may not begin until sufficient persons are present in person or represented by proxy to exercise, in aggregate, at least 25% of the voting rights that are entitled to be exercised in respect of at least one matter to be decided at the general meeting; and a matter to be decided at the general meeting may not begin to be considered unless sufficient persons are present in person or represented by proxy to exercise, in aggregate, at least 25% of all of the voting rights that are entitled to be exercised in respect of that matter at the time the matter is called on the agenda. Every shareholder present in person or represented by proxy and entitled to exercise voting rights at the general meeting shall be entitled to vote on a show of hands, irrespective of the number of voting rights that shareholder would otherwise be entitled to exercise. On a poll, any person who is present at the general meeting, whether as a shareholder or as proxy for a shareholder, has the number of votes determined in accordance with the voting rights associated with the shares held by that shareholder. Notwithstanding the above, the voting rights controlled by the executives and their associates, related persons and persons acting in concert with the executives (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 Resolutions 1, 2 and 3. SHAREHOLDERS General instructions Shareholders who are entitled to attend, speak and vote at the general meeting are encouraged to do so. Electronic participation The company has made provision for shareholders or their proxies to participate electronically in the general meeting by way of telephone conferencing. Should you wish to participate in the general meeting by telephone conference call, you, or your proxy, should advise the company thereof by 10:00 on Tuesday, 12 December 2017, by submitting by to the company secretary at meetfax@linkmarketservices.co.za, including an address, cellular number and landline as well as full details of your title to Dipula shares and proof of identity, in the form of copies of identity documents and share certificates (in the case of certificated shares) or written confirmation from your CSDP confirming your title to the dematerialised shares (in the case of dematerialised shares). Upon receipt of the required information, you will be provided with a secure code and instructions to access the electronic communication during the general meeting. Shareholders should note that access to the electronic communication will be at the expense of the shareholders who wish to utilise the facility. Shareholders and their appointed proxies attending by conference call will not be able to cast their votes at the general meeting through this medium. Accordingly, shareholders making use of the electronic participation facility are requested to submit their forms of proxy to the company, as directed. Proxies and authority for representatives to act The attached form of proxy is only to be completed by: certificated shareholders; or own name dematerialised shareholders, who cannot attend the general meeting but wish to be represented thereat. All other beneficial owners who have dematerialised their shares through a CSDP or broker, without own name registration, and who wish to attend the general meeting, must instruct their CSDP or broker to provide them with the necessary letter of representation, or they must provide the CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker. These shareholders must not use a form of proxy. 11

14 Forms of proxy are requested to be deposited at the transfer secretaries, Link Market Services South Africa Proprietary Limited, 13th Floor, 19 Ameshoff Street, Braamfontein, 2001, posted to PO Box 4844, Johannesburg, 2000, faxed to or ed to so as to arrive by 10:00 on Tuesday, 12 December Forms of proxy not lodged with the transfer secretaries in time may be handed to the chairman of the general meeting or to the transfer secretaries at the general meeting at any time prior to the commencement of the general meeting or prior to voting on any resolution proposed at 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. Dipula does not accept responsibility and will not be held liable for any failure on the part of the CSDP or broker of a dematerialised Dipula shareholder to notify such shareholder of the general meeting of or any business to be conducted thereat. GENERAL NOTES 1. Shareholders who are companies or other bodies corporate may, by resolution of its directors or other governing body, authorise any person to act as its representative at the general meeting. 2. The chairperson of the general meeting will be making a demand that all resolutions put to the vote shall be decided by way of a poll. By order of the board Dipula Income Fund Limited 15 November 2017 Registered office Block B, Dunkeld Park 6 North Road Dunkeld West

15 Annexure 1 INDEPENDENT EXPERT S FAIR AND REASONABLE OPINION IN RESPECT OF THE TRANSACTION 1 September 2017 The Directors Block B, Dunkeld Park 6 North Road Dunkeld West Johannesburg Dear Sirs, INDEPENDENT FAIRNESS OPINION IN RESPECT OF THE INTERNALISATION OF DIPULA ASSET MANAGEMENT TRUST ( THE ASSET MANAGER ) INTO DIPULA INCOME FUND LIMITED ( DIPULA ) INTRODUCTION We have been appointed by the Board of Directors ( Board ) to advise the shareholders of Dipula whether, in our opinion, the internalisation of the Asset Manager is fair to the shareholders of Dipula. Dipula will acquire the Asset Manager for a consideration of R The purchase consideration will be settled in the following manner: An amount of R (65%) will be settled by the issue of Dipula B shares; and The remaining consideration of R (35%) will be settled in cash. The purchase consideration has been agreed by the relevant parties post benchmarking. Additionally, a further amount of R will be paid as consideration to certain members of the executive management for an employment lock-in period of two years as well as to restricting their ability to trade shares received as consideration for the internalisation of the Asset Manager as well as contracting for a two-year service lock-in. The purchase consideration will be settled in shares. For the purposes of the opinion the Board of Dipula has requested that the transactions detailed above be are treated as a composite transaction for the purposes of the internalisation. Accordingly, the internalisation of the Asset Manager is deemed to be a related party transaction in terms of section 10.7 of the Johannesburg Stock Exchange ( JSE ) Listings Requirements. The Board is required to obtain a fairness opinion from an independent expert, prepared in accordance with Schedule 5 of the JSE Listings Requirements. Both the issue of shares as part consideration for the internalisation and the issue of shares to executives is required to be approved by shareholders in terms of section 41 of the Companies Act, 2008 of South Africa. EXPLANATION OF THE TERM FAIR The term fairness is defined in Schedule 5 of the JSE Listings Requirements as being primarily based on quantitative issues. Therefore, the consideration payable to a related party would be considered fair to the Dipula shareholders if the consideration payable is equal to or less than the value derived for the Asset Manager or unfair if the opposite would hold true. Our fairness opinion does not purport to cater for individual shareholder positions but rather the general body of shareholders. ASSUMPTIONS We arrived at our opinion based on the following assumptions: Current economic, regulatory and market conditions will not change materially. This included an analysis of publically available information relating to the forecast market outlook; That reliance can be placed on the signed Asset Management Agreement; That reliance can be placed on the budget of the Asset Manager for the 12 months ending June 2018; 13

16 That reliance can be placed on the unaudited year to date management accounts of the Asset Manager for the 14 months ended 28 February 2017; The reliance can be placed on the unaudited year to date management accounts for the four months ended 30 June 2017; That reliance can be placed on the audited financial statements of the Asset Manager for the 12 months ended 31 December 2015; That reliance can be placed on the audited financial statements of Dipula for the 12 months ended 31 August 2014, 31 August 2015, 31 August 2016 as well as the 28 February 2017 interim accounts; That reliance can be placed on the debt schedule of Dipula provided by management as at 31 May 2017; and That reliance can be placed on the forecast financial information provided for the Asset Manager for the 12 months ending 31 August 2018 to 31 August Where relevant, representations made by management and/or directors were corroborated to source documents prepared by third parties, independent analytical procedures performed by us and by examining and analysing external factors that influence the business. This included an analysis of the forecast financial information against that of the audited annual financial statements for reasonability. SOURCES OF INFORMATION In the course of our analysis, we relied upon financial and other information, including financial information obtained from management together with industry related and other information available in the public domain. Our conclusion is dependent on such information being accurate in all material respects. The principle sources of information used in formulating our opinion regarding the transaction include: Information and assumptions made available by and from discussions held with management and executive directors of Dipula and financial advisors in terms of the rationale for the internalisation of the Asset Manager; Audited annual financial statements of Dipula for the years ended 31 August 2014, 31 August 2015 and 31 August 2016; The Asset Management Agreement; The budgets of the Asset Manager company for the 12 months ending 30 June 2018; The debt schedule as provided by management as at 31 May 2017; The audited financial statements of the Asset Manager for the 12 months ended 31 December 2015; The unaudited management accounts for the 14 months ended 28 February 2017; The debt schedule of Dipula provided by management as at 31 May 2017; The forecast financial statements of the Asset Manager for the 12 months ending 31 August 2018 to 31 August 2022; Forecast financial information of Dipula as prepared by management for the years ending 31 August 2017 to 30 April 2021; and Publicly available information relating to Dipula and other competitors in the REIT industry that we deemed to be relevant, including company announcements. We obtained the information through: Conducting interviews with management; Obtaining corroborating evidence from third parties; and Extracting information from the internet and the press. We satisfied ourselves as to the appropriateness and reasonableness of the information with reference to: Audited annual financial statements of Dipula for the years ended 31 August 2015 and 31 August 2016; The budgets of the Asset Manager company for the year ending 30 June 2018; Forecast financial information of Dipula as prepared by management for the years ending 31 August 2017 to 30 April 2021; 14

17 Conducting analytical reviews on the financial statements, management accounts and forecast financial information; Understanding the industry in which Dipula operates; and Assessing whether replies from management on certain issues were corroborated by third parties and documentary evidence. LIMITING CONDITIONS AND RELATED PARTY RELATIONSHIPS We have relied upon the accuracy of information provided to us or otherwise reviewed by us, for the purposes of this opinion, whether in writing or obtained through discussion with the management of Dipula. We express no opinion on this information. There were no limiting conditions, or any restrictions of scope imposed by the client whilst this opinion was being prepared. Our opinion is based on current economic, regulatory, market as well as other conditions. Subsequent developments may affect this opinion, which we are under no obligation to update, review or re-affirm. This letter and opinion is provided solely for the benefit of the shareholders of Dipula in connection with and for the purposes of their consideration of the Transaction. There is no relationship between Mazars Corporate Finance Proprietary Limited ( MCF ) and any other parties involved in this Transaction. MCF has no shares in Dipula or any other party involved in the internalisation of the Asset Manager. MCF s fee in respect of this opinion is not payable in Dipula shares and is not contingent or related to the outcome of the internalisation of the Asset Manager. Each shareholder s individual decision may be influenced by such shareholder s particular circumstances and accordingly each shareholder should consult an independent advisor if in any doubt as to the merits or otherwise of the Transaction. PROCEDURES In order to assess the fairness of the terms and conditions relating to the Transaction, we have performed, amongst others, the following procedures: Considered the terms and conditions of the signed Asset Management Agreement; Considered the rationale for the internalisation of the Asset Manager; Considered the benefits of the internalisation of the Asset Manager; Considered information made available by and from discussions held with management and executive directors of Dipula and financial advisors; Reviewed the audited annual financial statements of Dipula for the years ended 31 August 2014, 31 August 2015 and 31 August 2016; Reviewed the unaudited year to date management accounts of Dipula for the 14 months ended 28 February 2017; Reviewed the forecast financial information for Dipula as prepared by management for the years ended 31 August 2017 to 30 April 2021; Reviewed the historic prices and volumes at which the shares in Dipula have traded and analysed the share price performance over the relevant periods for comparison; Reviewed recent reports and/or comments on Dipula by independent investment analysts and other market commentators; Considered the 14-day volume weighted average share price information of Dipula; Performed an indicative valuation of the Asset Manager using the discounted cash flow method save for Dipula; Reviewed the methodologies available for performing valuations of businesses operating in the real estate industry; Selected a number of South African-listed REITs as peer companies of Dipula and analysed publicly available financial information on this peer group; Performed an indicative valuation of The Asset Manager in terms of the Asset Management Agreement; and Reviewed general economic, market and related conditions in which Dipula operates. We believe the above procedures commercially justify the conclusion outlined below. 15

18 CONFIRMATION OF PERFORMANCE OF VALUATION AND VALUATION METHODOLOGY We have performed a valuation of the Asset Manager based on the discounted cash flow model. The valuation was performed taking cognisance of the Asset Managers current and planned operations as well as other market factors affecting these operations using the values derived from the above valuations, a comparison was made to the aggregate purchase consideration of R to the fair value of the Asset Manager and this was assessed for fairness. As a secondary method we have compared the purchase consideration of the Asset Manager as a percentage of enterprise value of Dipula, this has been compared to similar recently concluded transaction, it terms of the comparisons it is noted that internalisation of the Dipula Asset Manager was the lowest percentage. As a final method the effect of the saving to be generated by Dipula has been compared to the dividend per share pre and post transaction, in both cases the settlement of B shares and cash the saving has an accretionary effect on the dividend per share. We have determined the value per share of the Dipula B shares as at the transaction date. The valuation methodology was based on the net asset value of the B shares. In addition to the net asset value calculation of the Dipula B share, we have performed a dividend discount valuation of the B shares taking into account expected dividend per share to be paid per B share, at the required rate of return as well as the growth rate in the dividends (in perpetuity) for B shares. Based on discussions with management, along with research into the sector, the following key value drivers were assessed for the valuation calculation: Internal Growth rates on the shares was calculated based on a three year average which amounted to an average growth rate of 21.34%; Asset Manager fees which are paid in terms of the agreement a fee of 0.3% per month based on the market capital and borrowing combined; Dividend per B share; Borrowing costs at a prime rate of 10.5%; and B Shares in issue at the time of the report amounting to shares. External Stability of the economy and other macroeconomic factors; Comparable companies operating in the REIT sector; Both long-term and short-term inflation rates; and Interest rates. Based on discussions with management, along with research into the sector, the following key value drivers were assessed for the DCF valuation: Internal The average revenue growth rates of 8.65% each year; The average profit margins of 60% for each year; Working capital assumptions; Free cash flows; Discount rate; and Perpetuity growth rate. External Stability of the economy and other macroeconomic factors; Comparable companies operating in the REIT sector; Both long-term and short-term inflation rates; and Interest rates. 16