A D M I N I S T R A T I O N(Registration number: 1999/025764/06)

COMPANY SECRETARY AND REGISTERED OFFICE

Marriott Property Services (Pty) LimitedA subsidiary of Old Mutual Property Group (Pty) LimitedMarriott at Kingsmead,Kingsmead Office Park,Durban, 4001P O Box 207, Durban, 4000

PROPERTY ASSET MANAGERS

Marriott Property Services (Pty) LimitedA subsidiary of Old Mutual Property Group (Pty) LimitedMarriott at Kingsmead,Kingsmead Office Park,Durban, 4001P O Box 207, Durban, 4000

TRUSTEES

Steinway Trustees (Pty) LimitedThe Manor House,14 Nuttall Gardens,Morningside,Durban, 4001P O Box 712, Durban, 4000

TRANSFER SECRETARIES

Computershare Investor Services 2005 (Pty) Limited70 Marshall Street,Johannesburg, 2001P O Box 61051, Marshalltown, 2107

AUDITORS

KPMG Inc.20 Kingsmead Boulevard,Kingsmead Office Park,Durban, 4001P O Box 1496, Durban, 4000

COMMERCIAL BANKERS

FirstRand Bank Limitedt/a First National BankCorporate Account Services Durban8 Rydallvale Park,La Lucia Ridge Office Park,La Lucia Ridge, 4051P O Box 4130, Umhlanga Rocks, 4320

SPONSORS

Exchange Sponsors (Pty) Limited1st Floor, Building 3, North Wing Commerce Square,39 Rivonia Road, Sandhurst, SandtonP O Box 78011, Sandton, 2146

ATTORNEYS

Cox YeatsVictoria Maine,71 Victoria Embankment,Durban, 4001P O Box 3032, Durban, 4000

JSE code: SRLISIN code: ZAE 000034328Website: www.saretail.co.zaMember of the Property Loan Stock Association

A N N U A LR E P O R T2 0 0 6

Profile, Investment Objectives and Highlights 1

Directorate 2

Chairman's and Managing Director's Review 3

Statement on Corporate Governance 8

Linked Unitholders' Analysis 11

Linked Unitholders' Diary 13

Statement of Directors' Responsibilities 14

Approval of Annual Financial Statements 14

Certificate by Company Secretary 14

Report of the Independent Auditors 15

Directors' Report 16

Balance Sheet 20

Income Statement 21

Statement of Changes in Equity 22

Cash Flow Statement 23

Notes to the Annual Financial Statements 24

Property Portfolio 42

Notice of Annual General Meeting 45

Form of Proxy 47

Form of Proxy Notes 48

C O N T E N T S

This report together with additional information on the property portfolio is available at www.saretail.co.za

PROFILE

S A Retail Properties Limited (“S A Retail” or “the Company”)

is a property loan stock company which was listed on

The JSE Limited (“JSE”) in the “Financials – Real Estate”

sector on 15 November 2001.

The market capitalisation of the Company as at 31 March 2006

was R2 202 million (2005: R1 976 million) and the investment

properties were valued at R1,9 billion (2005: R1,5 billion).

The Company's retail property portfolio consists of investments

in 21 neighbourhood shopping centres, three regional shopping

centres and one semi-industrial property that was disposed

of post 31 March 2006.

INVESTMENT OBJECTIVES

S A Retail seeks to invest in a focused portfolio of retail

properties, which cater for the needs of stable communities,

are anchored by established retailers and which offer sustainable

rental growth and steady capital appreciation. In addition

to neighbourhood centres, S A Retail will invest in flagship

regional centres.

P R O F I L EI N V E S T M E N T

O B J E C T I V E S& H I G H L I G H T S

HIGHLIGHTS 2006 2005

• Total return 19,6% 67,1%

• Market capitalisation (Rm) 2 202 1 976

• Linked units in issue (000's) 225 874 225 874

• Listed market price

(cents per linked unit) 975 875

• Distribution (cents per linked unit) 71,18 69,20

• Number of properties 25 26

• Property acquisitions (Rm) 29 218

• Property disposals (Rm) 89 56

• Developments and

refurbishments (Rm) 171 24

• Value of property portfolio (Rm) 1 880 1 544

• Net asset value (cents per linked unit) 728 678

(including distribution yet to be paid)

• Vacancy factor 2,3% 2,8%

(based on lettable space)

(excluding development property)

• Premium to net asset value 33,9% 29,1%

1

Members of the Investment and

Management Committee.

From left to right: Back: C J Ewin, W J Swain,

A P W Sparks and A M Hyatt. Front: A M Malan

and D L Pronk.

D I R E C T O R A T ER A Norton (67) M.A. (OXON)

Fellow Institute of Bankers $ (*by invitation)

Non-executive, independent

Chairman, Remuneration and

Nomination Committee Chairman;

Has extensive business experience in various corporate and

financial institutions in an executive and non-executive capacity.

Chairman of KwaZulu-Natal University Health (Pty) Limited,

a director of Grindrod Limited and Illovo Sugar Limited. Past

president of the JSE Limited.

A P W Sparks (37) BSc (Hon),

MTRP RICS # (*by invitation)

Executive director

Managing director

Has 11 years diverse property experience with the Marriott

Group. Member of S A Council of Town and Regional Planners

and the Royal Institute of Chartered Surveyors. Founding member

and past executive committee member of the Association of

Property Loan Stock Companies and past executive committee

member of SAPOA-KZN.

H S C Bester (56) B. Comm (Hon), (FIA) London,

AMP (Harvard) *

Non-executive, independent

Currently serving on the boards of Vukilé Property Fund Limited,

Barnard Jacobs Mellet and the Board of HTL GROUP (Pty)

Limited, (unlisted). Was a senior general manager and later an

executive director of Sanlam between 1997 and 2001. Before

1997, he held various positions in the Sanlam Group. Other

previous directorships include Gensec, Sankorp and Sanlam

Unit Trusts and the Board of Quantity Surveyors. He is a past

president of SAPOA, a former director of the Board of Quantity

Surveyors and served on the Van Huysteen Commission on

government properties.

C J Ewin (46) B. Comm CA (SA) * # ($ by invitation)

Non-executive

Has 16 years property experience with particular emphasis in

the listed property sector. The managing director of Marriott

Property Services (Pty) Limited, a member of the executive

committee of the Old Mutual Property Group (Pty) Limited, a

director of Marriott Property Fund Managers Limited and an

alternate director of Oryx Properties Limited. Past chairman of

the Association of Property Unit Trust Management Companies.

A M Hyatt (68) BA (Natal), FIV (SA) #

Non-executive

Has 44 years property experience incorporating all facets of the

property industry. Executive director of Marriott Holdings Limited,

director of various subsidiaries of Marriott Holdings Limited and

Oryx Properties Limited. Past president of the S A Institute

of Valuers.

W J Swain (65) CA (SA) * $ #

Non-executive, independent

Risk, Audit and Compliance Committee Chairman,

A director of Mr Price Group Limited and Chairman of

Natal Sharks (Pty) Limited. Other previous listed company

directorships held include BOE Limited, Commercial Finance

Company Limited and Congella Federation Limited. A past

partner of Ernst & Young.

U J Van der Walt (55) B. Econ (Hon), A.E.P $

Non-executive, independent

Has 35 years of property experience with the Sanlam Group,

eight of which as the managing director of Gensec Property

Services Limited. He is currently the managing director of Sanlam

Properties (Pty) Limited as well as the director of iFour. He is

a past president of SAPOA.

* Member of the Risk, Audit and Compliance Committee$ Member of the Remuneration and Nomination Committee# Member of the Investment and Management Committee

2

3

LISTED PROPERTY MARKET REVIEW

The S A Listed Property Index (J253:SAPY) recorded an

exceptional 204% appreciation for the period 1 April 2002 to

31 March 2006. This appreciation and increased demand for

listed property was driven by firming bond yields and improved

earnings growth within the sector with continued retail buoyancy

and strong consumer demand benefiting especially retail property.

SAPY

Longer term performance

Source: INET Bridge

Listed property has strongly outperformed the other major asset

classes over the last four years as is demonstrated in the

following graph.

Performance: Property relative to other asset classes

Long-term performance

Source: INET Bridge

RETAIL PROPERTY MARKET REVIEW

Consumer demand continues to be the major driver fuelling the

thriving retail sector in South Africa. This consumer confidence

during the year in review has seen retailers performing well and

as a result occupying more space and opening new stores. This

demand from retailers has seen retail occupancy levels improve

and rentals firm.

The strength in consumer retail sales and consequent related

corporate profitability is unlikely to continue unabated.

Although favourable retail trading conditions are expected to

continue, caution is required.

Hyprop offer to Unitholders of S A Retail

The Board of Directors of S A Retail were advised on 31 March

2005 of Hyprop's firm intention to make an offer to the linked

unitholders of S A Retail to acquire all the linked units in

S A Retail.

The Hyprop offer finally closed almost 6 months later on

9 September 2005. Hyprop had acquired 7% of S A Retail linked

units in the open market prior to the opening of the offer and

25% from Redefine Income Fund as prior acceptance of the

offer. At the close of the offer Hyprop's stake in S A Retail stood

at 44%, an increase of 12% from the date the offer opened.

Since the closure of the offer, Hyprop has acquired an additional

2% of S A Retail linked units in the open market and at the date

of this report hold 46% of the S A Retail linked units.

S A RETAIL’S FINANCIAL RESULTS

A total distribution of R160,7 million (2005: R150,5 million) was

declared for the financial year ended 31 March 2006. S A Retail's

distributable income in cents for the period under review

amounted to 71,18 cents (2005: 69,20 cents). This represents

an increase of 3% on the 2005 financial year.

The corporate action by Hyprop Investments Limited (“Hyprop”)

against S A Retail during the year in review had a negative

influence on the Company's earnings and it has been calculated

that had it not been for this activity, the growth in distribution

for the reporting period would have been greater than 8%. The

5% reduction in distribution growth, is demonstrated as follows:

• S A Retail incurred R3,3 million in direct costs as a result of

the Hyprop offer. These costs, including corporate advisory,

announcements, legal, and sponsor fees were expensed in

the period under review and the consequence of this was a

2% reduction in distribution growth.

C H A I R M A N ' S & M A N A G I N GD I R E C T O R ' S R E V I E W

Property (J256) (204%)

Bonds (ALBI) (86%)

Equities (ALSI) (80%)

Cash (Stefi Call) (42%)

0

100

200

300

400

J O D F2002 2003 2004 2005 2006

A A J O D FA A J O D FA A J O D FA A

0

100

200

300

400

J O J A J O J A J O J A J O J2002 2003 2004 2005 2006

A

Property (SAPY)

4

Prior to the declaration by Hyprop on 31 March 2005 of its

intention to make an offer to linked unit holders of S A Retail,

the Company was in advanced negotiations with vendors of

property with a value in excess of R300 million. In terms of the

SRP Regulations these negotiations were unable to be transacted.

Given the anticipated need for funding at this time prior to the

offer being made, and the demand for S A Retail linked units,

R124 million was successfully raised to pursue the said

acquisitions through the issue of S A Retail linked units as follows:

• 13 882 288 linked units on 8 March 2005 at a price of

680 cents per linked unit.

• 4 004 118 linked units on 18 March 2005 at a price of

680 cents per linked unit.

S A Retail was unable to benefit from the higher property yield

on these investment opportunities but the cash raised generated

comparatively low returns. The dilutionary impact on growth has

been calculated at 3%.

The distribution of 71,18 cents gives rise to a yield of 8,1% on

the listed price of 875 cents per linked unit on 1 April 2005, the

commencement of the 2006 financial year. As at 31 March 2006

the ruling price was 975 cents per linked unit, an appreciation

of 11,4%. Accordingly, the total return on S A Retail units during

the year under review was 19,6%.

S A RETAIL’S PRICE MOVEMENT

The following graph reflects S A Retail's positive price movement

during 2005 and for the year ended 31 March 2006.

S A Retail Properties Limited

1 April 2004 — 31 March 2006

Source: INET Bridge

S A RETAIL’S INVESTMENT POLICY

S A Retail's investment strategy is to procure a focused portfolio

of retail properties, catering for the needs of stable communities

and anchored by established retailers, which offers sustainable

rental growth and steady capital appreciation.

More specifically, S A Retail's investment objectives for the

2006 financial year were to:

• Trade out of underperforming assets with low growth potential.

• Increase retail investment in under serviced areas where

favourable trading opportunities exist.

• Build yield through developments and adding value by the

exploitation of unutilised potential in existing properties.

S A Retail has during the year in review:

• Disposed of three investment properties, with a cumulative

value R89,4 million, that no longer met with the Company's

investment philosophy.

• Purchased two investment properties to the value of

R29,2million.

• Secured in excess of R200 million of development activity in

pursuance of achieving an investment through yield of

10,75% in year one.

The following key investment criteria will continue to be

considered in assessing future acquisitions, developments and

disposals:

• Property investment to be located in stable communities

where primary and secondary spending capacity is unlikely

to be disrupted by extraneous factors such as demographic

change, decentralisation or competition.

• Properties should be located in well-established communities

or growth nodes.

• Line shop income should not exceed 60% of the portfolio

income. Leases with the major tenants should generally

exceed five years save for special circumstances where lease

renewal is assured.

• S A Retail will seek stable and complementary tenant mixes

incorporating both the major national retail chains and small

independent retailers and line shops.

C H A I R M A N ' S & M A N A G I N GD I R E C T O R ' S R E V I E W

continued

0

500

1000

1500

A M J J A S O N D2004 2005 2006

O N DJ F M A M J J A S J F M

S A Retail Properties Limited

5

• Retail centres to be of an adequate size, well constructed,

visible, accessible to arterial routes and remain dominant

within their micro location.

The geographic spread of the properties in the portfolio should

generally follow regional contribution to GDP and the following

broad geographical spread is targeted:

50 – 60% Gauteng

20 – 30% KwaZulu-Natal

20 – 30% Western Cape

+ – 10% All other provinces

S A RETAIL’S PROPERTY PORTFOLIO

1. SAPIX/IPD Benchmarks

The S A Retail property portfolio has once again outperformed

the SAPIX/IPD benchmarks of total returns, vacancies and

operating costs. The total return generated by S A Retail's

portfolio of 32,6% for the 2005 calendar year compares to

the IPD universe of 28,8% and S A Retail's three year

annualised total return of 24,6% compares with the IPD

universe of 21,9% over the same period.

2. Portfolio Valuation

The value of S A Retail's property portfolio at year-end was

R1 879,7 million (2005: R1 544,4 million).

The S A Retail 31 March 2006 year end valuations were carried

out independently by Broll CB Richard Ellis (CBRE). The range

of discount and market capitalisation rates adopted in their

discounted cash flow analysis was 14,5% – 16,0% and 8,5%

to 12,0% respectively depending on the quality and profile of

the investment. The S A Retail portfolio was valued at a forward

yield of 9,5% (excluding development properties).

3. Acquisitions and Disposals

Four transactions, which were unconditional before the offer

was made by Hyprop, were transferred during the period

under review. Kyalami Downs and Cambridge Downs were

disposed of on 21 April 2005 for R53,8 million and

R25,5 million respectively and Florida Junction Shopping

Centre (50% undivided share) was disposed of on 13 July

2005 for R10,8 million. An assembly of 12 residential properties

to develop Kings Road Value Centre was transferred to

S A Retail on 13 June 2005 for R10,6 million.

Since the closing of the Hyprop offer in September 2005,

management have actively pursued a number of acquisition

opportunities.

Three transactions were concluded in the 1st quarter of 2006:

• Rhodesdene Shopping Centre, a R18,5 million quality

convenience shopping centre anchored by the highest

trading Pick 'n Pay in the S A Retail portfolio, was transferred

to S A Retail on the 24 February 2006;

• The R65,5 million acquisition of Willow Way Shopping

Centre in suburban Pretoria became unconditional on

31 March 2006. Willow Way is an 8 140m2 convenience

shopping centre anchored by a 2 564m2 SuperSpar with a

lease to 2014. Transfer took place in July 2006; and

• The sale of Kyalami Crescent for R30,7 million, the only non-

retail property in the portfolio, became unconditional in

March 2006 and transfer took place in August 2006.

Five acquisition proposals have been approved by the

S A Retail Board post 31 March 2006. Transfer of the properties

is pending, subject to the fulfillment of a selection of

predominantly statutory suspensive conditions. This includes

the proposed acquisition by S A Retail of:

• The Sharemax portfolio of properties for R995,8 million.

Unitholders are referred to the cautionary announcement

dated 11 July 2006 where it was reported that S A Retail

had entered into agreements with Sharemax Investments

(Pty) Limited to acquire a number of investment properties.

The S A Retail board approved the acquisition of the said

portfolio at a special board meeting on the 22 August 2006.

The acquisition remains conditional upon S A Retail linked

unitholder approval, shareholder approval from the respective

sellers and the required statutory approvals. A circular

detailing the effects of the transaction and proposed funding

will be distributed to S A Retail unitholders in October 2006;

• Hubyeni Shopping Centre, in the course of construction,

a 12 684m2 investment anchored by a 3 000m2 SuperSpar

in Elim, Limpopo Province, for R86,0 million;

• Dube Village Shopping Centre, a R43,3 million investment

anchored by a Shoprite Checkers on a long lease in

KwaMashu, Durban;

• Axiz IBG in Midrand for R92,0 million; and

• Summer Cottage in Fourways for R10,9 million.

4. Developments

In a pro-active undertaking to build yield rather than to purchase

relatively more expensive, lower yielding completed property

investments, management focused on securing a large pipeline

of development activity. The projected average return on capital

invested in these development projects during the year under

review is 10,75% which compares very favourably to current

acquisition yield of comparable retail property in the market

place of 8,0% – 9,5%. A short overview of each project follows:

• Umlazi MegaCity, a 31 000m2 regional shopping centre

developed jointly by S A Retail and Martprop Property Fund

at a total cost of R165 million and a projected initial yield

of 11,25%, opened on 1 April 2006. This major investment

in Durban will offer Umlazi residents a premier quality

6

shopping centre anchored by a SuperSpar, Woolworths and

many of SA's leading national tenants. This investment in

Umlazi is trading exceptionally well. With an estimated

R400 million annual spend capacity from 900 000 residents

in Umlazi, the rental growth prospects and sustainability of

the investment are favourable. Construction of an additional

4 000m2 retail outlet for Hirsch and a 2 500m2 free-standing

outlet for a Nissan dealership will commence shortly.

• Construction commenced in November 2005 on the

8 363m2 Kings Road Value Centre in Pinetown, Durban, in

partnership with Vukilé Property Fund Limited at an estimated

total capital cost of R55 million and an anticipated initial

yield of 11,0%. This investment, adjacent S A Retail's and

Vukilé's successful R300 million Pine Crest Shopping Centre,

is anchored by a 2 500m2 SuperSpar and a number of SA's

leading national retailers. The centre is scheduled to open

in October 2006.

• The re-development of Bluff Shopping Centre, incorporating

an additional 7 500m2 of bulk at a capital commitment of

R77 million, is well advanced with Phase 1 having opened

in December 2005. National tenants will occupy

approximately 80% of the area of the new centre and

Phase 2, including a new 2 177m2 Woolworths store,

2 300m2 Edgars store and 1 000m2 Mr Price store will be

opening in the third quarter of 2006. The centre is currently

anchored by a 4 950m2 Shoprite Checkers. Adjacent to Bluff

Shopping Centre, on the same erven, S A Retail are currently

developing a 1 852m2 retail investment anchored by FNB,

Spur and Ocean Basket, at a capital cost of R12,5 million

and a projected initial yield of 10,6 %.

• The re-development of Highland Mews Shopping Centre

in partnership with Martprop Property Fund, increasing the

existing centre from 12 670m2 to 16 676m2 at a capital cost

of R41 million, is progressing very satisfactorily. The project

is driven by the requirements of the Foschini Group and

Truworths with deals for eight of their stores totalling

2 073m2 having been concluded. This investment will

accommodate most of SA's leading national fashion retailers

including the existing anchor, Woolworths.

• Additional significant upgrades and developments that were

satisfactorily completed during the period under review,

include a R6 million refurbishment of East Rand Galleria in

Boksburg and the completion of Phase 2 at Tokai Junction

in Cape Town at a capital cost of R49 million, the latter also

in partnership with Martprop Property Fund.

5. Sectoral and Geographic Allocation

S A Retail is a retail focused fund with only one non-retail

property in the portfolio. This property, Kyalami Crescent, was

sold in a post balance sheet event for R30,7 million.

S A Retail has increased its exposure to KwaZulu-Natal during

the period under review with developments in the province

including Umlazi MegaCity, Kings Road Value Centre and

Bluff Shopping Centre. The geographical spread for the

property portfolio is depicted in the graph below with

KwaZulu-Natal exposure at 45%, Gauteng 38%, Cape 13%

and Mphumalanga 4%.

Geographic spread% of year-end valuations

6. National Tenant Composition

The space occupied by national tenants, including anchor

supermarkets, has decreased to 69% in 2006 (2005: 72%).

Pick 'n Pay, Shoprite Checkers, Woolworths and Spar, South

Africa's largest supermarket chains, account for 41%, 16%,

10% and 9% of this national tenant area respectively. This

demonstrates the quality of the income streams that underpin

the S A Retail portfolio.

Analysis of spread of tenants per category% of total GLA of portfolio

Spread of tenants per national retailer% of total GLA of portfolio

Gauteng

Cape

KwaZulu-Natal

Mphumalanga

38%

13%

45%

4%

Vacancies

Anchor Tenants

National Tenants

Line Shops

38%

32%

28%

2%

41%

Pick n PayShopriteSparWoolworthsMr Price GroupPepkorClicksFoschini GroupEdcon GroupTruworths GroupFamous Brands16%

10%

9%

9%

4%3%

3%2%2%1%

C H A I R M A N ' S & M A N A G I N GD I R E C T O R ' S R E V I E W

continued

7

7. Vacancies, Renewals Lease Expiries and Trading Densities

The year-end vacancy factor for the portfolio (excluding

properties under development) was 2,3%. This compares

favourably to the SAPIX/IPD benchmark for similar retail

property of 7,1% and reflects an improvement on the 2005

year-end vacancy factor of 2,8%. The portfolio expense ratio

of 32,1% is below the industry SAPIX/IPD benchmark.

S A Retail has maintained a favourable lease expiry profile.

Similar to 2005, the majority of the leases expiring over

the next three years are line shop leases which are

traditionally for a shorter duration. This favourable situation

is demonstrated in the following graph:

Lease Expiry Profile: Total Portfolio per m2

The trading densities of all the major national tenants in the

S A Retail portfolio are monitored on a monthly basis to ensure

that the necessary corrective intervention is implemented to

optimise the performance of the individual investments.

Management are currently satisfied that the trading densities

of tenants in the portfolio exceed the required minimum

benchmarks.

During the year under review the charge against income for

bad debts written off and provided for amounted to 0,75% of

gross revenue. This is considered satisfactory.

BEE

Subsequent to year-end, management has made considerable

progress towards concluding arrangements with BEE partners

for S A Retail. To this end, on 15 August 2006, the S A Retail

board approved two substantial black economic empowerment

(BEE) partners and agreements are in the process of being

finalised.

The S A Retail board is confident that these partners not only

have excellent BEE profiles and proven track records but will

play a meaningful role in furthering the Company's strategic and

transformation objectives with their property skills and experience,

as well as excellent relationships with capital market players.

Further details of the BEE parties will be announced shortly.

Whirlprops 33 (Pty) Limited (“Whirlprops”)

Whirlprops owns 64 388 474 units in S A Retail. The details and

obligations pertaining to these units are more fully described in

notes to these annual financial statements set out on pages 29

to 30.

Management and the S A Retail board have, on an ongoing basis

during the financial year, considered the merit of exercising the

Call right over the units owned by Whirlprops. The Call right has

not been exercised as this would have diluted both earnings

and net asset value. Management will continue to analyse the

impact of the Call right on the Company.

Prospects

The four major development projects referred to earlier in this

report are expected to contribute positively to S A Retail earnings

in 2007. The largest of these being Umlazi MegaCity which

opened on 1 April 2006 at a projected initial yield of 11,25%.

Management are proactively pursuing further acquisition activity

and development work which will enhance the profile and

critical mass of the portfolio and contribute to favourable

earnings growth.

Coupled with this investment activity, the Company is well

positioned to take advantage of continued consumer confidence

and increased tenant trading densities in the portfolio and

unitholders can expect to benefit accordingly.

R A Norton A P W Sparks

Chairman Managing Director

1 September 2006

2006 2007 2008 2009 2010+0

20000

40000

60000

80000

100000

120000

140000

12% 18% 13% 14% 40%

From left to right: R A Norton and A P W Sparks.

8

INTRODUCTION

The board of directors endorse and during the year under review,

have adopted and applied, where applicable, the Code of

Corporate Practices and Conduct as set out in the King II Report.

In supporting the Code, the directors recognise the need to

conduct the enterprise with integrity and accountability in

accordance with generally accepted corporate practices.

The directors recognise that the application of the Code must

be reviewed and updated regularly. Accordingly, the Company's

corporate governance principles and practices have been reviewed

taking market practices into account, as well as compliance with

the Code.

BOARD CHARTER

The charter has been formally adopted by the board and has

been designed to take into account legislative requirements and

recommendations of the King II Report.

The purpose of the charter is to regulate how business is to be

conducted by the board in accordance with the principles of

good corporate governance and sets out specific responsibilities

to be discharged by board members. The objectives of the charter

are to ensure that all board members acting on behalf of the

Company are aware of their duties and responsibilities as board

members in terms of various legislation and regulations affecting

their conduct and to ensure that the principles of good corporate

governance are applied in any dealings in respect of, and on

behalf of, the Company.

BOARD OF DIRECTORS AND ITS SUB-COMMITTEES

The board acknowledges that it is responsible for ensuring

the following:

• determining the overall objectives of the Company, developing

the strategies to meet those objectives and monitoring

performance;

• good corporate governance and implementation of the

Code of Corporate Practices and Conduct as set out in the

King II Report;

• that the Company performs at an acceptable level and that

its affairs are conducted in a responsible and professional

manner;

• the board recognises its responsibilities to all stakeholders;

• determining and reviewing mandates and terms of reference

of board committees;

• monitoring the performance of the managing director, directors

and the asset managers; and

• approving and reviewing company policies, setting an approval

framework and monitoring the compliance of such approval

framework by directors and asset managers.

Although certain responsibilities are delegated to committees

and management, the board acknowledges that it is not

discharged from its obligations in regards to these committees'

responsibilities.

The board acknowledges its responsibilities in the following

areas:

• the adoption of strategy and ensuring that strategy is carried

out by management;

• monitoring of the operational performance of the business

against predetermined budgets;

• monitoring the performance of management at both operational

and executive level;

• ensuring that the Company complies with all laws, regulations

and codes of business practice.

The composition of the board and its sub-committees, viz: the

Investment and Management Committee, the Risk, Audit and

Compliance Committee and the Nomination and Remuneration

Committee, as set out on page 2, have established clear mandates.

The board consists of six non-executive directors (including the

chairman), four of which are independent and one executive

director. The non-executive directors' remuneration is subject

to the motivation of the remuneration and nomination committee,

recommendations made by the board and approved from time

to time in the annual general meeting. One third of the non-

executive directors retire annually by rotation and if available,

offer themselves for re-election to the members in the annual

general meeting. Non-executive directors are obliged to retire

at the annual general meeting following their 70th birthday.

Executive directors retire every five years and if available, offer

themselves for re-election to the members in the annual

general meeting. There are no directors' contracts in place.

S T A T E M E N T O NC O R P O R A T E G O V E R N A N C E

9

The directors bring a wealth of experience from their own fields

of business and ensure that debate on matters of strategy, policy,

progress and performance is robust, informed and constructive.

The roles of the chairman and an executive director do not vest

in the same person. The composition also ensured a high level

of independence on the board.

The board of directors' independence from the daily management

team or asset managers is maintained by:

• keeping the roles of the chairman and managing director

separate;

• the Risk, Audit & Compliance Committee consisting of a

majority of independent directors;

• the non-executive directors not holding service contracts and

their remuneration is not tied to the financial performance of

the company; and

• all directors having access to the advice and services of the

company secretary and are entitled to seek additional

independent professional advice on behalf of the affairs of

the Company, at the expense of the Company. The company

secretary provides guidance to the board as a whole and to

individual directors with regards to how their responsibilities

should properly be discharged in the best interests of the

Company. The secretary also oversees the appointment and

termination of new and old directors and assists the chairman

and the managing director in formulating governance and

board related issues.

The board which meets at least quarterly, retains full and effective

control over the Company and executive management. The board,

through a disciplined approach to reporting and accountability

within an approved approval framework monitors the performance

of executive management and the Company's major service

providers.

During the financial year under review there were eight board

meetings (four quarterly and four special). H S C Bester did not

attend one, and W J Swain did not attend two special meetings.

The overall directors attendance for the eight meetings

was 94,6%.

Directors have to obtain written clearance from the chairman of

the Company of any intention to trade in linked units in the

Company, whether directly or indirectly. Directors and any

employees of the property asset managers who become aware

of sensitive information cannot directly or indirectly trade in the

Company's linked units until such information becomes

knowledge of the public. The Company has a closed period

commencing one month prior to the month of its financial interim

or year end month.

The Company has established an Investment and Management

Committee which consists of an executive director, three non-

executive directors, and two representatives of the property

asset managers. The committee meets at least quarterly and

reports directly through to the main board and assists the board

of directors in the discharging of their duties relating to the

acquisitions, disposals and asset management of the property

portfolio of the Company.

The Risk, Audit and Compliance Committee, is chaired by a non-

executive independent director, and consists of a further two

non-executive directors (one of which is independent). The

chairman of the board, who is independent is invited to attend,

while the managing director of the company and the financial

manager of the asset manager, although not members of this

committee, are expected to attend. This committee meets at

least three times a year and these meetings are attended by

the external auditors. This committee provides assistance to the

board and its responsibilities include inter-alia:

• ensuring compliance with applicable legislation and the

requirements of the regulatory authorities;

• matters relating to risk, financial and internal control, accounting

policies, reporting and disclosure;

• reviewing and approving external audit findings, reports and

fees; and

• appointment or termination of the services of the external

auditors.

The minutes of the Risk, Audit & Compliance Committee are

open for inspection by members of the board of directors. There

is a close communication between the board of directors, Risk,

Audit & Compliance Committee and the external auditors. Areas

of control weakness will be brought to the attention of the

relevant parties and remedial action will be taken immediately

to ensure no loss or misstatements due to the inadequacy of

the internal control environment. Limited internal audit assurance

is obtained by interacting with the internal auditors of the

asset managers.

Risk management is the responsibility of the board, the adequacy

of which, is reviewed by the Risk, Audit and Compliance

Committee. It is the opinion of the board that the identified

areas of risk pertaining to the Company are contained by being

pro-actively managed and are not outside expected industry

expectations.

The Nomination and Remuneration Committee, is chaired by

the board chairman, who is independent and consists of a further

two non-executive, independent directors. This committee meets

twice a year and recommends to the board:

10

• the remuneration policy;

• remuneration of executive and non-executive directors for

recommendation to unitholders;

• recommendations to the board on the appointment of new

executive as well as non-executive directors to the board or

its sub-committees.

• succession planning.

EMPLOYMENT EQUITY

The Company having contracted out the property management

and property asset management of the underlying properties

has no direct employees. Accordingly it has no worker participation,

affirmative action programmes, employee share incentive

schemes, nor any other employee targeted programmes.

The board does, however, support and encourage their material

service providers to adhere to these recommended practices.

DIRECTORS’ RESPONSIBILITY

The directors are responsible for the preparation of the annual

financial statements that fairly represent the state of affairs of

the Company at the end of the financial year and the results for

the year as set out on pages 14 to 41. The financial statements

have been prepared in accordance with International Financial

Reporting Standards. The external auditors are responsible for

reporting on the annual financial statements. The directors

are further responsible for maintaining the accounting records,

internal controls and risk management as well as consistent use

of appropriate accounting policies supported by reasonable

judgements and estimates.

GOING CONCERN

The directors are of the opinion that the Company has adequate

resources to continue in operation for the foreseeable future

and that the annual financial statements have accordingly been

prepared on a going concern basis.

The auditors have concurred with the directors' statement on

internal controls and going concern.

ETHICS

The directors of the Company and staff of the asset manager

are required to observe the highest ethical standards, thereby

ensuring that business practices are conducted in a manner

which, in all reasonableness, is beyond reproach.

R A Norton A P W Sparks

Chairman Managing Director

1 September 2006

S T A T E M E N T O NC O R P O R A T E G O V E R N A N C E

continued

11

ANALYSIS OF UNITHOLDERS

Number of % of Number of % of

unitholders unitholders units held issued units

Size of holding

1 – 1 000 179 64,16 25 350 0,01

1 001 – 10 000 35 12,54 196 622 0,09

10 001 – 100 000 39 13,98 1 420 417 0,62

100 001 – 1 000 000 16 5,73 5 817 552 2,58

over 1 000 000 10 3,59 218 413 885 96,7

Total 279 100,00 225 873 826 100,00

Type of unitholders

Banks 2 0,72 3 920 0,00

Close Corporations 1 0,36 15 000 0,01

Endowment Funds 1 0,36 21 450 0,01

Individuals 213 76,34 482 044 0,21

Insurance Companies 4 1,43 11 355 913 5,03

Investment Companies 3 1,08 699 240 0,31

Mutual Funds 15 5,38 40 477 883 17,92

Nominees and Trusts 14 5,02 427 683 0,19

Other Corporations 1 0,36 8 000 0,00

Pension Funds 17 6,09 2 999 112 1,33

Private Companies 6 2,15 65 246 474 28,89

Public Companies 2 0,71 104 137 107 46,10

Total 279 100,00 225 873 826 100,00

Significant unitholders

Number of

units held %

Unitholders who are invested in 5% or more of the Company

Hyprop Investments Limited 104 137 007 46,10

Whirlprops 33 (Pty) Limited* 64 388 474 28,51

Marriott Asset Management Limited as nominee for various companies 30 148 128 13,35

Old Mutual Asset Management Limited as nominee for various companies 14 549 081 6,44

213 222 690 94,40

*A right to nominate two representatives to the board of directors

in terms of the Whirlprops funding arrangement.

L I N K E D U N I T H O L D E R S ' A N A L Y S I S& O T H E R J S E R E Q U I R E M E N T S

31 March 2006

12

Unitholder spread Number of % of % of

(Nominee holders analysed) unitholders unitholders units held issued units

Held by public 273 97,84 27 200 117 12,04

Held by non-public 6 2,16 198 673 709 87,96

Held by directors and associates of

the Company holdings 3 1,08 1 438 560 0,63

Strategic holdings (more than 10%) 3 1,08 197 235 149 87,33

Total 279 100,00 225 873 826 100,00

Units traded during the year ended 31 March 2006

Number of units traded 42 118 792

Units traded as a percentage of issued capital 18,64%

JSE Price History High Low Month-end close

March 2005 875

April 2005 840 790 840

May 2005 870 815 848

June 2005 846 810 846

July 2005 915 820 915

August 2005 961 871 960

September 2005 955 940 940

October 2005 950 940 950

November 2005 955 950 950

December 2005 950 950 950

January 2006 1 015 950 1 015

February 2006 977 960 977

March 2006 1 100 975 975

L I N K E D U N I T H O L D E R S ' A N A L Y S I S& O T H E R J S E R E Q U I R E M E N T S

31 March 2006continued

13

Financial year-end 31 March 2006

Annual general meeting 1 November 2006

Distribution plan dates in respect of the financial year ending 31 March 2007:

Anticipated Last date Units trade

Financial period distribution to trade cum- ex-distribution Record date Payment date

announcement distribution

1st Half to

30 September 2006 3 November 2006 17 November 2006 20 November 2006 24 November 2006 27 November 2006

2nd Half to

31 March 2007 4 May 2007 18 May 2007 21 May 2007 25 May 2007 28 May 2007

L I N K E D U N I T H O L D E R S ' D I A R Y

14

STATEMENT OF DIRECTORS’ RESPONSIBILITIES

The directors are responsible for the preparation of the annual financial statements with integrity, giving a true and fair view of thestate of affairs of the Company and of the profit or loss for the year. The financial statements are prepared in accordance withInternational Financial Reporting Standards and the Companies Act in South Africa. The accounting policies are consistently appliedand are supported by reasonable and prudent judgements and estimates. In preparing the annual financial statements the directorsare responsible for:

• selecting suitable accounting policies and then applying them consistently;

• making judgements and estimates that are reasonable and prudent; and

• stating whether applicable accounting standards have been followed in terms of International Financial Reporting Standardssubject to any material departures disclosed and explained in the annual financial statements.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time thefinancial position of the Company and which enables them to ensure that the annual financial statements comply with the CompaniesAct, 1973, as amended.

The directors are responsible for managing the risks and internal controls of the Company. In order for the directors to dischargetheir responsibilities, management has developed a system of internal controls. The risks and internal controls are continuallyreviewed and updated when necessary, primarily through the board's sub committee – The Risk, Audit and Compliance Committee.

The directors believe that the Company will be a going concern in the year ahead and accordingly have prepared the financialstatements on a going concern basis.

APPROVAL OF THE ANNUAL FINANCIAL STATEMENTS

The annual financial statements for the year ended 31 March 2006 as set out on pages 1 to 44 were approved by the board ofdirectors on 1 September 2006 and are signed on its behalf by:

R A Norton A P W Sparks

Chairman Managing Director

CERTIFICATE BY COMPANY SECRETARY

Marriott Property Services (Pty) Limited, in its capacity as Company Secretary of S A Retail Properties Limited, hereby certifiesthat to the best of its knowledge and belief, all returns required by a public company, in terms of the Companies Act, 1973, asamended, for the period 1 April 2005 to 31 March 2006 have been lodged with the Registrar of Companies and that all such returnsare true, correct and up to date.

Marriott Property Services (Pty) Limited

Company Secretary1 September 2006

S T A T E M E N T O F D I R E C T O R S 'R E S P O N S I B I L I T I E S , A P P R O V A L O F

T H E A N N U A L F I N A N C I A LS T A T E M E N T S & C E R T I F I C A T E B Y

C O M P A N Y S E C R E T A R Y31 March 2006

15

TO THE MEMBERS OF S A RETAIL PROPERTIES LIMITED

We have audited the annual financial statements of S A Retail

Properties Limited as set out on pages 16 to 41 for the year

ended 31 March 2006. These annual financial statements are

the responsibility of the Company's directors. Our responsibility

is to express an opinion on these annual financial statements

based on our audit.

We conducted our audit in accordance with International

Standards on Auditing. Those standards require that we plan

and perform the audit to obtain reasonable assurance about

whether the financial statements are free of material

misstatement. An audit includes examining, on test basis,

evidence supporting the amounts and disclosures in the financial

statements. An audit also includes assessing the accounting

principles used and significant estimates made by management,

as well as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for

our opinion.

In our opinion, the annual financial statements present fairly, in

all material respects, the financial position of the Company at

31 March 2006, and the results of its operations and cash flows

for the year then ended in accordance with the International

Financial Reporting Standards and in the manner required by

the Companies Act in South Africa.

KPMG Inc.

Registered Auditor.

Per N Bhoola

Chartered Accountant (SA)

Registered Auditor

Director

1 September 2006

KPMG Inc.

20 Kingsmead Boulevard,

Kingsmead Office Park,

Durban

R E P O R T O F T H EI N D E P E N D E N T A U D I T O R S

16

The directors have pleasure in presenting the annual financial statements of the Company for the year ended 31 March 2006.

NATURE OF BUSINESS

S A Retail is a property investment company and is listed on the JSE Limited under the “Financials – Real Estate” sector.The Company derives its income from a focused retail portfolio of regional and convenience retail shopping centres.

ISSUED SHARE CAPITAL

At the beginning of the year there were 225 873 826 linked units in issue and this remained unchanged to 31 March 2006.Each linked unit comprises one ordinary share of 0,001 cent and one unsecured variable rate debenture of 499,999 cents.

FINANCIAL REVIEW

2006 2005

R'000 R'000

Headline earnings per linked unit (cents) (weighted) 71,22 81,29

Earnings per linked unit (cents) (weighted) 120,60 197,39

Distribution per linked unit (cents)

Interest 71,16 69,18Dividend 0,02 0,02

71,18 69,20

A final distribution comprising a dividend of 0,01 cents per ordinary share and interestof 38,22 cents per linked debenture (2005: 36,69 cents per linked debenture), totalling38,23 cents per linked unit (2005: 36,70 cents per linked unit) has been declared inrespect of the income distribution for the period 1 October 2005 to 31 March 2006.

Distribution analysis per linked unit (cents per linked unit):

For the period 1 April 2005 to 30 September 2005 (1 April 2004 to 30 September 2004) 32,95 32,50

For the period 1 October 2005 to 31 March 2006 (1 October 2004 to 31 March 2005) 38,23 36,70

71,18 69,20

The results of the Company are fully set out in the financial reports onpages 20 to 41 of this report.

DIRECTORATE

Details of the directors are set out on page 2 of this report.

The following directors held office for the year under review:

Director Directors' fees Directors' fees

2006 2005

R'000 R'000

Non-executive

R A Norton (Chairman) 115 40H S C Bester 70 40C J Ewin * 70 40A M Hyatt * 60 40W J Swain 85 40U J van der Walt 70 40F M Berkeley * (resigned 30 March 2005) – 30 #D G Gorven * (resigned 1 April 2005) – 30 #

Executive

A P W Sparks (managing director)

– As a director * 60 40– Basic salary º 715 650– Bonuses º 852 365

D I R E C T O R S ' R E P O R T31 March 2006

* Fees accrue to the corporate entity where the directoris employed.

# Fees were accrued pro-rata.º The executive director is employed and paid by

Marriott Property Services (Pty) Limited from assetmanagement fees earned as detailed on page 39.

17

Fees paid for the 2006 financial year include additional fees for the chairman and members of various sub-committees.

The following director changes were made during the period to the date of this report.

Resignations:

D G Gorven – (1 April 2005).

No directors have service contracts.

DIRECTORS’ INTERESTS

The joint beneficial interests of directors in the equity of the Company as at 31 March 2006 is 0,66% (1 438 560 units) and can

be analysed as follows:

Director Direct Beneficial Indirect Beneficial Total

2006 2005 2006 2005 2006 2005

Linked % Linked % Linked % Linked % Linked % Linked %

units units units units units units

A M Hyatt – – – – 1 356 021 0,60 1 356 021 0,60 1 356 021 0,60 1 356 021 0,60

C J Ewin – – – – 73 854 0,03 73 854 0,03 73 854 0,03 73 854 0,03

A P W Sparks 100 – 50 100 0,03 8 585 – 8 585 – 8 685 – 58 685 0,03

100 – 50 100 0,03 1 438 460 0,63 1 438 460 0,63 1 438 560 0,63 1 488 560 0,66

No directors held in excess of 1% of the equity of the Company at 31 March 2006.

A P W Sparks disposed of 50 000 linked units on 7 June 2005.

On the 19 May 2006, Old Mutual Property Group (Pty) Limited acquired certain of the business units from Marriott Holdings Limited.

As a result of the change in ownership of these business units from Marriott Holdings Limited, there is no longer any indirect

beneficial interest held by the directors in S A Retail.

Apart from the abovementioned trade and the adjustment to the indirect beneficial interest, there were no further changes in the

directors' interests between 31 March 2006 and 1 September 2006, being the latest practical date prior to finalisation of this

annual report.

BORROWINGS

The directors are authorised to borrow funds up to an amount not exceeding 55% (in terms of the Whirlprops covenant) of the

directors' bona fide valuation of the consolidated property portfolio and any other assets of the Company. At 31 March 2006, the

Company had interest bearing borrowings of R129 542 941 or 6,6% (2005: R23 493 943 or 1,4%) of asset value. These borrowings

attract interest at a variable rate of prime less 2,2% (2005: prime less 1,5%) per annum and expire in May 2014. The Company has

contingent liabilities as set out in notes 6 and 25 of the notes to the annual financial statements.

ACQUISITIONS AND IMPROVEMENTS

In June 2005, S A Retail took transfer of 12 residential properties in Kings Road adjacent to Pine Crest Shopping Centre. Conversion

from residential to an 8 363m2 value centre commenced in November 2005. This centre is anchored by a 2 500m2 SuperSpar.

Completion of the value centre is anticipated in October 2006 at a total capital cost of R55,0 million and at an initial yield of 11,0%.

Vukilé who own a 50% undivided share of Pine Crest Shopping Centre, have acquired a 50% undivided share of this development.

18

On the 24 February 2006, the company acquired a 2 981m2

convenience shopping centre known as Rhodesdene in Kimberley

for R18,5 million. This investment is anchored by 1 821m2

Pick 'n Pay with a lease until 2013.

R80,1 million was spent on capital improvements (excluding

development expenditure) during the financial year. This includes:

East Rand Galleria R6,5 million

Bluff Shopping Centre R47,5 million

Highland Mews R15,2 million

Tokai Junction R5,3 million

Pinecrest Shopping Centre R2,2 million

DISPOSALS

During the period under review, the Company disposed of three

properties, namely Cambridge Downs in Sandton, Kyalami Downs

in Kyalami and a 50% undivided share of Florida Junction in

Florida at a combined realised value of R89,6 million. A further

two properties (Kyalami Crescent in Kyalami and a basement in

Knowles Shopping Centre in Pinetown, of which S A Retail owns

a 50% undivided share) were disposed of post 31 March 2006

at a combined realised value of R33,4 million. The abovementioned

properties did not meet the Company's investment criteria.

HYPROP INVESTMENTS LIMITED ( HYPROP ) OFFER TO

UNITHOLDERS OF S A RETAIL

The board of directors of S A Retail were advised on 31 March

2005 of Hyprop’s firm intention to make an offer to the linked

unitholders of S A Retail to acquire all the linked units in

S A Retail not already owned by Hyprop (“Hyprop offer”).

The Hyprop offer finally closed six months later on

9 September 2005.

Hyprop had acquired 7% of the S A Retail linked units in the

open market prior to the opening of the offer and 25% from

Redefine Income Fund as prior acceptance of the offer. At the

close of the offer, Hyprop's share in S A Retail stood at 44%,

an additional 12%.

At the date of this report, Hyprop owns 46% of S A Retail linked

units in the open market.

POST BALANCE SHEET EVENTS

Acquisitions:

Willow Way Shopping Centre was acquired on 14 July 2006 for

R65,5 million at an initial yield of 9,1%. 7 119 565 linked units

were issued, at 920 cents per linked unit, in settlement of the

transaction.

Five acquisition proposals have been approved by the S A Retail

Board post 31 March 2006. Transfer of the properties is pending,

subject to the fulfillment of a selection of predominantly statutory

suspensive conditions. This includes the proposed acquisition

by S A Retail of:

• Dube Village Shopping Centre, a R43,3 million investment

anchored by a Shoprite Checkers on a long lease in KwaMashu,

Durban;

• Summer Cottage at a capital cost of R10,9 million and an initial

yield of 9,0%;

• Axiz IBG at a capital cost of R92,0 million and initial yield

of 9,5%;

• Hubyeni Shopping Centre at an estimated capital cost of

R86,0 million and an agreed initial yield of 9,5%. This

development is expected to open on 1 April 2007 at which

date S A Retail will take ownership, and

• The Sharemax portfolio of properties for R995,8 million.

Unitholders are referred to the cautionary announcement

dated 11 July 2006 where it was reported that S A Retail had

entered into agreements with Sharemax Investments (Pty)

Limited to acquire a number of investment properties. The

S A Retail board approved the acquisition of the said portfolio

at a special board meeting on the 22 August 2006. The

acquisition remains conditional upon S A Retail linked unitholder

approval, shareholder approval from the respective sellers and

the required statutory approvals. A circular detailing the effects

of the transaction will be distributed to S A Retail unitholders

in October 2006.

D I R E C T O R S ' R E P O R T31 March 2006

continued

19

Disposals:

The following property disposals have been effected:

• The basement area of the Knowles Shopping Centre was

sectionalised and transferred on the 11 July 2006 at a price

of R2,8 million.

• Kyalami Crescent was transferred on the 17 August 2006 at

a price of R30,7 million and an exit yield of 9,8%.

Black Economic Empowerment (“BEE”)

Subsequent to year end management has made considerable

progress towards concluding arrangements with BEE partners

for S A Retail. To this end, on the 15 August 2006 the S A Retail

board approved two substantial black economic empowerment

(BEE) partners and agreements are in the process of being

finalised.

The directors have considered all material post balance sheet

events up to the date of issue of the annual financial statements.

Other than those stated in this report, the directors are not

aware of any other material post balance sheet events and are

of the opinion that the Company has adequate resources to

continue in operation for the foreseeable future. The annual

financial statements have accordingly been prepared on a going

concern basis.

MANAGEMENT BY THIRD PARTY

S A Retail entered into a five year service agreement with

Marriott Property Services (Pty) Limited (a subsidiary of Marriott

Holdings Limited) on 30 September 2005 in respect of the

property asset management and property management of the

portfolio and its properties. On the 19 May 2006, the acquisition

of Marriott Property Services (Pty) Limited by the Old Mutual

Property Group (Pty) Limited was finalised, and as a result

Marriott Property Services (Pty) Limited has become a wholly

owned subsidiary of the Old Mutual Property Group (Pty) Limited.

CORPORATE GOVERNANCE

The directors endorse, and during the period under review, as

set out on pages 8 to 10, have adopted and applied where

applicable the Code of Corporate Practices and Conduct as set

out in the King II Report. By supporting the Code the directors

recognise the need to conduct the enterprise with integrity and

in accordance with generally accepted corporate practices.

R A Norton A P W Sparks

Chairman Managing Director

1 September 2006

20

2006 2005

Notes R'000 R'000

ASSETS

Non-current assets

Investment properties 2 1 788 198 1 394 793

At valuation 1 846 210 1 454 820

Prepaid letting commission 4 173 3 801

Rental straight line adjustment (62 185) (63 828)

Rental receivable – straight line adjustment 53 929 61 875

1 842 127 1 456 668

Current assets

Net receivables 39 348 18 070

Trade and other receivables 31 092 16 117

Rental receivable – straight line adjustment 8 256 1 953

Cash and cash equivalents 22 62 555 62 402

Properties classified as held for sale 3 33 439 89 600

135 342 170 072

TOTAL ASSETS 1 977 469 1 626 740

EQUITY AND LIABILITIES

Capital and reserves

Share capital and premium 4.1 33 238 33 238

Non-distributable reserves 4.2 381 999 257 769

Distributable reserves (9 590) 3 015

405 647 294 022

Non-current liabilities

Debentures 5 1 154 210 1 154 858

Fair value of Put obligation 6 17 722 12 118

Interest bearing borrowings 7 129 543 23 494

Deferred taxation 8 157 685 50 384

1 459 160 1 240 854

Current liabilities

Trade payables 4 138 9 014

Other payables 9 22 224 –

South African Revenue Services 3 3

Linked unitholders for distribution 86 297 82 847

112 662 91 864

TOTAL EQUITY AND LIABILITIES 1 977 469 1 626 740

B A L A N C E S H E E T31 March 2006

21

2006 2005

Notes R'000 R'000

Revenue 229 800 219 502

Contractual lease revenue 231 443 214 107

Straight line adjustment on leases (1 643) 5 395

Net rental income from properties 10 149 293 144 884

Interest earned 9 947 3 200

Finance costs – (1 429)

Capital (loss)/profit on disposal of investment properties (728) 48

Net profit before fair value adjustments 158 512 146 703

Write up on revaluation of investment properties 226 796 275 947

As per valuation 225 153 281 342

Adjusted for rental straight line adjustment 1 643 (5 395)

(Deficit)/surplus on revaluation of Put obligation 6 (5 604) 20 332

Net profit before debenture interest and taxation 379 704 442 982

Debenture interest (160 727) (150 435)

Net profit before taxation 218 977 292 547

Taxation 11 (107 307) (41 554)

Net profit attributable to linked unitholders 111 670 250 993

Earnings per share (cents) 14 49,44 123,41

(Weighted)

Diluted earnings per share (cents) 14 49,44 123,41

(Weighted)

Distribution per linked unit (cents) 15

Interest 71,16 69,18

Dividend 0,02 0,02

71,18 69,20

I N C O M E S T A T E M E N Tfor the year ended 31 March 2006

22

Non-

Share Share Distributable Distributable

Capital Premium Reserves Reserves Total

Notes R'000 R'000 R'000 R'000 R'000

Balance at 31 March 2004 2 33 236 21 675 (21 191) 33 722

Prepaid distribution received – – – 9 350 9 350

Net profit attributable to linked

unitholders – – – 250 993 250 993

Transfer to non-distributable

reserve 4.2 – – 236 094 (236 094) –

Dividend distributed – – – (43) (43)

Balance at 31 March 2005 2 33 236 257 769 3 015 294 022

Net profit attributable to linked

unitholders – – – 111 670 111 670

Transfer to non-distributable

reserve 4.2 – – 124 230 (124 230) –

Dividend distributed – – – (45) (45)

Balance at 31 March 2006 2 33 236 381 999 (9 590) 405 647

S T A T E M E N T O FC H A N G E S I N E Q U I T Y

for the year ended 31 March 2006

23

2006 2005

Notes R'000 R'000

OPERATING ACTIVITIES

Cash received from tenants 16 216 096 206 468

Cash paid to suppliers and employees 17 (63 718) (73 947)

Cash generated by operating activities 18 152 378 132 521

Interest received 9 947 3 200

Finance costs – (1 429)

Distribution to linked unitholders: 19

– Interest (157 278) (128 146)

– Dividend (45) (55)

Taxation paid 20 (6) (6)

Net cash inflow 4 996 6 085

INVESTING ACTIVITIES

Acquisition of investment properties 21 (29 213) (313 339)

Disposal of investment properties 89 475 56 082

Improvements to investment properties (171 066) (23 456)

Net cash outflow (110 804) (280 713)

FINANCING ACTIVITIES

Debentures issued (88) 300 110

Increase in interest bearing borrowings 106 049 23 494

Net cash inflow 105 961 323 604

Net increase in cash and cash equivalents 153 48 976

Cash and cash equivalents at beginning of the year 62 402 13 426

CASH AND CASH EQUIVALENTS AT END OF THE YEAR 22 62 555 62 402

C A S H F L O W S T A T E M E N Tfor the year ended 31 March 2006

24

1. Accounting policies

These are the first annual financial statements prepared in

accordance with International Financial Reporting Standards

(IFRS), the interpretations adopted by the International

Accounting Standards Board (IASB) and the requirements

of the South African Companies Act. IFRS 1 has been applied.

The accounting policies set out below have been applied in

preparing the financial statements for the year ended

31 March 2006, the opening IFRS balance sheet and

the 2005 annual financial statements were prepared in

accordance with South African Statements of Generally

Accepted Accounting Practice. A reconciliation is provided

in note 28.

The financial statements are prepared on the historical cost

basis, except for investments properties and financial

instruments which are carried at fair value. Properties classified

as held for sale are stated at the lower of carrying value and

the fair value less costs to sell.

The preparation of financial statements in conformity with

IFRS requires management to make judgements, estimates

and assumptions that affect the application of policies and

reported amounts of assets and liabilities, income and

expenses. The estimates and associated assumptions are

based on historical experience and various other factors that

are believed to be reasonable under circumstances, the

results of which form the basis of making judgements about

carrying values of assets and liabilities that are not readily

apparent from other sources. Actual results may differ from

these estimates.

The estimates and underlying assumptions are reviewed on

an ongoing basis. Revisions to accounting estimates are

recognised in the period in which the estimate is revised if

the revision affects only that period, or the period of the

revision and future periods if the revision affects both current

and future periods.

1.1 Investment properties

Investment properties are held for the purpose of

earning rental income and for capital appreciation. The

cost of investment properties comprises the purchase

price and directly attributable expenditure. Subsequent

expenditure relating to investment properties is

capitalised when it is probable that future economic

benefits from the use of the asset will be increased.

All other subsequent expenditure is recognised as an

expense in the period in which it is incurred.

Expenditure incurred on letting commission is capitalised

and amortised over the period of the lease.

Investment properties are revalued annually at open

market values using the discounted cash flow method

of valuation. At 31 March 2006, all investment properties

were revalued by a registered valuer. It is the Company's

policy to revalue a minimum one third of the property

portfolio on a rotation basis by a registered valuer in

September (half year), in December (in line with

SAPIX/IPD reporting) and in March (financial year-end).

Investment properties under development are valued

using the fair value model. These properties are

developed for the continued use as investment

properties and therefore are not classified as property,

plant and equipment. Any gain or loss arising from the

change in fair value of the investment properties is

included in net profit for the year in which it arises and

is then transferred to the non-distributable reserve net

of deferred taxation in the statement of changes in

equity.

On disposal of investment properties, the difference

between the net disposal proceeds and the fair value

at the date of the last valuation is charged or credited

to the income statement. Revaluation gains/losses

accounted for in non-distributable reserves relating

to such disposals are transferred to/against the

distributable reserves in the statement of changes in

equity and realised capital profits are transferred to the

non-distributable reserve to comply with the terms of

the Debenture Trust Deed.

N O T E S T O T H EA N N U A L F I N A N C I A L S T A T E M E N T S

31 March 2006

25

Borrowing costs that are directly attributable to

investment properties that necessarily take a substantial

period of time to prepare for their intended use are

capitalised. Capitalisation continues up to the date that

the investment properties are substantially complete.

Capitalisation is suspended during extended periods

in which active development is interrupted.

1.2 Properties classified as held for sale

On initial classification as held for sale, the investment

property is recognised at fair value less costs to sell.

Any gain or loss arising from the change in fair value

of the investment property is included in net profit and

is then transferred to the non-distributable reserve net

of deferred taxation in the statement of changes in

equity.

1.3 Taxation

Income tax on the profit or loss for the year comprises

current and deferred tax.

Current tax comprises tax payable calculated on the

basis of the expected taxable income for the year, using

the tax rates enacted or substantially enacted at the

balance sheet date, and any adjustment of tax payable

for previous years.

Deferred tax is provided using the balance sheet liability

method, based on temporary differences. Temporary

differences are differences between the carrying

amounts of assets and liabilities for financial reporting

purposes and their tax base. The amount of deferred

tax provided is based on the expected manner of

realisation or settlement of the carrying amount of

assets and liabilities using tax rates enacted or

substantially enacted at the balance sheet date.

Additional income taxes that arise from the distribution

of dividends are recognised at the same time as the

liability to pay the related dividend.

A deferred tax asset is recognised to the extent that

it is probable that future taxable profits will be available

against which the associated unused tax losses and

deductible temporary differences can be utilised.

Deferred tax assets are reduced to the extent that it

is no longer probable that the related tax benefit will

be realised.

1.4 Provisions

Provisions are recognised when the Company has a

present legal or constructive obligation as a result of

past events, for which it is probable that an outflow of

economic benefits will occur, and where a reliable

estimate can be made of the settlement amount of

the obligation. Where the effect of discounting is

material, provisions are discounted. The discount

rate is a pre-tax rate that reflects current market

assessments of the time value of money and, where

appropriate, the risks specific to the liability.

1.5 Financial instruments

A financial asset or liability is recognised on the balance

sheet for as long as the Company is party to the

contractual provisions of the instruments.

Measurement

Financial instruments are initially measured at fair value,

which includes transaction costs except for those

financial instruments carried at fair value through profit

and loss. Financial instruments on the balance sheet

include trade and other receivables, cash and cash

equivalents and financial liabilities. Subsequent to the

initial recognition these instruments are measured as

set out below:

• Trade and other receivables:

Trade and other receivables are stated at amortised

cost less impairment losses.

• Cash and cash equivalents:

Cash and cash equivalents comprise cash balances

and call deposits and are measured at fair value.

• Financial liabilities:

Financial liabilities including trade and other payables

are measured at amortised cost using the effective

interest rate method. Debentures are recognised at

original debt less amortisations and principle

repayments. Derivative financial instruments are

recognised at fair value through profit and loss.

Interest bearing borrowings are initially measured at

the loan proceeds received net of direct transaction

costs. Subsequent to initial recognition interest

bearing borrowings are measured at amortised cost

using the effective interest rate method.

26

N O T E S T O T H EA N N U A L F I N A N C I A L S T A T E M E N T S

31 March 2006continued

Gains and losses on subsequent measurement of

instruments carried at fair value

Gains and losses arising from a change in fair value of

financial instruments are included in net profit or loss

in the period in which the change arises.

Set off

Financial assets and financial liabilities are offset and

the net amount reported in the balance sheet when

the Company 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.

Derecognition

Financial assets are derecognised when the Company

realises the rights to the benefits specified in the

contract, the rights expire or the Company surrenders

or otherwise loses control of the contractual rights that

comprise the financial asset. On derecognition, the

difference between the carrying amount of the financial

asset and proceeds receivable are included in the

income statement.

Financial liabilities are derecognised when the obligation

specified in the contract is discharged, cancelled or

expires. On derecognition, the difference between the

carrying amount of the financial liability, including related

unamortized costs, and amount paid for it are included

in the income statement.

1.6 Revenue recognition

Revenue

Revenue comprises gross rental income, including all

recoveries from tenants, excluding VAT. Turnover rental

is recognised when it is due in terms of the lease

agreement.

Operating lease receipts are recognised on a straight-

line basis over the lease term. There will be an offsetting

effect to the change in fair value, of investment property

in the income statement (where relevant).

1.7 Net finance costs

Financing costs comprise interest payable on borrowings

calculated using the effective interest rate method.

Interest earned

Interest earned is recognised at effective rates

of interest and is brought to income on a yield to

maturity basis.

1.8 Property letting fees

Letting fees are written off over the period of the lease,

with the deferred portion being included in investment

properties under non-current assets. Letting fees for

developments are capitalised to the cost of the property

when it is probable that future economic benefits

flowing from the asset will be increased.

1.9 Capitalisation of borrowing costs

Where the Company undertakes a major development

or refurbishment of a property, borrowing costs are

capitalised to the cost of the property concerned during

the construction period. Capitalisation is suspended

during extended periods in which active development

is interrupted.

1.10 Segmental information

On a primary basis, the Company operates in the

following geographical areas of South Africa:

• Gauteng

• KwaZulu-Natal

• Western Cape

It is the Company's investment philosophy to invest

only in retail property, therefore the Company can only

report on a primary segment basis. Segment results

include revenue and expenses directly attributable to

a segment and the relevant portion of the enterprise

revenue and expenses that can be allocated on a

reasonable basis to a segment.

Segment assets and liabilities comprises those

assets and liabilities that are directly attributable to the

segment or can be allocated to the segment on a

reasonable basis.

27

1.11 Impairment

The carrying amounts of the Company's assets, other

than investment property and deferred tax assets are

reviewed at each balance sheet date to determine

whether there is an indication of impairment. If any

such indication exists, the asset's recoverable amount

is estimated.

An impairment loss is recognised whenever the

carrying amount of an asset exceeds its recoverable

amount. Impairment losses are recognised in the

income statement.

The recoverable amount is the greater of their fair

value less cost to sell and value in use. In assessing

value in use, the estimated future cash flows are

discounted to their present value using a pre-tax

discount rate that reflects current market assessments

of the time value of money and the risks specific to

the asset.

An impairment loss is reversed if there is an indication

that the impairment loss may no longer exist and there

has been a change in the estimates used to determine

the recoverable amount.

An impairment loss is reversed only to the extent that

the asset's carrying amount does not exceed the

carrying amount that would have been determined,

net of depreciation or amortisation, if no impairment

loss had been recognised.

1.12 Jointly controlled assets

Where the Company has interest in jointly controlled

assets, the Company records its share of the jointly

controlled assets, classified according to the nature

of the assets, rather than as an investment. Liabilities

in respect of the jointly controlled asset are recognised

to the extent it has been incurred by the Company.

The Company recognises rental income of its share

of the output of the joint venture, together with its

share of any expenses incurred by the joint venture.

Any direct expenses that the Company has incurred

in respect of its interest in the joint venture is also

recognised by the Company.

Because the assets, liabilities, income and expenses

are recognised in the financial statements of the

venturer, no adjustments or other consolidation

procedures are required in respect of these items

when the venturer presents consolidated financial

statements.

1.13 Accounting estimates and judgements

Management discusses with the audit committee the

development, selection and disclosure of the

Company's critical accounting policies and estimates

and the application of these policies and estimates.

In applying the Company's accounting policies, critical

judgements are made:

• Determining the capitalisation rates used to value

investment properties. Changes in market conditions

may result in capitalisation rates being revised and

the fair value of investment properties adjusting

accordingly. Independent valuers are consulted in

determining the applicable capitalisation rates.

• Determining if an investment property will be

recovered through sale or use.

28

2006 2005

R'000 R'000

2. Investment properties

Cost of fixed property 1 081 717 1 081 766Subsequent expenditure* 211 127 41 321Revaluation 553 366 331 733Prepaid letting commission 4 173 3 801Rental straight line adjustment (62 185) (63 828)

Carrying value 1 788 198 1 394 793

Movements in investment properties:Carrying amount at beginning of the year 1 394 793 1 022 099At valuation 1 454 820 1 077 730Prepaid letting commission 3 801 2 802Straight line rental adjustment (63 828) (58 433)Acquisitions 29 213 217 926Disposals – (56 082)Improvements** 170 463 23 456Revaluation 225 153 281 390Increase in prepaid letting commission 372 999Adjustments for rental straight line 1 643 (5 395)Transfer to investment properties held for sale (33 439) (89 600)

Carrying amount at end of the year 1 788 198 1 394 793

* includes cumulative interest capitalised of R10 327 699.

** includes interest capitalised of R7 344 134 at prime less 2,2%(2005: R1 752 624 at prime less 1,5%) rate of interest.

Property descriptions of freehold and leasehold investment properties aredetailed on pages 42 to 44 of this report.

Investment properties are encumbered as per note 6.

Investment properties were valued independently by Broll C B Richard Ellis whoare registered with the South African Council of Valuers using the discountedcash flow method.

3. Properties classified as held for sale

(Date of classification)

Knowles Shopping Centre – Basement, Pinetown, KwaZulu-Natal 14 December 2005 2 761 –Kyalami Crescent, Kyalami, Gauteng 3 March 2006 30 678 –Cambridge Downs, Sandton, Gauteng 20 September 2004 – 25 250Florida Junction, Florida, Gauteng 5 November 2004 – 10 750Kyalami Downs, Kyalami, Gauteng 2 February 2005 – 53 600

33 439 89 600

The above properties were considered as non-core holding and no impairmentlosses have been recognised.

4. Share capital and reserves

4.1 Share capital

Authorised500 000 000 ordinary shares of 0,001 cent each 5 5

Issued225 873 826 (2005: 225 873 826) ordinary shares of 0,001 cent each 2 2

N O T E S T O T H EA N N U A L F I N A N C I A L S T A T E M E N T S

31 March 2006continued

29

2006 2005

R'000 R'000

Share premium

Premium arising on listing 50 342 50 342Share issue expenses on listing (17 106) (17 106)

33 236 33 236

33 238 33 238

Each share is linked to a debenture, which together comprises a linked unit.

The unissued linked units are under the control of the directors until thenext annual general meeting.

4.2 Non-distributable reserves

Investment property revaluation reserve:Revaluation of investment property 556 887 321 115Rental straight line adjustment (8 072) (21 412)Deferred tax (158 646) (43 457)

Realised capital profit:Investments properties (9 556) 1 791Capital gains tax 1 386 (268)

381 999 257 769

Movement for the year:

Balance at the beginning of the year 257 769 21 675Net surplus on write up of investment property 124 852 236 053On revaluation 112 268 240 745On rental straight line adjustment 12 584 (4 692)Capital (loss)/profit on disposal of investment property (622) 41

Balance at the end of the year 381 999 257 769

5. Debentures

225 873 826 (2005: 225 873 826) unsecured variable rate debentures of499,999 cents each, net of amortised debenture issue expenses 1 154 210 1 154 858

The debentures are valued at amortised cost at rates approximating the distributionyield of the Company or the acquisition yield of the properties over the expectedperiod of repayment.

In terms of the debenture trust deed, the interest entitlement of every debenturelinked to each ordinary share cannot be less than 90% of net earnings of theCompany before debenture interest, amortisation, taxes and before any revaluationsthat are transferred to any non-distributable reserve. Debenture interest is payablesemi-annually. The debentures are redeemable after 25 years from November 2001at the instance of the debenture holders, commencing from November 2026.

6. Fair value of Put obligation and Call right 17 722 12 118

In terms of IAS 39, the accounting statement on financial instruments,the Put obligation and the Call right that exists between S A Retail andWhirlprops has been fair valued at 31 March 2006.

In terms of the accounting standard, the fair value adjustment at31 March 2006 has been charged to the income statement. Thisadjustment has had no effect on distributable income.

30

N O T E S T O T H EA N N U A L F I N A N C I A L S T A T E M E N T S

31 March 2006continued

Put obligation

The fair value of the Put obligation that Whirlprops has onS A Retail at 31 March 2006, based on the assumption that thePut will be exercised by Whirlprops in November 2011, is ashortfall of R17,7 million (2005: R12,1 million). This equates toa decrease in the net asset value of 7,8 cents per linked unit(2005: 5,4 cents per linked unit); a dilution of 1,1% (2005: 0,8%).The fair value of the Put obligation was determined by presentvaluing the terminal value in November 2011 having givencognisance to projected interest rates and distribution growth.

The fair value assumptions were reviewed by the directors forreasonableness.

Background to transaction

Whirlprops subscribed for 64 388 474 units in S A Retail at anissue price of 578,18 cents per linked unit in November 2001.Nedcor Investment Bank Limited and BoE Bank Limited (nowNedcor Investment Bank Limited), the funding banks, advancedR372,2 million to fund the investment. The loans at 31 March2006 comprise a fixed loan of R310,0 million (2005: R310,0million) bearing interest fixed at 12,85% per annum (2005:12,85% per annum) repayable in 5 years and 8 months and avariable loan of R121,3 million (2005: R116,5 million) bearinginterest at either 2,25% (2005: 2,25%) above the JohannesburgInter Bank Agreed Rate or 1,5% (2005: 1,5%) below the primeoverdraft rate, at the election of Whirlprops. Both loans will berepaid from the distributions by S A Retail and the sale of linkedunits. The linked units owned by Whirlprops rank pari passu inall respects with all linked units issued by S A Retail save forthe Put obligation described below:

The Put obligation given by S A Retail to the funding banks isfor their shares in Whirlprops and their sale claims or alternativelythe linked units in S A Retail owned by Whirlprops. The pricingof such shares is the greater of the 30 day weighted averagetrading price of S A Retail, or the outstanding loans to the banksin Whirlprops, plus all applicable cancellation costs relating tosuch loans. The net cost to S A Retail had the Put obligationbeen exercised at 31 March 2006 would have beenR230,4 million (2005: R17,1 million), being the excess of theaverage trading price per linked unit above the outstanding loanplus cancellation costs. The Put obligation is only exercisable ifthe covenants set out below are breached or any time afterNovember 2011. All covenants were maintained during the yearunder review.

• The distributions of S A Retail for the periods set out belowshall not be less than:– From listing to 31 March 2002 20,29 cents;– 1 April 2002 to 31 March 2003 55,62 cents;– 1 April 2003 to 31 March 2004 60,01 cents;– 1 April 2004 to 31 March 2005 63,74 cents;– 1 April 2005 to 31 March 2006 67,46 cents;– 1 April 2006 to 31 March 2007 63,87 cents;– 1 April 2007 to 31 March 2008 65,78 cents;– 1 April 2008 to 31 March 2009 67,76 cents;– 1 April 2009 to 31 March 2010 69,79 cents;– 1 April 2010 to 31 March 2011 71,88 cents or

• S A Retail fails to make two distributions per financial year; or

• S A Retail encumbers its assets without the prior writtenconsent of Whirlprops; or

• S A Retail borrows, issues guarantees, suretyships or otherwise

incurs liabilities, actual or contingent, in excess of R5 millionin the aggregate without the prior written consent of Whirlprops;or

• the borrowings of Whirlprops from the funding banks at anytime exceed 55% of the net asset value excluding thedebenture liabilities of S A Retail. At 31 March 2006 theborrowings were 27,6% (2005: 30,7%) of net asset value; or

• S A Retail grants any other party a Put option without theconsent of Whirlprops; or

• the rental income of S A Retail for four consecutive monthsduring the first five years is below 75% of the projected rentalstream; or

• a judgement in excess of 1,5% of the value of the propertiesbe granted against S A Retail and an appeal is not lodgedagainst the judgement or should S A Retail attempt tocompromise with any of its creditors; or

• S A Retail fails to ensure that the properties are insured; or

• any redemption or repayment of debentures without the priorwritten consent of Whirlprops; or

• at any time after 15 November 2011.

After the Put obligation has been exercised the linked units inS A Retail owned by Whirlprops will be either cancelled throughtheir repurchase or traded on the open market. Any sale of linkedunits owned by Whirlprops will cause a pro-rata reduction in thevalue of the Put obligation and must first be applied against theoutstanding loans.

Call right

S A Retail has a Call right, exercisable at any time, whereby thelinked units held by Whirlprops can be redeemed at the greaterof the value of the market value of the linked units based upona 30 day weighted average trading price of S A Retail or thevalue of the outstanding loan in Whirlprops including allapplicable cancellation costs relating to such loans and apremium. The premium on the Call right is 2% on the value ofthe outstanding fixed loan and 1% on the variable loan. It is notthe intention of management to exercise the Call right inthe future. The net cost to S A Retail had the Call right beenexercised at 31 March 2006 would have been R223,0 million(2005: R9,8 million).

Notarial Deeds of Restraint

The following properties are subject to Notarial Deed of Restraintof free alienation in favour of Nedbank Limited in terms of theWhirlprops arrangement:• East Rand Galleria• Eikestad Mall• Value Centre Springfield• Hayfields Mall• Coachman's Crossing• Cambridge Crossing• Bluff Shopping Centre• Queensburgh Shopping Centre• Kyalami Cresent (disposed post 31 March 2006)• Middelburg Pick 'n Pay• The Quarry Shopping Centre• Checkers Somerset West• Canterbury Crossing• Kempton Park Shoprite

2006 2005

R'000 R'000

7. Interest bearing borrowings

Secured variable rate loansNedbank Limited

The terms are as follows:

A facility available to the Company of R140,0 million; the loan attracts interest at 129 543 –prime less 2,2% per annum; interest is payable monthly in arrears with thecapital being repayable in November 2011; and the loan is secured by the notarialdeed in restraint of free alienation over the investment properties in terms of theWhirlprops financing structure as detailed in note 6 above.

The Company has further facilities available with Nedbank Limited. As at 31 March2006 the Company had repaid the outstanding borrowings. Terms of the facilities areas follows:

• A facility available to the Company of R187,5 million; the loan attracts interest atprime less 2,2% (2005: 1,5%) per annum; interest is payable monthly in arrearswith the capital being repayable in November 2011; and the loan is secured by thenotarial deed in restraint of free alienation over the investment properties in termsof the Whirlprops financing structure as detailed in note 6 above. – –

• A facility available to the Company of R25 million, the loan attracts interest at primeless 2,2% (2005: 1,5%) per annum; interest is payable monthly in arrears with thecapital being repayable in May 2014; and the loan is secured by way of a mortgagebond over the investment property known as “Town Square” for R25 million. – 23 494

8. Deferred taxation

Movements in deferred taxation:Balance at beginning of the year 50 384 8 835Charged to income statement 107 301 41 549

Deferred tax on property related assets 109 460 41 512Other temporary differences charged to the income statement (2 159) 37

Balance at end of the year 157 685 50 384

Analysis of deferred tax charged to the income statement:Deferred tax on property related assets 109 460 41 512Prepaid expenses (5) 312Accelerated capital allowances 659 355Other allowances (545) –Assessed losses (2 268) (630)

107 301 41 549

Composition of deferred taxation:Deferred tax on property related assets 159 340 49 880Other deferred tax assets (4 738) (1 925)Sundry deferred tax liabilities 3 083 2 429

157 685 50 384

31

32

2006 2005

R'000 R'000

9. Other payables 22 224 –

As at 31 March 2006 development expenditure to the value of R22 224 000 asdetermined by a Quantity Surveyor was accrued for at year-end.

10. Net rental income from properties

Net rental income is arrived at after taking the following items into account:

Audit fees

Current 338 205Other services 53 3Underprovision prior year 60 –

451 208

Asset management fee 7 610 4 863

Property expensesAdministration fees 6 772 6 591Letting fees 2 512 2 335

9 284 8 926

Debenture amortisation 559 42

Directors' emoluments:For services of executive director 60 40For services of non-executive directors 470 300Underprovision prior year 20 –

550 340

11. Taxation

S A Normal taxationCurrent – –Deferred tax other (2 159) 37Deferred tax on property related assets 109 460 41 512Secondary taxation on companies 6 5

107 307 41 554

Reconciliation of tax rate:

Taxation as a percentage of profit:Effective tax rate 49,00% 14,20%

Unrecognised tax on property related assets (49,99%) (14,19%)Secondary tax on companies – –Disallowable expenses 29,99% 29,99%

Standard tax rate 29,00% 30,00%

No current taxation has been provided for as the Company has a loss for taxationpurposes estimated to be R14 459 000 (2005: R6 636 000).

N O T E S T O T H EA N N U A L F I N A N C I A L S T A T E M E N T S

31 March 2006continued

33

2006 2005

R'000 R'000

12. Headline earnings per linked unit 71,22 81,29

(Cents per linked unit)

The calculation of headline earnings per linked unit is based on profit attributable

to unitholders of R160 856 964 (2005: R165 327 039) (refer to note 15) and

225 873 826 (2005: 203 365 682) weighted average linked units in issue during

the year.

13. Earnings per linked unit 120,60 197,39

(Cents per linked unit)

The calculation of earnings per linked unit is based on profit attributable to unitholders

adjusted for the payment of debenture interest of R272 396 747

(2005: R401 427 708) and 225 873 826 (2005: 203 365 682) weighted average

linked units in issue during the year.

14. Headline earnings per share and earnings per share

In terms of the JSE listing requirements it is mandatory to disclose headline

earnings per share and earnings and diluted earnings per share is required by IFRS.

The disclosure below is not meaningful to investors as the shares are linked to a

debenture and virtually all the distributable profit is distributed in the form of

debenture interest.

Headline earnings/(loss) per share 0,06 7,32

(Cents per share)

The calculation of headline earnings per share is based on a profit attributable

to shareholders of R130 660 (2005: R14 891 815) (refer to note 15) and

225 873 826 (2005: 203 365 682) weighted average shares in issue during

the year.

Earnings per share and diluted earnings per share 49,44 123,41

(Cents per share)

The calculation of earnings per share and diluted earnings per share is based on

profit attributable to shareholders of R111 670 443 (2005: R250 992 485) and

225 873 826 (2005: 203 365 682) weighted average shares in issue during

the year.

34

2006 2006 2005 2005

R'000 c/u R'000 c/u

15. Reconciliation of weighted average earnings per

share to weighted average headline earnings per

share to headline earnings per linked unit

Earnings and diluted earnings 111 670 49,44 250 993 123,41Net surplus on write up of investmentproperties (net of deferred taxation) (112 268) (49,70) (236 053) (116,07)

Loss/(profit) on disposal of investmentproperty 728 0,32 (48) (0,02)Headline earnings per share 130 0,06 14 892 7,32Debenture interest 160 727 71,16 150 435 73,97Headline earnings per linked unit 160 857 71,22 165 327 81,29

Headline earnings per linked unit have beenbased on the weighted average number of linkedunits in issue and therefore cannot be compared tothe total distribution of 71,18 (2005: 69,20) centsper linked unit, which has been derived as follows:

For the period 1 April 2005 to 30 September 2005(1 April 2003 to 30 September 2003) 32,95 32,50

For the period 1 October 2005 to 31 March 2006 38,23 36,70(1 October 2003 to 31 March 2005)

71,18 69,20

Distributable earnings are not impacted by therevaluation of the Put obligation (ISA 39 fair valueadjustment) or rental straight line adjustment, whichis included in earnings per linked unit and headlineearnings per linked unit.

16. Cash received from tenants

Revenue 229 800 219 502Rental straight line adjustment 1 643 (5 395)Increase in trade and other receivables (15 347) (7 639)

216 096 206 468

17. Cash paid to suppliers and employees

Revenue 229 800 219 502Net rental income from properties (149 293) (144 884)

80 507 74 618

Amortisation of debenture premium, discountand expenses 559 42Increase in trade and other payables (17 348) (713)

63 718 73 947

N O T E S T O T H EA N N U A L F I N A N C I A L S T A T E M E N T S

31 March 2006continued

35

2006 2005

R'000 R'000

18. Cash generated by operating activities

Net rental income from properties 149 293 144 884Adjusted for:

Rental straight line adjustment 1 643 (5 395)Amortisation of debenture issue expenses (559) (42)Working capital changes

Increase in trade and other receivables (15 347) (7 639)Increase in trade and other payables 17 348 713

152 378 132 521

19. Distribution to linked unitholders

Debenture interest paid is reconciled as follows:

Amounts unpaid at beginning of the year (82 825) (60 536)Amounts charged to the income statement (160 727) (150 435)Amounts unpaid at end of the year 86 274 82 825

(157 278) (128 146)

Dividends paid are reconciled as follows:

Amounts unpaid at beginning of the year (23) (35)Amounts declared during the year (45) (43)Amounts unpaid at end of the year 23 23

(45) (55)

(157 323) (128 201)

20. Taxation paid

Taxation paid is reconciled as follows:

Amounts unpaid at beginning of the year (3) (4)Amounts charged to the income statement (107 307) (41 554)Deferred tax charged to the income statement 107 301 41 549Amounts unpaid at end of the year 3 3

(6) (6)

21. Acquisition of investment properties

Total acquisition of investment properties (29 213) (217 926)Property acquisition obligation – (95 413)

(29 213) (313 339)

22. Cash and cash equivalents at end of the year

Cash and cash equivalents included in the cash flow statementcomprise the following amounts:

Cash at bank 11 937 1 648Cash on call and fixed term deposits 50 618 60 754

62 555 62 402

36

Year-end 31 March 2006 KwaZulu-Natal Gauteng Western Cape Corporate Total

R'000 R'000 R'000 R'000 R'000

23. Segment results

Income Statement

Revenue (external) 92 315 134 921 2 564 – 229 800Contractual lease revenue 107 758 91 345 32 340 – 231 443Straight line adjustment (15 443) 43 576 (29 776) – (1 643)

Segment result

Net rental income 60 272 109 351 (7 531) (12 799) 149 293Interest received 310 646 567 8 424 9 947Finance costs – – – – –Capital loss on disposal ofinvestment properties – (728) – – (728)Write up on revaluation ofinvestment properties 134 134 45 969 46 693 – 226 796As per valuation 118 691 89 545 16 917 – 225 153Adjustment for rentalstraight line 15 443 (43 576) 29 776 – 1 643Revaluation of Put obligation – – – (5 604) (5 604)Debenture interest (76 022) (66 418) (22 812) 4 525 (160 727)

118 694 88 820 16 917 (5 454) 218 977

Other information

Investment properties 910 511 631 433 246 254 – 1 788 198At valuation 930 970 664 998 250 242 – 1 846 210Prepaid letting commission 1 579 2 200 394 – 4 173Rental straight lineadjustment (22 038) (35 765) (4 382) – (62 185)Current and other long-termassets 41 354 88 103 12 396 47 418 189 271Excluding rental straightline adjustment 19 316 52 338 8 014 47 418 127 086Rental straight lineadjustment 22 038 35 765 4 382 – 62 185

Total segment assets 951 865 719 536 258 650 47 418 1 977 469

Debentures * – – – 1 154 210 1 154 210Interest bearing borrowing – – – 129 543 129 543Fair value of Put obligation – – – 17 722 17 722Deferred taxation – – – 157 685 157 685Current liabilities 72 095 42 146 13 831 (15 419) 112 653

Total segment liabilities 72 095 42 146 13 831 1 443 741 1 571 813

Acquisition of

investment property 10 671 – 18 542 – 29 213

* Due to the nature of debentures, segmentation could not be allocated in any meaningful manner.

N O T E S T O T H EA N N U A L F I N A N C I A L S T A T E M E N T S

31 March 2006continued

37

Year-end 31 March 2005 KwaZulu-Natal Gauteng Western Cape Corporate Total

R'000 R'000 R'000 R'000 R'000

23. Segment results (continued)

Income Statement

Revenue (external) 85 659 105 624 28 219 – 219 502Contractual lease revenue 83 793 103 583 26 731 – 214 107Straight line adjustment 1 866 2 041 1 488 – 5 395

Segment result

Net rental income 60 386 71 949 18 636 (6 087) 144 884Interest received 234 260 67 2 639 3 200Finance costs – – – (1 429) (1 429)Capital profit on disposalof investment properties – – 48 – 48Write up on revaluationof investment properties 123 045 110 780 42 122 – 275 947As per valuation 124 911 112 821 43 610 – 281 342Adjustment for rentalstraight line (1 866) (2 041) (1 488) – (5 395)Revaluation of Put obligation – – – 20 332 20 332Debenture interest – – – (150 435) (150 435)

183 665 182 989 60 873 (134 980) 292 547

Other information

Investment properties 626 976 593 676 174 141 – 1 394 793At valuation 663 050 583 770 208 000 – 1 454 820Prepaid letting commission 1 407 2 095 299 – 3 801Rental straight lineadjustment (37 481) 7 811 (34 158) – (63 828)Current and otherlong-term assets 42 796 96 605 37 517 55 029 231 947Excluding rental straightline adjustment 5 315 104 416 3 359 55 029 168 119Rental straight lineadjustment 37 481 (7 811) 34 158 – 63 828

Total segment assets 669 772 690 281 211 658 55 029 1 626 740

Debentures * – – – 1 154 858 1 154 858Interest bearing borrowing – – – 23 494 23 494Fair value of Put obligation – – – 12 118 12 118Deferred taxation – – – 50 384 50 384Current liabilities 5 655 5 564 2 673 77 972 91 864

Total segment liabilities 5 655 5 564 2 673 1 318 826 1 332 718

Acquisition of investment

property 190 197 – 27 729 – 217 926

Segment revenue and expenses

Revenue and expenses that are directly attributable to properties in the particular region are allocated to those regions. Expensesnot directly attributable to a region are allocated to the corporate segment.

Segment assets and liabilities

Segment assets include all operating assets used by a region and consist principally of property assets, trade receivables, cashand cash equivalents. Segment liabilities include all operating liabilities of a region and consist principally of outstanding accounts.Assets and liabilities not directly attributable to a particular region are allocated to the corporate segment.

* Due to the nature of debentures, segmentation could not be allocated in any meaningful manner.

38

2006 2005

R'000 R'000

24. Operating leases

Minimum lease rentalsContractual lease revenue within one year 166 663 151 082Contractual lease revenue within two – five years 392 491 339 269Contractual lease revenue after five years 307 485 216 073Total future contractual lease revenue 866 639 706 424Rental straight line adjustment already accrued (62 185) (63 828)

Future straight line lease revenue 804 454 642 596

Minimum lease paymentsContractual lease payments within one year 746 –Contractual lease payments within two – five years 3 628 –Contractual lease payments after five years 154 488 –Total future contractual lease payments 158 862 –Rental straight line adjustment already accrued (5 466) –

Future straight line lease payment 153 396 –

25. Contingent assets, liabilities and commitments

25.1 Guarantees

Issued in lieu of municipal services deposits. 2 998 2 554

The Company has a total facitity of R5 million,which is renewable on 31 October 2007.

25.2 Capital expenditure

Capital expenditure amounting to R130,9 million has been authorised and contracted for re-development and improvementsto existing properties.

This expenditure will be funded through existing facilities.

25.3 Property disposals

Investment property to the value of R33,4 million has been transferred post 31 March 2006. Refer to note 3.

26. Financial risk management

The financial instruments consist mainly of deposits with banks, accounts receivable, accounts payable and derivative financialinstruments. In respect of financial instruments, carrying amounts approximate fair values. In terms of the international accountingstatement IAS 39, derivative financial instruments are fair valued and their potential gains or losses are recognised in the incomestatement. The risk associated with these and other transactions have been addressed as set out below:

Operation risk management

Operational risk includes the risk of non-compliance with applicable legal, regulatory requirements, board policies and therisk that counterparty's performance obligations will be unenforceable. S A Retail has established risk management proceduresthat are designed to ensure compliance with applicable governance.

N O T E S T O T H EA N N U A L F I N A N C I A L S T A T E M E N T S

31 March 2006continued

39

26. Financial risk management (continued)

Interest rate and liquidity risk management.

Fluctuations in interest rates impact on the value of short-term cash investments and financing activities, giving rise tointerest rate risk.

In the ordinary course of business, the Company receives cash from the letting of its investment properties and is requiredto fund working capital requirements. This cash is managed to ensure surplus funds are invested in a manner to achievemarket related returns while minimising risks. The Company is able to actively source financing at competitive rates.

The Company has sufficient undrawn borrowing facilities available to fund working capital requirements.

Credit risk management

Potential areas of credit risk consist mainly of trade receivables. Trade receivables consist of debt from a large widespreadtenant base. The financial position of the tenants is monitored on an ongoing basis. Impairment is recognised for amountsnot expected to be recovered. At year-end management did not consider there to be any further impairment or materialcredit risk exposure.

27. Related party transactions

Related party transactions are concluded on an arm's length basis in the normal course of business. Details of materialtransactions with those related parties that took place during the year ended 31 March 2006 are summarised below:

2006 2005

Party concerned Class of related party Transaction R'000 R'000

Management fees:

Marriott Property Services Directors are also – Asset management fees 7 610 4 863(Pty) Limited directors of related party (0,35% p.a. of market

capitalisation plus debt,calculated and payable monthly)

– Property management fees 6 660 6 591(based upon collections at ratesvarying between 1,5% and 3,5%dependent upon the nature andsize of each property)

– Leasing commissions 3 557 3 623(paid during the year)

Other:

Marriott Corporate Property Directors are also – Guarantee fees – 20Bank Limited directors of related party

Motseng Marriott Property Directors are also – Valuation fees 158 162Services (Pty) Limited directors of related party

Property acquisitions, disposals, development and listing expenses:

Marriott Property Services Directors are also – Acquisition, disposal, 4 331 2 024(Pty) Limited directors of related party technical and

development fees

Marriott Corporate Property Directors are also – Professional, advisory, 1 702 1 980Bank Limited directors of related party guarantee and placing fees

Other related parties that have been identified by way of their relatedness to the directors of the Company or the associationof the asset management company include:

• Martprop Property Fund• Vukilé Property Fund• Mr Price Group Limited and its subsidiaries.

No fees have been paid or received and there are no outstanding amounts with these parties apart from those disclosed above.

Old Mutual South Africa Limited has been identified as a related party with effect from 19 May 2006 due to the acquisition ofcertain business units from Marriott Holdings Limited.

Key management personnel

Other than the directors of the Company, D L Pronk and A M Malan have been identified as key management personnel of theCompany. Both D L Pronk and A M Malan are employed by the asset managers – Marriott Property Services (Pty) Limited.

40

2006 2005

Notes R'000 R'000

28. Explanation of transition to IFRS

As stated in note 1 these are the Company’s first annual financial statements

prepared in accordance with IFRS.

The accounting policies set out in note 1 have been applied in preparing

the financial statements for the year ended 31 March 2006, the comparative

information presented in these financial statements for the year ended

31 March 2005 and in the preparation of an opening IFRS balance sheet

as at 1 April 2004.

In preparing its opening IFRS balance sheet, the Company has adjusted

amounts reported previously in financial statements prepared in accordance

with South African Statements of Generally Accepted Accounting Practice

(SA GAAP) and the requirements of the South African Companies Act. An

explanation of how the transition from previous SA GAAP to IFRS has

affected the Company’s financial position is shown below.

Effective changes:

Prepaid letting commission 2

Prepaid letting commission has been reclassified from trade and other

receivables to investment properties in terms of IAS 17 which requires

initial direct costs incurred by lessors on negotiating an operating lease

to be added to the carrying amount of the leased asset.

Investment properties held for sale 3

Investment properties that would be realised within twelve months

are reclassified as held for sale.

Investment properties 2

– as previously stated 1 788 198 1 480 592

– reclassification

• prepaid letting commission – 3 801

• investment properties held for sale – (89 600)

As restated 1 788 198 1 394 793

Trade and other receivables

– as previously stated 39 348 21 871

– reclassification – (3 801)

As restated 39 348 18 070

Investment properties held for sale 3

– reclassification 33 439 89 600

N O T E S T O T H EA N N U A L F I N A N C I A L S T A T E M E N T S

31 March 2006continued

28. Explanation of transition to IFRS (continued)

The income statement has not been effected by the transition to IFRS.

A reconciliation of equity in terms of IFRS 1 transition statement is not required as a reclassification of investment property to

non current assets held for sale has had no impact on equity.

None of the IFRS 1 optional exemptions were applied. Therefore the above figures were restated in terms of IFRS 1 as it requires

an entity to apply all standards effective at year end.

29. International Financial Reporting Standards and Interpretations issued but not yet effective

International Financial Reporting Standards and Interpretations issued but not yet effective that will be applicable to the Company

are as follows:

IFRS 7

IFRS 7 lays out disclosure requirements for all financial instruments. As it does not affect the recognition and measurement

of financial instruments, the application of IFRS 7 will have no financial implications for the Company.

IFRIC 8 and AC 503

The entity has not yet entered into a BEE transaction at balance sheet date. When the Company does, IFRIC 8 and AC 503

would be considered.

At this stage the financial impact of these interpretations cannot be determined.

30. Post balance sheet acquisitions

Property acquisitions to the value of R1 228,1 million has been authorised by the Directors after the year-end but before

the date of this report. Agreements have been entered into.

This expenditure will be funded through a combination of existing facilities, debt and an issue of linked units.

Standard/Interpretation Effective Date

IFRS 7 Financial Instruments:

Disclosures (including amendments to IAS 1),

Presentation of Financial Statements:

Capital Disclosures

Annual periods commencing on or after

1 January 2007

IFRIC 8 Scope of IFRS 2 Annual periods commencing on or after

1 May 2006

AC 503 Accounting For Black Economic Empowerment

(BEE) Transactions

Annual periods commencing on or after

1 May 2006

41

42

P R O P E R T Y P O R T F O L I O31 March 2006

Valuation (R) % of Gross Material

portfolio lettable leases

area (m2)

1 East Rand Galleria # 345 700 000 18,42 52 855 Pick 'n PayRetail Regional Centre DionCnr Northrand & Rietfontein Roads Toys R UsJansenpark, Boksburg Joshua Doore

2 Musgrave Centre 238 600 000 12,71 39 872 Pick 'n Pay(50% co-owned with Martprop Property Fund) StuttafordsRetail Regional Centre Woolworths103–115 Musgrave Road Ster KinekorMusgrave, Durban Mr Price

Truworths

3 Pine Crest Centre, Pinetown 150 150 000 8,00 39 950 Pick 'n Pay(Formerly known as Sanlam Centre Pinetown) Game(50% co-owned with Vukilé Property Fund) WoolworthsRetail Regional Centre The HubKings RoadPinetown

4 Eikestad Mall # 139 800 000 7,45 28 431 ABSA BankRetail Community Centre Clicks43 Andringa Street Shoprite CheckersStellenbosch Ster Kinekor

TruworthsWoolworths

5 Value Centre Springfield # 136 100 000 7,25 19 887 Hi-Fi CorporationRetail Value Centre Pro-ShopCnr Umgeni & Electron Roads, Springfield Sportsmans WarehouseDurban Mr Price

6 Hayfields Mall # 95 200 000 5,07 12 218 ABSA BankRetail Community Centre ClicksCnr Cleland & Blackburrow Road, Hayfields First National BankPietermaritzburg Nedcor Bank

Pick 'n PayStandard Bank

7 Bluff Shopping Centre # 87 496 417 4,66 19 475 Shoprite CheckersRetail Community Centre Ackermans328 Tara Road, Bluff TruworthsDurban Edgars

WoolworthsMr Price

8 Umlazi MegaCity 85 700 000 4,57 32 075 Spar(50% co-owned with Martprop Property Fund) WoolworthsLeasehold Property Mr PriceRetail Community Centre Jet50 Mangosuthu Highway AckermansUmlazi, Durban

9 Town Square Shopping Centre * 66 700 000 3,55 5 460 WoolworthsRetail Community Centre ClicksHendrik Potgieter DriveConstantia KloofWestrand

43

Valuation (R) % of Gross Material

portfolio lettable leases

area (m2)

10 Coachman's Crossing # 58 500 000 3,12 6 370 Pick 'n PayRetail Neighbourhood Centre AdegaCnr Peters Place & Karen Street Mugg & BeanSandton

11 Highland Mews 46 697 997 2,49 18 563 Woolworths(50% co-owned with Martprop Property Fund) FoschiniRetail Community Centre ClicksWatermeyer Street RussellsWitbank Truworths

12 Queensburgh Shopping Centre # 45 200 000 2,41 8 133 Pick 'n PayRetail Neighbourhood Centre ABSACnr of Ridley Park and Main RoadQueensburghDurban

13 Cambridge Crossing # 43 300 000 2,31 3 650 WoolworthsRetail Convenience Centre Nando'sCnr Witkoppen & Stone Haven Streets Mugg & BeanPaulshof, Sandton

14 The Quarry Shopping Centre # 33 200 000 1,77 7 761 ClicksRetail Neighbourhood Centre First National Bank57 Hilton Avenue Standard BankHilton Spar

15 Middelburg Pick 'n Pay # 31 700 000 1,69 7 688 Pick 'n PayRetail Neighbourhood Centre Pep StoresCnr Church & Joubert StreetsMiddelburg

16 Paradys Park 31 600 000 1,68 8 026 SparRetail Community Centre Virgin ActiveCnr Paradys Street & Frans Conradie DriveBrackenfell

17 Kyalami Crescent # 30 677 500 1,64 10 084 Le Petit PaineLight IndustrialKyalami Business ParkKyalami

18 Checkers Somerset West # 30 600 000 1,63 6 253 Shoprite CheckersRetail Neighbourhood Centre SpecsaversCnr Main & Gordon Roads Cash CrusadersSomerset West

19 Tokai Junction 29 700 000 1,58 7 547 Pick 'n Pay(50% co-owned with Martprop Property Fund) Toys 'R UsRetail Convenience Centre Cell CCnr Tokai & Main Roads Torga OpticalTokai

SOLD

Valuation (R) % of Gross Material

portfolio lettable leases

area (m2)

20 Kempton Park Shoprite # 28 600 000 1,52 17 807 Shoprite Checkers

Retail Community Centre Cash CrusadersCnr Langenhoven & Central Streets VodacomKempton Park

21 Montclair Mall 25 300 000 1,35 11 640 Pick 'n Pay(50% co-owned with Martprop Property Fund) ClicksRetail Community Centre Mr PriceCnr Wood & Montclair Roads AckermansMontclair, Durban

22 Westwood Village Shopping Centre 24 800 000 1,32 4 761 SparRetail Neighbourhood CentreCnr Atlas & Phillips RoadsBoksburg

23 Canterbury Crossing # 19 000 000 1,01 4 800 Pick 'n PayRetail Community Centre O’HagansCnr Hendrik Verwoerd Drive Scooters Pizza& Hunter Street, Ferndale Freemantle ProductionsRandburg

24 Rhodesdene Shopping Centre 18 542 326 0,99 2 866 Pick 'n PayRetail Neighbourhood Centre SteersCnr Carters Road & Selous AvenueRhodesdeneKimberley

25 Knowles Centre 15 050 000 0,80 15 179 Spar(50% co-owned with Martprop Property Fund) Geen and RichardsRetail Community Centre St Elmo’s22 Chancery Lane Ithala BankPinetown

Total 1 857 914 240 98,99 391 351

CONTRACTED DEVELOPMENT COMMITMENTS

1 Kings Road Value Centre 18 973 711 1,01 8 127 Spar(50% co-owned with Vukilé Property Fund)Retail Value CentreKings RoadPinetown

Total 1 876 887 951 100 399 478

#Notarially tied in terms of Deed of Restraint of free alienation in favour of Nedbank Limited

*Secured in terms of a first mortgage bond in favour of Nedbank Limited

P R O P E R T Y P O R T F O L I O31 March 2006

continued

44

45

N O T I C E O FA N N U A L G E N E R A L M E E T I N G

31 March 2006

Notice is hereby given that the annual general meeting of the

linked unitholders of S A Retail Properties Limited (“the

Company”) in respect of the period ended 31 March 2006 will

be held in the conference room at the offices of Marriott Property

Services (Pty) Limited, Marriott at Kingsmead, Kingsmead Office

Park, Durban on Wednesday, 1 November 2006 at 09h00 for

the following purposes:

AGENDA

1. Notice convening the meeting.

2. Apologies.

3. Confirmation of the minutes of the annual general meeting

held on the 1st day of November 2005.

4. Report of the Chairman of S A Retail Properties Limited.

5. To receive and adopt the audited annual financial statements

of the Company and the reports of the auditors and the

directors for the year ended 31 March 2006.

6. Remuneration

6.1. To approve the remuneration of the directors for the

year ahead as follows:

Chairman of the board

R94 500 p.a.

Per director

R63 000 p.a.

Chairman of various sub-committees, a further

R15 750 p.a.

Member of various sub-committees, a further

R10 500 p.a.

Should board meetings be held more frequently than

quarterly within the year, or where the board appoints

ad hoc committees for a specific purpose, attendees

will receive a fee determined by the board on an

appropriate basis. Such fees will be subject to linked

unitholder approval at the next annual general meeting.

6.2. To approve the special remuneration of the non-

executive directors and the executive director.

For the period 29 March 2005 to 15 September 2005

there were five special meetings. A special fee of

R258 750 is proposed based upon the individual

directors attendance. The calculation was based upon

half of the approved quarterly fee per director and that

of the chairman, being R7 500 and R11 250 per special

meeting respectively.

7. To consider and, if deemed fit, to pass, with or without

modification, the following resolutions:

7.1 Ordinary resolution number 1:

“Resolved that the unissued linked units of company

be placed under the control of the directors, and that

they are hereby authorised, subject to section 221 and

222 of the Companies Act of 1973, as amended, and

to the rules and regulations of the JSE Securities

Exchange South Africa, to allot and/or issue linked units

to such person or persons on such terms and conditions

as they may determine, such authority to expire at the

next annual general meeting of the Company.”

7.2 Ordinary resolution number 2:

“Resolved to authorise the directors to appoint and to

determine the remuneration of the auditors for the

past period.”

7.3 Ordinary resolution number 3:

“To re-elect retiring directors in accordance with the

Articles of Association. Such elections should be moved

in a single motion, if a resolution that it be so moved

is first agreed, without any vote being cast against it.

Otherwise motions for re-election will be moved

individually.”

“In terms of the Company's Articles of Association, one

third of the directors are required to retire annually on

a rotation basis, but are eligible for re-election,

accordingly Messrs R A Norton and U J van der Walt

retire by rotation but being eligible, offer themselves

for re-election.”

7.4 Ordinary resolution number 4:

“To confirm the appointment of new directors nominated

in accordance with the Articles of Association.”

8 . To transact such other business as may be transacted at an

annual general meeting.

9. General.

46

NOTES

1 . A linked unitholder (certificated or own name dematerialised

unitholder) entitled to attend and vote is entitled to appoint

a proxy to attend, speak, and on a poll, vote in his stead, and

such proxy need not also be a linked unitholder of the

Company.

2 . The Proxy Form must be deposited at the Company

Secretary's office or with the Transfer Secretaries not later

than 48 (FORTY-EIGHT) hours before the time of holding the

meeting. Linked unitholders (other than own name

dematerialised unitholders) who have dematerialised their

units should instruct their broker or CSDP as to how they

want to vote on the resolutions at the meeting. Alternatively

should they wish to attend the meeting, they must arrange

with the CSDP or broker concerned to provide them with

the necessary authorisation to attend the annual general

meeting and vote thereat. This must be done in terms of

the agreement entered into between the linked unitholder

and the CSDP or broker concerned.

3 . Should you wish to nominate a director in terms of the

Company's Articles of Association, a directors’ nomination

form, to be completed by the nominator and person(s)

nominated as director can be collected from Miss P Nel at

the Company Secretary's office. The directors' nomination

form together with the nominated director's curriculum vitae

is to be lodged at the Company Secretary's office by no later

than 16:00 on 26 October 2006.

By order of the Board of Directors

Marriott Property Services (Pty) Limited

Company Secretary

Durban

1 September 2006

Company Secretary and Registered Office

Marriott Property Services (Pty) Limited

Delivery Address

Marriott at Kingsmead,

Kingsmead Office Park,

Durban

Postal Address

PO Box 207, Durban, 4000

Transfer Secretaries

Computershare Investor Services 2005 (Pty) Limited

70 Marshall Street,

Johannesburg, 2001

P O Box 61051, Marshalltown, 2107

47

F O R M O F P R O X Y

S A Retail Properties Limited

(Incorporated in the Republic of South Africa)(Registration number: 1999/025764/06)

Share code: SRLISIN code: ZAE 000034328

(“S A Retail Properties Limited” or “the Company”)

To be completed by certificated linked unitholders and own name dematerialised linked unitholders only for use at the

annual general meeting to be held at 09h00 on Wednesday, 1 November 2006.

I/We (block letters)

of (address)

Telephone (work) Telephone (home)

being the holder(s) of linked units

in the Company as at close of business on Friday, 27 October 2006 (see note 1)

hereby appoint

or failing him/her,

or failing him/her,

the chairman of the meeting

as my/our proxy to act on my/our behalf at the annual general meeting of the linked unitholders of the Company to be held at 09h00on Wednesday, 1 November 2006 and at each adjournment thereof and to vote for or against the resolutions or to abstain fromvoting in respect of the linked units registered in my/our name/s, in accordance with the following instructions (see note 2):

For Against Abstain

1. Resolution to receive and adopt the Company's audited annual financial statementsfor the year ended 31 March 2006.

2. Resolution to approve the remuneration of the directors for the year ahead.

3. Resolution to approve the special remuneration of the directors for the period29 March 2005 to 15 September 2005.

4. Ordinary resolution number 1.

To place the unissued linked units under the control of the directors.

5. Ordinary resolution number 2.

5.1 To authorise the directors to appoint the auditors for the ensuing year, and

5.2 To authorise the directors to approve the remuneration of the auditors for thepast period.

6. Ordinary resolution number 3.

6.1 To re-elect Mr R A Norton; and

6.2 To re-elect Mr U J Van Der Walt; and

7. Ordinary resolution number 4.

7.1 To confirm the appointment of any new directors nominated in terms of theCompany's Articles of Association.

Insert unitholding in the relevant spaces above according to how you wish your votes to be cast.

Each linked unitholder is entitled to appoint one or more proxies (who need not be a linked unitholder of the Company) to attend,speak, and on a poll, vote in place of that linked unitholder at the annual general meeting.

Signed at on 2006

Signature(s)

Capacity

Please read the notes on the reverse side hereof.

48

Notes

1 . A linked unitholder entitled to attend and vote at the meeting

may appoint a proxy to speak and vote in his capacity.

A proxy need not be a linked unitholder of the Company.

Proxy Forms should be forwarded to reach the Company

Secretary’s office or with the Transfer Secretary not later

than 48 hours before the time of holding the meeting. The

appointment of a proxy will not preclude a member from

attending the meeting.

2 . A linked unitholder may insert the name of a proxy or the

name of two alternative proxies of the linked unitholder's

choice in the space/s provided, with or without deleting “the

chairman of the annual general meeting”. Any such deletion

must be initialed by the linked unitholder. The person at the

meeting whose name appears first on the form of proxy and

has not been deleted will be entitled to act as proxy to the

exclusion of those whose names follow.

3 . A linked unitholder's instructions to the proxy must be

indicated by the insertion of the relevant number of votes

exercisable by that linked unitholder in the appropriate space

provided. Failure to comply with the above will be deemed

to authorise the chairman of the annual general meeting, if

he is an authorised proxy, to vote in favour of the resolutions,

or any other proxy to vote or abstain from voting at the

annual general meeting as he/she deems fit, in respect of

the linked unitholder's vote exercisable thereat. A linked

unitholder or his/her proxy is not obliged to use all the votes

exercisable by the linked unitholder or by his/her proxy, but

the total of votes cast and in respect whereof abstention is

recorded may not exceed the total of the votes exercisable

by the linked unitholder or by his/her proxy.

4 . A deletion of any printed matter and the completion of any

blank space(s) need not be signed or initialed. Any alteration

or correction to this form of proxy must be signed, and not

initialed by the relevant signatory/ies.

5 . Documentary evidence establishing the authority of a person

signing the form of proxy in a representative capacity must

be attached to the form of proxy unless previously recorded

by the transfer secretaries of the Company or waived by the

chairman of the annual general meeting.

6 . The completion and lodging of this form will not preclude

the relevant linked unitholder from attending the annual

general meeting and speaking and voting in person thereat

to the exclusion of any proxy appointed in terms hereof,

should such linked unitholder wish to do so.

7. When there are joint holders of linked units and if more than

one such joint holder be present or represented, then the

person whose name stands first in the register in respect

of such linked units or his Proxy, as the case may be, shall

alone be entitled to vote in respect thereof.

8. The chairman of the meeting shall be entitled to decline to

accept the authority of the signatory: under a power of

attorney; or on behalf of a company or any other entity unless

the power of attorney or authority is deposited at the Company

Secretary’s office or with the Transfer Secretary not later

than 48 hours before the time of holding the meeting.

9. The chairman of the annual general meeting may accept or

reject a 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 manner

in which a linked unitholder wishes to vote.

10. If linked unitholders have dematerialised their linked units

with a CSDP or broker, other than own name dematerialised

linked unitholders, they must arrange with their CSDP or

broker concerned to provide them with the necessary

authorisation to attend the annual general meeting and vote

thereat or the linked unitholders concerned must instruct

their CSDP or broker as to how they wish to vote in this

regard. This must be done in terms of the agreement entered

into between the linked unitholder and their CSDP or broker

concerned in the manner and by the cut-off time stipulated

therein.

11. If the unitholding is not indicated on the Proxy Form, the

Proxy Form will be deemed to be authorised to vote the

total unitholding.

Company Secretary and Registered Office

Marriott Property Services (Pty) Limited

Delivery Address

Marriott at Kingsmead,

Kingsmead Office Park,

Durban

Postal Address

P O Box 207, Durban, 4000

Tel: 031 – 366 1201

Fax: 031 – 366 1273

Website: www.saretail.co.za

Transfer Secretaries

Computershare Investor Services 2005 (Pty) Limited

70 Marshall Street,

Johannesburg, 2001

P O Box 61051, Marshalltown, 2107

Tel: 011 – 370 5000

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