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VUNANI LIMITED - Reviewed Preliminary Condensed Consolidated Results for the year ended 31 December 2013

Release Date: 24/03/2014 16:05
Code(s): VUN     PDF:  
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Reviewed Preliminary Condensed Consolidated Results for the year ended 31 December 2013

 VUNANI LIMITED
  (“Vunani” or “the company” or “the group”)
 Incorporated in the Republic of South Africa
 Registration number: 1997/020641/06
 JSE code: VUN ISIN: ZAE000163382 Listed on Alt-X on the JSE Limited (“JSE”)

 REVIEWED PRELIMINARY CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013

 THE REVIEWED PRELIMINARY CONDENSED CONSOLIDATED RESULTS HAVE BEEN PREPARED UNDER THE SUPERVISION OF THE CHIEF FINANCIAL OFFICER, APHRODITE JUDIN CA (SA)


 Salient features

 Results from operating activities after finance costs of R11.7 million at 31 December 2013 compared to R10.8 million in 2012, Net finance costs down from R47.8 million to
 R2.8 million, Basic earnings per share of 9.9c per share compared to basic loss per share of 0.2c in 2012, Net asset value per share increased to 203.5c per share at 31 December
 2013 from 191.2 c per share at 31 December 2012, Declaration of ordinary and special dividends totalling 30 cents per share.

 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2013

                                                                                                                                                                       Audited
                                                                                                                                          Reviewed                re-presented
Figures in R'000s                                                                                                Note                  31 Dec 2013                 31 Dec 2012
Continuing operations
Revenue                                                                                                            1                       109 958                     100 878
Other income                                                                                                                                 6 265                       8 620
Investment revenue                                                                                                                          10 469                       2 355
Interest received from investments                                                                                                           2 733                      22 557
Net profit on disposal of assets                                                                                                            11 169                       5 854
Fair value adjustments and impairments                                                                             2                        18 470                      43 786
Operating expenses                                                                                                                       (144 608)                   (125 437)
Results from operating activities                                                                                                           14 456                      58 613


Finance income                                                                                                                               2 404                       1 007
Finance costs                                                                                                                               (5 174)                    (48 845)
Net finance cost                                                                                                                            (2 770)                    (47 838)
Results from operating activities after net finance costs                                                                                   11 686                      10 775
Equity accounted earnings (net of income tax)                                                                                               (3 438)                     17 218
Profit before income tax                                                                                                                     8 248                      27 993
Income tax expense                                                                                                                          (1 553)                    (18 640)
Profit from continuing operations                                                                                                            6 695                       9 353


Discontinued operations
Profit from discontinued operations (net of income tax)                                                            8                         1 611                       2 402

PROFIT FOR THE YEAR                                                                                                                          8 306                      11 755


OTHER COMPREHENSIVE INCOME
Exchange differences on translating foreign operations                                                                                        (897)                           -


TOTAL COMPREHENSIVE INCOME FOR THE YEAR                                                                                                      7 409                      11 755


Profit/(loss) for the year attributable to :
Equity holders of Vunani Limited                                                                                                             9 869                        (216)
Non-controlling interest                                                                                                                    (1 563)                     11 971
                                                                                                                                             8 306                      11 755


Total comprehensive income for the year attributable to :
Equity holders of Vunani Limited                                                                                                              9 205                      (216)
Non-controlling interest                                                                                                                    (1 796)                     11 971
                                                                                                                                             7 409                      11 755


Basic and diluted earnings/ (loss) per share (cents)                                                                                            9.9                       (0.2)
     Basic and diluted earnings/ (loss) per share from continuing operations (cents)                                                            8.6                       (2.1)
     Basic and diluted earnings/ (loss) per share from discontinued operations (cents)                                                          1.3                        1.9


Basic and diluted headline earnings/(loss) per share (cents)                                                       9                            2.5                      (11.2)



                                                                                                                                                                                     1
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2013


                                                                                      Reviewed           Audited
Figures in R'000s                                                            Note  31 Dec 2013       31 Dec 2012

ASSETS
Plant and equipment                                                                      1 934            2 611
Goodwill                                                                                34 123           34 123
Intangible assets                                                                        2 207              489
Investment property                                                                          -            4 000
Investment in and loans to associates                                                   22 425           80 073
Other investments                                                             3        115 317           73 728
Deferred tax asset                                                                      40 397           40 917
Other non-current assets                                                                25 358           15 984
Total non-current assets                                                               241 761          251 925


Other investments                                                             3              -           78 513
Non-current assets held for sale                                              7          2 634               -
Other current assets                                                                     1 451            3 994
Taxation prepaid                                                                         1 041              254
Trade and other receivables                                                             30 729           25 768
Accounts receivable from trading activities                                            113 077          199 629
Trading securities                                                                         320            1 564
Cash and cash equivalents                                                               42 271           29 378
Total current assets                                                                   191 523          339 100
Total assets                                                                           433 284          591 025


EQUITY
Stated capital                                                                4        610 088          610 088
Treasury shares                                                                        (15 265)         (14 899)
Share based payment reserve                                                             10 256            5 906
Foreign currency translation reserve                                                      (897)               -
Accumulated loss                                                                      (389 709)        (399 578)
Equity attributable to equity holders of Vunani Limited                                214 473          201 517
Non-controlling interest                                                                (6 226)          12 794
Total equity                                                                           208 247          214 311

LIABILITIES
Other financial liabilities                                                   3         45 606           60 080
Deferred tax liabilities                                                                 4 061            8 610
Total non-current liabilities                                                           49 667           68 690

Other financial liabilities                                                   3           7 869          68 646
Non-current liabilities held for sale                                         7           2 479               -
Current tax payable                                                                       9 896          10 310
Trade and other payables                                                                39 274           25 861
Accounts payable from trading activities                                               112 941          200 373
Bank overdraft                                                                           2 911            2 834
Current liabilities                                                                    175 370          308 024

Total liabilities                                                                      225 037          376 714


Total equity and liabilities                                                           433 284          591 025

Shares in issue (000s)                                                        4        105 415          105 415
Net asset value per share (cents)                                                        203.5            191.2
Net tangible asset value per share (cents)                                               169.0            158.3




                                                                                                                   2
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2013




                                                                                            Total attributable
                                                                                            to equity holders      Non-controlling
Figures in R'000s                                                                                   of Vunani             interest     Total equity


Balance as at 31 December 2011 - Audited                                                             198 856               13 842         212 698
Transactions with owners, recorded directly in equity
Acquisition of non-controlling interest                                                                  118                 (118)              -
Treasury shares acquired                                                                                (623)                   -         (   623)
Dividend paid                                                                                              -              (12 901)        (12 901)
Share based payment reserve                                                                             3 382                   -            3 382
Total transactions with owners                                                                          2 877             (13 019)        (10 142)
Total comprehensive income
Profit/(loss) and total comprehensive income
for the year                                                                                            (216)              11 971          11 755
Balance as at 31 December 2012 - Audited                                                             201 517               12 794         214 311
Transactions with owners, recorded directly in equity
Acquisition of subsidiaries                                                                                -               (2 112)         (2 112)
Acquisition of non-controlling interest                                                               (1 117)               1 117               -
Disposal to non-controlling interest                                                                      884                (884)              -
Dividend paid                                                                                               -             (15 345)        (15 345)
Treasury shares acquired                                                                                (366)                    -           (366)
Share based payment reserve                                                                             4 350                    -           4 350
Total transactions with owners                                                                        205 268               (4 430)        200 838
Total comprehensive income
Profit/ (loss) for the year                                                                             9 869               (1 563)          8 306
Other comprehensive income for the year                                                                 (664)                 (233)          (897)
Total comprehensive income for the year                                                                 9 205               (1 796)          7 409
Balance as at 31 December 2013 - Reviewed                                                             214 473               (6 226)        208 247




 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2013


                                                                                                                   Reviewed                Audited
Figures in R'000s                                                                                                31 Dec 2013           31 Dec 2012


Net cash utilised by operating activities                                                                           (34 816)              (60 407)
Net cash inflow from investing activities                                                                           115 561                200 121
Net cash outflow from financing activities                                                                          (67 929)             (130 179)
Net increase in cash and cash equivalents                                                                            12 816                  9 535
Cash and cash equivalents at the beginning of the year                                                               26 544                 17 009
Total cash and cash equivalents at end of year                                                                       39 360                 26 544




                                                                                                                                                      3
SEGMENTAL REPORTING FOR THE YEAR ENDED 31 DECEMBER 2013

Reviewed 31 December 2013
                                                                                                                        31 Dec 2013        31 Dec 2013           31 Dec 2013
Continuing operations
Asset management                                                                                                             36 822                992                42 030
Advisory services - South Africa*                                                                                             5 860                554                10 958
Advisory services - Zimbabwe*                                                                                                   621             (4 655)                  190
Investment holdings                                                                                                                -            25 073               195 830
Institutional securities broking **                                                                                          46 463              7 945               140 140
Private wealth and investments **                                                                                             7 624              (601)                 2 470
Property developments and investments                                                                                         1 953              1 048                19 205
Group                                                                                                                        10 615           (23 661)                19 332


                                                                                                                            109 958              6 695               430 155
Discontinued operations


Properties asset management                                                                                                   8 858              1 611                 3 129
                                                                                                                              8 858              1 611                 3 129


TOTAL                                                                                                                       118 816              8 306               433 284


Audited 31 December 2012


                                                                                                                        31 Dec 2012        31 Dec 2012           31 Dec 2012
Continuing operations
Asset management                                                                                                             25 039              1 248                49 440
Advisory services *                                                                                                           9 283             (6 277)                2 045
Investment holdings                                                                                                               -              3 282               221 071
Securities broking **                                                                                                        48 068             (1 513)              220 449
Property developments & investments                                                                                           7 864             20 951                89 213
Group                                                                                                                        10 624             (8 338)                8 117
                                                                                                                            100 878              9 353               590 335


Discontinued operations


Properties asset management                                                                                                   7 014              2 402                  690
                                                                                                                              7 014              2 402                  690


TOTAL                                                                                                                       107 892             11 755              591 025



* The Advisory Services segment was previously named “Investment banking and advisory”. The name was amended in 2012. The Zimbabwean operations have
been consolidated for the first time during the current year (and hence no comparatives have been presented) and are disclosed separately.

** The Institutional Securities Broking and Private Wealth & Investments segments were previously reported as the Securities Broking segment. In the 2013 year,
the Securities Broking segment was split up following the acquisition in the current year of a majority shareholding in Vunani Private Clients Proprietary Limited.
The Institutional Securities Broking segment includes the institutional securities broking operations, while the Private Wealth and Investments segment includes
the retail securities trading and wealth management operations.




                                                                                                                                                                               4
NOTES TO THE CONDENSED CONSOLIDATED PRELIMINARY RESULTS
(all figures in R’000)

BASIS OF PREPARATION

The preliminary condensed consolidated results for the year ended 31 December 2013 have been prepared in accordance with the framework concepts and recognition and
measurement principles of International Financial Reporting Standards and Financial Pronouncements as issued by the Financial Reporting Standards Council. The preliminary
condensed consolidated results have been presented in accordance with the minimum content, including disclosures, prescribed by IAS 34 Interim Financial Reporting applied to
year end reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Listing Requirements of the JSE Limited and the requirements of
the Companies Act of South Africa.

The accounting policies as set out in the audited financial statements for the year ended 31 December 2012 have been consistently applied. The reviewed preliminary condensed
consolidated results have been presented on the historical cost basis, except for other investments, investment property and other financial liabilities, which are fair valued. These
preliminary condensed consolidated results are presented in Rands, rounded to the nearest thousand, which is the functional currency of Vunani and the group presentation
currency.

These reviewed preliminary condensed consolidated results incorporate the financial statements of the company, its subsidiaries and companies that, in substance, are controlled
by the group and the group's interest in associates. Results of subsidiaries and associates are included from the effective date of acquisition up to the effective date of disposal. All
significant transactions and balances between group enterprises are eliminated on consolidation.

 Comparatives on the statement of comprehensive income have been re-presented to show the effect of the discontinued operation (refer to note 8).

 NOTES

 1. Revenue

 Revenue includes fees earned from advisory services, brokerage, asset management fees, client service fees and proprietary trading revenues.

 2. Fair value adjustments and impairments



                                                                              Reviewed           Audited
                                                                           31 Dec 2013       31 Dec 2012
                                                                                 R'000             R'000
 Financial assets and liabilities designated as fair value through
 profit and loss                                                                22 709            42 176
 Impairment of other non-current assets                                         (3 576)                -
 Impairment of investment in associates                                              -             (933)
 Revaluation of Investment property                                             (1 400)                -
 Impairment of loans to associates                                                (564)                -
 Reversal of impairment of loans to associates                                      60             2 543
 Reversal of impairment of loans to associates on consolidation
 of associate                                                                    1 241                 -
                                                                                18 470            43 786



  3.   Other investments and other financial liabilities

 Unlisted investments are fair valued annually by the directors. Listed investment prices are determined with reference to the share price at year end.
 3. Other investments and other financial liabilities (continued)
 Both listed and unlisted investments are designated as fair value through profit and loss. Financial liabilities are either accounted for at amortised cost or designated as fair value
 through profit and loss. The group designates certain financial liabilities at fair value through profit or loss upon initial recognition. Ring-fenced special purpose entities have
 historically been used to house the group’s geared equity investments and any financial liabilities that relate to such investments.

 Financial assets and liabilities that arise in terms of these ring-fenced structures are both fair valued through profit or loss in terms of IAS 39 Financial instruments: Recognition
 and measurement.

 The reason for the above designation was to reduce the measurement inconsistency on ring-fenced liabilities relative to the assets that they funded. Because the liability to
 lenders is limited to the fair value of the assets, if the assets were fair valued through profit or loss and the liabilities carried at amortised cost, inconsistency would arise that
 would not reflect the true liability of the group. In order to eliminate this inconsistency on ring-fenced structures, these specific liabilities are designated as fair value through
 profit or loss on initial recognition.
 Financial liabilities at fair value include capitalised interest and attributable profit participation.




                                                                                                                                                                                            5
4. Authorised and issued stated capital

The authorised stated capital at 31 December 2013 was 200 million ordinary shares of no par value (2012: 200 million shares of no par value). 105 414 649 shares were in issue
throughout the year.

Weighted average number of ordinary shares (000s)                       Reviewed              Audited
                                                                     31 Dec 2013             Dec 2012

Issued ordinary shares at the beginning of the year                      105 415            5 270 732


Effect of share consolidation                                                  -           (5 165 317)
Effect of own shares held                                                 (5 211)              (4 793)
Weighted average number of shares                                        100 204              100 622


Number of shares in issue at the end of the year (000s)                  105 415              105 415


The shares issued as part of the employee share incentive scheme could potentially dilute basic earnings in the future. In the current year, the employee shares have no dilutive
effect.

5. Impact of new accounting standards

A number of new IFRS standards become applicable to the group in the 2013 financial year. An assessment of the applicability of these standards for Vunani was performed. The
requirements of the consolidation suite of standards (IFRS 10, 11 and 12) were assessed and in the assessment, it was determined that the group’s investment in Vunani Capital
Zimbabwe (Private) Limited (“VCZ”) would need to be consolidated. The standards require retrospective application and if the impact of the application is material, prior periods
would need to be restated to reflect the impact of application if the impact is material. The impact of the application of the standard has been quantified and is considered
immaterial for the prior periods. Consequently, the full impact of consolidating the subsidiary was included in the 2013 preliminary results. The consolidation of the subsidiary
resulted in a foreign currency translation reserve of R0.9 million at 31 December 2013.


6. Business acquisitions

On 1 May 2013, Vunani increased its investment in Vunani Private Clients Proprietary Limited (“VPC”) from 40% to 51% for a nominal amount. The 40% shareholding was
previously held indirectly through Vunani Private Client Holdings Proprietary Limited (“VPCH”), which owned 100% of VPC. VPCH sold 51% of its shareholding in VPC to Vunani
and 49% to the non-controlling interests.

The carrying amount of the investment in VPC by VPCH was a nominal amount. R2.1m of the negative acquisition date net asset value of VPC was allocated to the non-
controlling interest. Since acquisition, an after tax loss of R0.6m has been included in Vunani’s profit or loss. R0.3m of this loss is attributable to non-controlling interests. If the
acquisition had taken place at the beginning of the year, an after tax profit of R0.03m would have been included in Vunani’s profit or loss. R0.01m of this profit would have been
attributable to non-controlling shareholders’ interests. A purchase price allocation in terms of IFRS 3 is presented below.

The acquisition resulted in the recognition of intangible assets of R2.2 million at acquisition date. These are attributable to VPC having an existing client base and the ability to
secure a number of additional clients through their business activities, which will ensure revenue streams for the future. VPC has significant intellectual capital and top
management has over 10 years’ experience in the private client management industry. VPC has significant trading platforms in place, which will enable it to service the expected
increase in the client base with ease.

Trade receivables acquired are at fair value and are expected to be collected in their entirety. No contingent liabilities arose as a result of the business combination. The
valuation of the non-controlling interest was based on the net asset value of VPC at acquisition date.

The acquisition date fair values of the net assets in terms of the business combination are presented below:


                                                                                        Reviewed
                                                                                     31 Dec 2013

                                                                                             VPC
 Net assets acquired                                                                       R'000
 Property, plant and equipment                                                               254
 Intangible assets                                                                         2 207
 Deferred tax asset                                                                           69
 Trade and other receivables                                                               2 728
 Cash and cash equivalents                                                                   124
 Other financial liabilities                                                             (1 340)
 Trade and other payables                                                                (6 154)
 Non-controlling interests                                                                 2 112
 Cost of investment                                                                            -

7. Non-current assets and liabilities held for sale

During the year, the group made a decision to dispose of its investment in Selectria Investments 49 Proprietary Limited ("Selectria") and the business in Vunani Property
Asset Management Proprietary Limited ("VPAM"), which fall under the Properties Development and Investments segment and the Properties Asset Management segment
respectively. The investment and the assets and liabilities related to the sale of VPAM’s business have been presented as a disposal group held for sale. The sale of Selectria is
in the process of being finalised, while the sale of VPAM’s business was concluded on 28 February 2014. At 31 December 2013 the disposal group consisted of assets of R2.6
million less liabilities of R2.5 million.



                                                                                                                                                                                            6
As at 31 December 2013 the non-current assets and liabilities held for sale were detailed as follows:



                                                                                  Reviewed
                                                                               31 Dec 2013
Assets classified as held for sale
Investment property                                                                  2 600
Plant and equipment                                                                     13
Trade and other receivables                                                             20
Cash and cash equivalents                                                                1
                                                                                     2 634


Liabilities classified as held for sale
Other financial liabilities                                                          2 450
Trade and other payables                                                                29
                                                                                     2 479



8. Discontinued operations

A strategic decision was made in November 2013 to dispose of the group's property asset management business. This culminated in the group disposing of the property
management contract that was held in VPAM. As this contract related to a major line of the group's business, the related activities have been presented as a discontinued
operation. The comparative for the December 2012 consolidated statement of comprehensive income has been re-presented to disclose the discontinued operation separately
from continuing operations.




                                                                            Reviewed              Audited
                                                                          31 Dec 2013         31 Dec 2012
                                                                                R'000               R'000


Revenue                                                                         8 858               7 014
Operating expenses                                                             (6 190)            (3 692)
Results from operating activities                                               2 668               3 322
Finance costs                                                                    (179)                  -
Results from operating activities after net finance costs                       2 489               3 322
Equity accounted earnings (net of income tax)                                       -                   -
Profit before income tax                                                        2 489               3 322
Income tax expense                                                               (878)              (920)
Profit from operations                                                          1 611               2 402


Attributable to non-controlling interest                                          354                 528
Attributable to equity holders of Vunani Limited                                1 257               1 874
                                                                                1 611               2 402



Effect on basic and diluted earnings per share (cents)                            1.3                 1.9
Effect on basic and diluted headline earnings
per share (cents)                                                                 1.3                 1.9


Cashflows from discontinued operations
Net cash (utilised)/ generated by operating activities                         (1 777)              2 090
Net cash inflow/ (outflow) from investing activities                            1 898             (1 755)
Net cash outflow from financing activities                                          -               (335)
Net cash inflow for the year                                                      121                  -




                                                                                                                                                                            7
9. Reconciliation of headline earnings/(loss) for the year

                                                                                 Reviewed               Audited
                                                                              31 Dec 2013           31 Dec 2012
 Total comprehensive income attributable to equity holders of                       9 869                 (216)
 Vunani
 Adjusted for
 Revaluation of investment property
 Gross revaluation of investment property                                           1 400                     -
 Deferred taxation on revaluation                                                   (261)                    38
 Non-controlling interest                                                           (251)                    (8)
 Associates
 Gross revaluation of investment property                                         (1 400)               (10 866)
 Deferred taxation on revaluation                                                    261                  2 026
 Deferred taxation on rate change                                                      -                    984
 Non-controlling interest                                                            251                  1 728
 Disposal of plant and equipment
 Loss on disposal                                                                      -                     53
 Capital gains tax                                                                     -                    (10)
 Disposal of subsidiaries
 Profit on disposal                                                                  (19)                (5 907)
 Taxation                                                                              4                      -
 Disposal of associates
 Profit on disposal                                                              (11 150)                     -
 Taxation                                                                           2 079                     -
 Non-controlling interest                                                           1 762                     -
 Associates
 Impairment of cost of investment                                                       -                   933
                                                                                    2 545               (11 245)


 Headline earnings/ (loss) per share (cents)                                          2.5                 (11.2)


 Basic and diluted headline earnings/(loss) per share from                            1.2                 (13.1)
 continuing operations
 Basic and diluted headline earnings per share from                                   1.3                   1.9
 discontinued operations


 10. Financial instruments carried at fair value

 The fair value of a financial instrument is the price that would be received for the sale of an asset or paid for the transfer of a liability in an orderly transaction between market
 participants at the measurement date. Underlying the definition of fair value is a presumption that an entity is a going concern without any intention or need to liquidate, to
 curtail materially the scale of its operations or to undertake a transaction on adverse terms. Fair value is not, therefore, the amount that an entity would receive or pay in a
 forced transaction, involuntary liquidation or distressed sale.

 The existence of published price quotations in an active market is the best evidence of fair value and, where they exist, they are used to measure the financial asset or financial
 liability. A market is considered to be active if transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis. Financial instruments
 fair valued using quoted prices would generally be classified as level 1 in terms of the fair-value hierarchy.

 Where a quoted price does not represent fair value at the measurement date or where the market for a financial instrument is not active, the group establishes fair value by
 using a valuation technique. These valuation techniques include reference to the value of the assets of underlying business, earnings multiples (e.g. unlisted investments),
 discounted cash flow analysis (e.g. unlisted investments, loans and advances) and various option pricing models.

 Valuation techniques applied by the group would result in financial instruments being classified as level 2 or level 3 in terms of the fair-value hierarchy. The determination of
 whether a financial instrument is classified as level 2 or level 3 is dependent on the significance of observable inputs versus unobservable inputs in relation to the fair value of the
 financial instrument. Inputs typically used in valuation techniques include discount rates, expected future cash flows, dividend yields, earnings multiples, volatility, equity prices
 and commodity prices. Valuation methodologies and techniques applied for level 3 financial instruments include a combination of discounted cash flow analysis, application of
 earnings multiples on sustainable after tax earnings, current and projected net asset values to determine overall reasonability. The valuation technique applied to specific
 financial instruments depend on the nature of the financial instrument and the most appropriate valuation technique is determined on that basis.

 After the valuations of the unlisted financial assets and liabilities are performed, these are presented to the group's investment committee for independent review. All
 significant valuations are approved by the investment committee.




                                                                                                                                                                                        8
The valuation methodologies, techniques and inputs applied to the fair value measurement of the financial instruments have been applied in a manner consistent with that of
the previous financial year.

Fair values                                        Reviewed 31 Dec 2013                     Audited 31 Dec 2012
                                                 Carrying         Fair value             Carrying          Fair value
                                                   amount                                  amount
Financial assets
Designated as fair value through profit           144 885           144 885               177 722             177 722
or loss on initial recognition


Loans and receivables                             164 519           164 519               263 395             263 395
Non-current assets held for sale                       34                34                     -                   -


Trading securities                                    320               320                 1 564               1 564
Cash and cash equivalents                          42 271            42 271                29 378              29 378


                                                  352 029           352 029               472 059             472 059

Financial liabilities


Designated as fair value through profit            (6 971)          (6 971)              (77 140)             (77 140)
or loss on initial recognition


Amortised cost                                   (198 720)        (198 720)             (275 469)            (275 469)
Non-current liabilities held for sale              (2 479)          (2 479)                    -                    -


Bank overdraft                                     (2 911)          (2 911)               (2 834)              (2 834)


                                                 (211 081)        (211 081)             (355 443)            (355 443)



Fair value hierarchy

The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in
the fair value hierarchy based on inputs to valuation techniques used. The different levels are defined as follows:

   •    Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
   •    Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from
        prices).
   •    Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).



2013                                                                           Level 1             Level 2             Level 3      Total


Financial assets designated at fair value through profit or loss                80 240                   -              64 645    144 885


Financial liabilities designated at fair value through profit or
loss                                                                                 -                   -              (6 971)    (6 971)
                                                                                80 240                   -              57 674    137 914


2012                                                                           Level 1             Level 2             Level 3      Total


Financial assets designated at fair value through profit or loss               139 217                   -              38 505    177 722


Financial liabilities designated at fair value through profit or
loss                                                                                 -                   -             (77 140)   (77 140)
                                                                               139 217                   -             (38 635)   100 582




                                                                                                                                                                                             9
                                                                       Reviewed        Audited
                                                                         31 Dec         31 Dec
                                                                           2013           2012
Level 3 comprises:
Balance at beginning of year                                           (38 635)      (247 686)
Total gains or losses in profit or loss                                  19 573          (975)
Proceeds from loan, interest and repayments                              70 697       (67 302)
Purchases, sales, issues and settlements                                  6 039       277 328
Balance at end of year                                                   57 674       (38 635)




A change of 10% in the fair value of investment and liability at the reporting
date would have increased/(decreased) equity and profit or loss by the amount
shown below. This analysis assumes that all other variables remain constant.


                                                                      Reviewed        Audited
                                                                        31 Dec         31 Dec
Effect on profit/(loss) and equity                                        2013           2012
10% increase                                                             5 767         (3 864)
10% decrease                                                            (5 767)         3 864



OVERVIEW AND PROSPECTS

Vunani generated total comprehensive income for the year of R7.4 million (2012: R11.8 million). Total comprehensive income attributable to equity holders of the company
amounts to R9.2m (2012: loss of R0.2), which is a pleasing result. The results for the 2013 financial year have been presented such that the disposal of the business in VPAM has
been reflected as a discontinued operation (refer to note 8). In addition, the group’s investment in VCZ was assessed in terms of the requirements of IFRS 10, 11 and 12, which
became effective in the current financial year. Based on this assessment, it was determined that the group’s investment would need to be consolidated. VCZ’s cumulative losses
have been consolidated into the group’s results in 2013 as a result of this. Please refer to note 5 for further information.

Revenue from continuing operations increased by 9% to R110.0 million (2012: R100.9 million) for the year ended 31 December 2013. Other income comprises the amortisation
of deferred revenue that arose on the historic acquisition of Black Wattle Colliery Proprietary Limited and directors’ fees earned where the group’s executive directors serve on
investee company boards. Other income has reduced compared to December 2012 as the 2012 value included the reversal of a rental guarantee provision that was provided to
Vunani Property Investment Fund Limited (“VPIF”) in August 2011 when it listed.

Investment income has increased substantially to an amount of R10.5 million compared to 2012, which reflected an amount of R2.4 million. This increase was a result of
dividend declarations by investee companies. Interest received from investments reduced by 88% to R2.7 million following the disposal of the group’s investment in VPIF
during 2012.

Net profit on disposal of assets amounted to R11.2 million compared to R5.9 million in 2012. Disposals in the current year included the disposal of the group’s associate
investments in Greenstone Hill Office Park Proprietary Limited (“GHOP”), Lexshell 638 Investments Proprietary Limited (“Lexshell”), Integrated Managed Investments
Proprietary Limited (“IMI”) and Buttonwood Proprietary Limited (“Buttonwood”).

Positive fair value adjustments and impairments of R18.5 million are included in the results (2012: R43.8 million) and relate to the revaluation of assets which have been
designated as fair value through profit and loss, as well as any impairments on other assets and revaluation of investment property.

Operating expenses have increased by 15% from R125.4 million to R144.6 million. The increase is largely attributable to salary costs in the asset management business where
there has been active recruitment of investment professionals. In addition to that, bonuses have been accrued for group management who are incentivised on group
performance and realised profits. The group remains focused on cost containment, but is cognisant that the underlying operating businesses are in a growth phase therefore
managing costs is critical such that this does not stifle growth.

Finance income has increased to R2.4 million in 2013 compared to R1.0 million in 2012 resulting from higher cash resources in the group. Finance costs have decreased from
R48.8 million in 2012 to R5.2 million in 2013. The benefit of the redemption of legacy debt issues during 2012 is reflected in the 2013 financial year.

Equity accounted earnings (net of taxation) shows a loss of R3.4 million compared to earnings of R17.2 million in 2012. This loss arises mainly from the Properties –
Developments and Investments segment, where the share of associates’ losses in certain development SPV’s in the current year have been accounted for. The majority of the
property developments in the group have been completed.

Discontinued operations relates to the disposal of VPAM’s business. The profit attributable to the discontinued operation during the year amounts to R1.6 million (2012: R2.4
million).

Intangible assets increased by R2.2 million with the acquisition of a further 11% in VPC (refer to note 6 for further detail). A decision to dispose of the group’s one remaining
investment property was made at the end of 2013 and as such, the asset has been reclassified as a non-current asset held for sale. The assets and liabilities relative to the
disposal of VPAM’s business have also been reclassified as non-current assets held for sale

Investments in and loans to associates have reduced significantly following the disposals of GHOP, IMI, Lexshell and Buttonwood. The group also received dividends from
associates amounting to R19.4 million (2012: R30 million) during the year. The net decrease in other investments during the year is attributable to the sale of Redefine
Properties Limited linked units following the maturity of the funding structure in early 2013, which resulted in the disposal of part of the investment in order to settle the
related liability.

The share based payment reserve increase is attributable to the current year IFRS 2 charge amounting to R4.4 million (2012: 3.4 million). Non-controlling interest decreased by
R19.0 million. Dividends declared to non-controlling interests amounted to R15.3 million during the year.
The year’s activities resulted in cash and cash equivalents increasing by R12.8 million (2012: R9.5 million). Cash flows from operating activities includes net finance costs paid of
R5.8 million (2012: R39.2 million), dividends paid to non-controlling interests of R15.3 million (2012: R nil) and income tax paid of R10.6 million (2012: R1.9 million). The related
cash inflows for these items are categorised in cash flows from investing and financing activities.

Asset management
With the group’s disposal of the associate investment in Integrated Managed Investments Proprietary Limited (“IMI”) in early 2013, the asset management segment is
underpinned by the group’s investment in Vunani Fund Managers (“VFM”). VFM has been successfully growing its underlying funds under management, with total funds at the
end of December amounting to R14.6 billion. The segment reflected a profit to December 2013 of R1.0 million despite increases in staff costs, which were incurred to strengthen
the professional team. The team remains focused and energised.

Advisory services
The advisory services segment reflects the challenging conditions that have been prevalent in the market during the 2013 year both in South Africa and Zimbabwe.

Zimbabwe
The loss in the segment was R4.7 million for the year ended 31 December 2013. Losses attributable to VCZ since inception have been consolidated into this segment in the current
financial year. For more information, please refer to note 5.

South Africa
The South African segment made a profit of R 0.6 million in the 2013 year despite the challenging conditions.

Investment holdings
The investment holdings segment reflects a profit for the year of R25.1 million, mainly due to positive fair value adjustments and significantly reduced interest cost. The resolution
of the legacy debt issues at the end of 2012 has left the group with a handful of unencumbered investments. While the group continues to look for investment opportunities, the
strategy is more focused on investing alongside well-capitalised strategic partners and the use of innovative funding mechanisms, to lower risk and exposure to the group balance
sheet.

The group’s investment initiatives in Zimbabwe continue to gain momentum; the principles highlighted above being the prevalent way of doing business. During the year, VC
made a 45% investment into a Zimbabwean asset management business which has been renamed Purpose Vunani Asset Management Private Limited (“Purpose Vunani”). Vunani
intends using the intellectual capital and product set in its domestic business to offer a strong value proposition to the retirement funding sector in Zimbabwe.

Securities broking
In the current year, the group increased its investment in Vunani Private Clients from 40% to 51%. As such, the securities broking segment has been split to show the institutional
and retail securities broking businesses separately.

Institutional securities broking
This segment includes the institutional equity, derivative and capital markets businesses. The segment’s results reflect a profit of R7.9 million despite the volatility within the
markets in the 2013 year. The group is confident that the cost base is stable and that this business is poised to make cash. The Vunani Capital Markets team won second place in
the Spire Awards in the categories Best Agency Broker- Cash Bonds and Best Bonds Agency House, despite only having joined Vunani in April 2013.

Private wealth and investments
The segment’s results reflect a loss of R0.6 million for the year. This is the first year that the results have been consolidated as in 2012, the company was accounted for as an
associate.
The segment’s focus is retail securities broking and providing private wealth and investment products to clients.

Property developments & investments
The property development team has completed all developments and there are no new developments in progress. The Houghton development was fully sold out, while the
Dainfern development has 33 units that have been retained in stock. These units have been retained in the development company and are fully let. A proposed sale of the
company’s investment in a piece of land at Blair Athol has also been accepted and will become effective during 2014 and hence has been disclosed as non-current assets and
liabilities held for sale. This is the last remaining piece of investment property following the disposal of the group’s interest in GHOP and Lexshell earlier in the year.

Property asset management
The agreement for the sale of the business of VPAM was concluded in November 2013 and all the conditions were met on 27 February 2014. The closing date of the
transaction was 28 February 2014. The activities of this segment have been classified as a discontinued operation.

Group
This segment represents the central operating platform that is provided by group executive, finance and support. Revenues generated by executives from external
directorships as well as initiatives that are driven by these individuals. Costs have been higher than usual as agreed mechanisms for incentivising executive directors have
kicked in. These are strongly biased towards the unlocking of value in underlying investments and the generation of cash for the group. In this regard management have done
a sterling job over the last year, with a few value unlocking transactions still in the pipeline.

Prospects
Vunani’s financial situation has improved significantly since the restructure, with the group reporting a second successive year of profit. The directors believe that with the
operating businesses largely profitable and a greater degree of clarity on the investment strategy the group is well-poised to develop a positive legacy.

The fund management business has grown in leaps and bounds with the business earning performance fees for the first time. More importantly the average fee margin has
increased by 43% over the last 3 years, which, coupled with the growth in assets under management, means the group is poised to be a strong cash flow generator for the
group. Management is targeting further growth in margin and assets under management. The cost base is stable and staff incentives are in place to motivate staff and
management.

Management is pleased with the manner in which the stockbroking business performed in a market that has been subject to a lot of ebbs and flows. The business has found
stability in its market niche and will grow at a controlled pace into the future. The real effort will be in strengthening the retail stockbroking business, where margins tend to be
higher.

The advisory business is now the subject of attention and some significant restructuring of the business will take place. A number of restructuring options are being considered
and management is confident that these will be completed by the 2nd quarter of the year. Furthermore, a co-operation agreement has been concluded with a Nigerian based
investment bank, which management envisages will unlock cross-border opportunities between two of the largest economies on the continent.

Management is looking to re-position its property business; the immediate opportunity being to focus on the unlisted property sector. Various property initiatives are being
considered with some strong capital and property development partners. These span both South Africa and the African continent. They will be low risk initiatives with a focus
on ensuring that there is a clear line of sight to cash flow generation. For the foreseeable future, the group’s investment strategy will revolve around co-investment with strong
South African industrial companies in domestic and pan-African initiatives. The Board and management are aware that the performance of the business will depend on market
conditions being conducive and do not envisage engaging a high risk investment approach in pursuit of returns.

SUBSEQUENT EVENTS
VPAM is a wholly owned subsidiary of Vunani Properties Proprietary Limited (“Vunani Properties”), which is 78% held by Vunani Limited. VPAM’s sole business activity is the
provision of property asset management services to VPIF. On 9 November 2013, an agreement was entered into to sell VPAM’s business to Texton Property Investments
Proprietary Limited (“Texton”). All the suspensive conditions were fulfilled on Friday the 28th February 2014. The transaction includes the transfer of the asset management
agreement and the transfer of employment contracts to Texton.

The proceeds for the disposal of the business amount to a total of R117 million. Net of taxation, it is estimated that R82.5 million is attributable to the group and R12.7 million
attributable to non-controlling interests. R102 million of the proceeds was received on 28 February 2014 and the settlement of the balance of R15 million has been deferred to
28 February 2015 in accordance with the agreement. A special dividend of 25 cents per share will be declared as a result of the sale.

GOING CONCERN

The directors have made an assessment of the ability of the company and its subsidiaries to continue as going concerns and have no reason to believe the businesses will not
continue as going concerns for the foreseeable future.

REVIEW OPINION

The preliminary condensed consolidated results of Vunani Limited for the year ended 31 December 2013 have been reviewed by the company’s auditor, KPMG Inc. In their
review report dated 24 March 2014, which is available for inspection at the Company’s Registered Office, KPMG Inc. state that their review was conducted in accordance with
the International Standard on Review Engagements 2410, Review of Interim Information Performed by the Independent Auditor of the Entity, which applies to a review of
condensed consolidated preliminary financial information, and have expressed an unmodified conclusion on the condensed consolidated preliminary results.

DIVIDENDS

Notice is hereby given that a gross ordinary dividend of 5 cents per share (2012: nil) and a gross special dividend of 25 cents per share (2012: nil) have been declared out of
income reserves on 24 March 2014 and are payable to ordinary shareholders in accordance with the following timetable.

In terms of dividend tax effective since 1 April 2012, the following additional information is disclosed:
• The local dividend tax rate is 15%;
• No STC credits will be utilised for the ordinary dividend;
• 105 414 649 shares are in issue;
• The net ordinary dividend is 4.25 cents per share and the net special dividend is 21.25 cents for ordinary shareholders who are not exempt from dividends tax; and
• Vunani Limited’s tax reference number is 9841003032.

Timetable
Declaration date                                     Monday, 24 March 2014
Last day to trade cum dividend                       Thursday, 10 April 2014
Shares commence trading ex dividend                  Friday, 11 April 2014
Record date                                          Thursday, 17 April 2014
Dividend payment date                                Tuesday, 22 April 2014

No dematerialisation or rematerialisation of shares will be allowed for the period from Thursday 11 April 2014 to Thursday 17 April 2014, both dates inclusive.

Dividends are declared in the currency of the Republic of South Africa. The special dividend is conditional on Vunani receiving approval for the declaration and payment of the
special dividend by the South African Reserve Bank five days prior to the Last date to trade. The directors have confirmed that the company will satisfy the liquidity and solvency
requirements immediately after the payment of the dividend.

CORPORATE INFORMATION

Executive directors                                             Independent non-executive directors
EG Dube (Chief Executive Officer)                               WC Ross (Chairman)
BM Khoza (Managing Director)                                    Dr XP Guma
A Judin (Chief Financial Officer)                               NS Mazwi
CE Chimombe-Munyoro (resigned 1 March 2014)                     G Nzalo
NM Anderson                                                     JR Macey

Company secretary                                               A Judin

Designated Adviser                                              Grindrod Bank Limited

Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg
2001




EG Dube                               A Judin
Chief Executive Officer               Chief Financial Officer
24 March 2014                         24 March 2014

On behalf of the board of directors

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