VUNANI LIMITED - Disposal of an asset by a subsidiary

Disposal of an asset by a subsidiary

VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN
ISIN: ZAE000110359
("Vunani” or “the Company" or “the Group”)

DISPOSAL OF AN ASSET BY A SUBSIDIARY

INTRODUCTION
Shareholders are advised that a subsidiary of the Company, Vunani
Properties Proprietary Limited (“Vunani Properties”) has entered into an
agreement with Greenstone Hill Office Park (Proprietary) Limited (“GHOP”),
Barrow Properties Proprietary Limited, the Trustees of the Task Trust and
Vunani Property Investment Fund Limited (“VPIF”) in terms of which Vunani
Properties will sell its 40% shareholding in GHOP to VPIF for a cash
consideration of R34 504 112 (“the transaction”). VPIF intends to settle
the purchase consideration via the proceeds raised from a rights offer.
The proceeds of the transaction will be utilised to support the growth of
the operations of the group.

BUSINESS CARRIED ON BY GREENSTONE
Greenstone owns and manages 8 commercial properties in the sectional title
schemes known as Greenstone Hill Office Park SS1149/2008 and SS599/2009,
and associated use areas, situated in the fast-growing node known as
Greenstone Hill on the East Rand of Gauteng.

RATIONALE FOR THE TRANSACTION
GHOP was established in 2007 to develop a commercial office park. The
development was completed and fully tenanted in 2012. On completion of the
development, GHOP became an asset that could be made available for sale to
interested buyers. All of the shareholders of GHOP have agreed to accept
an offer to acquire their shares in GHOP.

FINANCIAL EFFECTS OF THE TRANSACTION
The unaudited pro forma financial effects of the transaction, for which the
directors are responsible, are provided for illustrative purposes only to
show the effect thereof on the basic and diluted loss per share (“LPS”) and
headline and diluted headline loss per share (“HLPS”) as if they had taken
effect on 1 January 2012 and on net asset value per share (“NAVPS”) and net
tangible asset value per share (NTAVPS”) as if they had taken effect on 31
December 2012. Because of their nature, the unaudited pro forma financial
effects may not give a fair presentation of the Group’s financial position
and performance.    The unaudited pro forma financial effects have been
compiled from the reviewed condensed consolidated preliminary results of
Vunani for the year ended 31 December 2012 and are presented in a manner
consistent with the format and accounting policies adopted by Vunani and
have been adjusted as described in the notes set out below:

                                             Reviewed     Unaudited
                                           Before the     Pro forma
                                          transaction     After the        %
                                             (Note 1)   transaction   change
LPS (cents) (Note 2)                            (0.2)         (7.2)   3 500%
HLPS (cents) (Note 2)                          (11.2)        (12.6)    12.5%
NAVPS (cents) (Note 3)                          191.2         195.3     2.1%
NTAVPS (cents) Note 3)                          158.3         162.4     2.6%
Weighted average number of shares in
issue (‘000s)                                 100 622
Actual shares in issue at end of period       105 415
(‘000s)

Notes:
1.    The “Reviewed 31 December 2012” column information has been extracted
      from the company’s reviewed condensed consolidated preliminary
      results for the year ended 31 December 2012.
2.    The effects relating to NAVPS and NTAVPS are based on the following
      assumptions and information:
      -    The transaction was effected on 31 December 2012
      -    The cash consideration of R34 504 112 is firstly applied to settle
           loans due to the Group from GHOP of R20 459 875. The balance of
           R14 044 237 is considered to be the proceeds for the disposal of the
           shares.
      -    The consolidated profit on disposal of the shares amounts to
           R6 951 669 based on the equity accounted value of GHOP of R7 092 568
           at 31 December 2012.
      -    The tax charge on the profit of the disposal amounts to
           R2 618 969.
      -    The net increase in the accumulated loss as a result of the
           disposal is R4 332 700.
      -    The proceeds of R34 504 112 have increased cash and cash
           equivalents and will be used to enhance the Group’s cash
           reserves.
            
3.    The effects relating to the LPS and HLPS are based on the following
      assumptions and information:
      -    The transaction was effective on 1 January 2012;
      -    The consolidated profit on disposal of the shares amounts to
           R8 253 378 based on the equity accounted value of GHOP of
           R26 250 734 at 31 December 2011.
      -    The tax charge on the profit of the disposal amounts to
           R6 434 327.
      -    Equity accounted earnings for GHOP included in the reviewed
           condensed consolidated preliminary results of R10 841 834 have
           been eliminated.
      -    The net effect on the statement of comprehensive income is a
           reduction of profit from continuing operations of R9 022 783. Of
           this amount, R7 037 770 is attributable to equity holders of the
           Group and R1 985 012 is attributable to non-controlling
           interest.
      
4.     All adjustments will have a continuing effect.

CONDITIONS PRECEDENT
The transaction is conditional upon, inter alia, the following:
•     the approval by the competition authorities in terms of the
      Competition Act;
•     the requisite approval of VPIF unitholders in general meeting;
•     VPIF raising the requisite funding; and
•     the transfer of the properties and the shares in Greenstone.

EFFECTIVE DATE
The effective date of the transaction will be the date of registration of
transfer of ownership of the shares in GHOP and the properties which is
expected on or about 30 June 2013.

CATEGORISATION OF THE TRANSACTIONS
The transaction is categorised as a Category 2 transaction in terms of the
JSE Limited Listings Requirements.

Sandton
12 April 2012

Designated Adviser
Grindrod Bank Limited

Corporate Adviser
Vunani Corporate Finance

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