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Ukhamba Holdings ANNUAL REPORT 2015

Contents 1 About this report

2 About Ukhamba Holdings

7 How Ukhamba creates value 10 Increasing shareholder value

12 Creating social value

15 Ukhamba’s strategy

16 Ukhamba’s investments

20 The Ukhamba board

22 Chairman’s statement

26 Frequently asked questions from Ukhamba’s shareholders

29 Summarised consolidated annual financial statements

46 Statement of financial position per class of shares

47 Notice of annual general meeting

51 Form of proxy

Feedback on the report is welcome and can be directed to the company secretary, Jeannet Johnson, at [email protected].

Ukhamba Holdings | Annual Report 2015

1

About this reportThe 2015 Ukhamba Holdings Annual Report covers the period 1 July 2014 to 30 June 2015. The intended readers of this report are the shareholders of Ukhamba Holdings (Ukhamba), therefore this report emphasises the value that has been created for this stakeholder group. It provides pertinent related performance indicators which can be found in the How Ukhamba creates value section starting on page 7. Further detail on the value created for shareholders and communities through the work of the Imperial and Ukhamba Community Development Trust can be found on pages 12 to 14. The content of this report is informed by engagements between Ukhamba, its investee companies and its shareholders.

The chairman’s statement, starting on page 22, sets out Ukhamba’s share trading performance and discusses the impact on Ukhamba of the Financial Markets Act’s regulations relating to companies trading their shares on the over-the-counter (OTC) trading platform. The financial performance of Ukhamba’s investments for the 2015 financial year can be found on page 16.

The consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and the requirements of the Companies Act of South Africa. Ukhamba’s independent external auditor, SizweNtsalubaGobodo Inc, has confirmed that the summarised consolidated annual financial statements are derived from the consolidated annual financial statements and their unmodified report can be found on page 32. The consolidated and separate annual financial statements can be found at www.ukhamba.co.za.

The Ukhamba board of directors take responsibility for the Annual Report which was approved on 16 October 2015.

2

Established to generate wealth for Imperial’s historically disadvantaged employees, Ukhamba owns an effective 10.1% of Imperial’s share capital.Ukhamba is an investment holding company created in 1998 by Imperial Holdings Limited (Imperial), a JSE-listed company. A total of R15 million was provided by Imperial as seed capital to establish Ukhamba in a partnership between Imperial’s shareholders and its historically disadvantaged employees. Ukhamba gives effect to Imperial’s long-term broad-based black economic empowerment (BEE) strategy and is aimed at generating and realising value for historically disadvantaged individuals over time.

In 2004, the partnership was strengthened through the issue of 22 755 389 deferred Imperial ordinary shares to Ukhamba: an effective 10.1% of Imperial’s share capital. The shares were issued at a par value of 4 cents, costing Imperial shareholders approximately R1,5 billion. In turn, Ukhamba Trust ‘B’ units were created and distributed at no cost to 15 575 historically disadvantaged Imperial employees. These units allowed employees to share in the dividend or other cash payouts from Ukhamba’s investments, including its investment in Imperial.

Ukhamba is owned by the Ukhamba Trust, the Imperial and Ukhamba Community Development Trust and Imperial, as depicted in the diagram below.

At June 2015, Ukhamba held investments in four other businesses, in addition to Imperial. The financial performance of each investment company is discussed on page 16.

About Ukhamba Holdings

Shareholding structure

Ukhamba Trust

47,1%

Imperial and Ukhamba

Community Development Trust

,

6,0%

Imperial

46,9%

U K H A M B A’ S S H A R E H O L D E R S


3

Ukhamba Holdings

Imperial Holdings Limited

Shareholding structure

89,9%

10,1%

Imperial

U K H A M B A’ S S H A R E H O L D I N G I N I T S I N V E S T M E N T C O M PA N I E S

About ImperialImperial is a JSE-listed, South Africa-based international group of companies active in the areas of mobility of consumer and industrial logistics, vehicle import, distribution, retail, rental and aftermarket parts and vehicle-related financial services. Imperial’s 51 000 people serve clients from more than 1 200 locations in 31 countries on five continents, extending the leading positions of the group’s five divisions in carefully chosen segments and specific niches of the logistics and vehicles value chains.

Other investments

U N L I S T E D

49,95%

Probe Corporation SA

50%

Life Green Group

Investment Holdings

20%

Giuricich Brothers Construction

J S E - L I S T E D

32,3%

Distribution and Warehousing Network Limited

(DAWN)

Investments

4

Responding to beneficiary needs

The Ukhamba scheme was created in 2004 to provide long-term benefit for its shareholders. In 2011, after having participated in the BEE structure for seven years, Ukhamba beneficiaries expressed their desire for greater liquidity of their investment. This required a more flexible approach to enable beneficiaries to access value.In response to beneficiaries’ needs, the Ukhamba board resolved to pay out R850 million in dividends.

The dividend was debt funded by means of a collar loan entered into with Investec Bank to hedge the 9 538 147 Imperial ordinary shares that had already converted. R900 million was raised, which was used for the dividend payment and to settle debt. This structure assisted in preserving the value of the shares.

In 2013, Ukhamba was restructured to further increase liquidity and enable beneficiaries to sell and thus realise value from the units they held. The restructure was undertaken within the parameters set by Imperial’s shareholders and in consultation with Ukhamba beneficiaries.

About Ukhamba Holdings continued

5


The restructure of Ukhamba achieved the following:

More certainty A fixed 12-year period was set over which deferred ordinary shares would convert in 12 equal tranches of 831 469 shares to June 2025. This provides beneficiaries with more certainty, and removed the link between the rate of conversion and Imperial’s financial performance.

The ability to trade shares Ukhamba’s shares were split into A, B and C class shares, with the A class shares listed on the OTC trading platform. Trading commenced on 15 November 2013, enabling beneficiaries to sell their investment in return for cash.

Preservation of Imperial’s BEE ownership structure Ukhamba shares can only be bought and owned by historically disadvantaged individuals or 100% black-owned companies. In addition, agreement was reached with Ukhamba that it would not transfer ownership of its share in Imperial for the duration of the 12-year conversion period.

At the time of the restructure, most of Ukhamba’s investment in Imperial was through deferred ordinary shares and could therefore not be traded or disposed of. In addition, the rate at which these deferred ordinary shares converted into tradeable ordinary shares was dependent on Imperial’s financial performance, meaning that it could take between 16 and 30 years before beneficiaries could fully realise value from their shares. The intention of the restructure was to better address the needs expressed by Ukhamba beneficiaries.

6

Ukhamba’s share capital structure

About Ukhamba Holdings continued

Ukhamba’s investment in Imperial(ordinary and deferred ordinary shares)

Other investments

A sharesTraded OTC

B sharesNot traded OTC

C sharesNot traded OTC

The A class shares represent BEE shareholders’ rights to Ukhamba’s net investment in Imperial.

The B class shares represent Imperial’s right to Ukhamba’s net investment in Imperial.

C class shares represent shareholder rights to Ukhamba’s other investments where the Ukhamba Trust holds 47,1%, the Imperial and Ukhamba Community Development Trust holds 6,0% and Imperial holds 46,9%.

Represents

53,1%shareholding

Represents

46,9%shareholding

A class shareholder breakdown

• 8 292 individuals*, including Imperial employees, of which 7 874 are original beneficiaries and 418 are new shareholders.

• Eight 100% black-owned companies.

• Four black-owned trusts.

• One black-owned unincorporated entity.

* Historically disadvantaged individuals.

B class shares

Of the total capital used to fund the Imperial BEE deal in 2004, 46,9% will accrue back to Imperial shareholders over time.

To date, 57% of Ukhamba’s 15 575 original beneficiaries have registered on the OTC trading platform, with 7 407 beneficiaries having elected to sell all their Ukhamba shares.

7


How Ukhamba creates valueShare conversion: A class shares

Dividend payments

Ukhamba’s investment in Imperial includes 8 314 690 deferred ordinary shares which will convert to ordinary shares in 12 equal tranches to 2025. As more deferred ordinary shares convert to Imperial ordinary shares and more dividends are earned, the value of these shares will increase. To date, 40% of the deferred ordinary shares have converted.

The net asset value of the A class shares dropped 4% year-on-year to 30 June 2015 as a result of the decrease in the Imperial share price from R200,00 at 30 June 2014 to R185,50 at 30 June 2015.

A summary of Imperial’s performance can be found on page 16.

Ukhamba’s dividend yield increases as more deferred shares convert. Five dividend payouts have been made since 2012: R850 million before the OTC listing and R35,8 million after the listing.

The net asset value of a share is defined as the worth of the share less any liabilities.

R39,93Net asset value of an

A class Ukhamba share at 30 June 2015

(30 June 2014: R41,53)

R885,8 million

Total value of dividends distributed to shareholders

to date

The statement of financial position per class of share can be found on page 46.

8How Ukhamba creates value continued

Share trading1

The price of Ukhamba’s OTC-listed A class shares tracks the listed Imperial share price on the JSE. Given that the A class shares include an investment in Imperial deferred ordinary shares that convert over a period of time, they trade at a discount to the Imperial shares on the JSE. The OTC trading platform provides current shareholders with the option to sell their shares and realise cash when required.

At 30 June 2015, a total of 9 644 156 A class shares had been traded since the listing in November 2013.

1 Trading of A class shares has been suspended following the Financial Services Board’s notice regarding the facilitation by companies in trading their shares in the OTC market. This is explained on page 25 of the Chairman’s statement.

C class sharesAt the time of the Ukhamba restructure, shareholders received C class shares which are linked to Ukhamba’s investments in DAWN and three other companies.

The Ukhamba Trust received 471 C class shares, with beneficiaries owning on average three units each. At 30 June 2015 the value of a unit was approximately R5 035, around R15 105 per beneficiary.

The decrease in the net asset value of the C class shares is mainly due to the decrease in DAWN’s share price from R10,89 at 30 June 2014 to R5,50 at 30 June 2015.

The C class shares are not traded on the OTC trading platform.

R209,6 million

Total value of shares to date since the listing

in November 2013

R459 708Net asset value per

C class share(June 2014: R592 492)

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Sale of investments

Net asset value

Imperial and Ukhamba Community Development Trust

The proceeds received from the sale of a number of Ukhamba investments and part of the ring-fenced loan taken out in 2012, have been used to settle Ukhamba’s debt incurred before 2011. Going forward, the investments in DAWN, Probe Corporation SA, Life Green Group Investment Holdings and Giuricich Brothers Construction will be sold. Beneficiaries who received A and C class shares in 2013, will receive additional value in the form of C class dividends as these investments are sold, even if they have sold their A class shares.

Ukhamba has remained sustainable, is well-capitalised and has created value for shareholders despite an environment in which a number of BEE schemes have not succeeded.

The Imperial and Ukhamba Community Development Trust provides support to selected schools. More information on this can be found on pages 12 to 14.


16School libraries

established reaching approximately 20 000 learners

R2 billionUkhamba’s net

asset valueat 30 June 2015

The only debt that Ukhamba holds

is the ring-fenced loan which does not have

recourse to the shares that convert from June 2014


Increasing shareholder value

Tough economic conditions brought about by the global financial crisis results in a strategic decision to move away from building an investment portfolio towards creating an equity portfolio and raising liquidity through the sale of some of Ukhamba’s investments.

Cash earned from disinvestments used to service Ukhamba’s debt.

2011 and 20122004 to 20102004Imperial BEE deal

Sale of investments, cash realised and debt settled

Dividend and ring-fenced loan

Ring-fenced loan used to pay dividend to beneficiaries and to settle previous debt.

9 538 147 deferred Imperial ordinary shares converted to tradeable ordinary shares.

All converted shares used as security on a loan. Loan ring-fenced (hedged) to ensure no impact on future ordinary shares. Dividends on hedged ordinary shares used to repay the loan.

Value created

R850 million in dividends paid to beneficiaries holding ‘B’ units. Each unit received a dividend of R8 616. Holding an average of three ‘B’ units, employees received an average payment of approximately R25 848

22 755 389 unlisted deferred Imperial ordinary shares issued to Ukhamba.

Ukhamba Trust ‘B’ units distributed at no cost to

15 575 historically disadvantaged Imperial employees.

Based on length of service, employees received on average

three ‘B’ units each.

On the date of allocation these units held

zero value.


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Ukhamba holds

12 561 622 ordinary shares and 8 314 690 deferred ordinary shares in Imperial.

Value created

• 402 A class shares distributed for every ‘B’ unit held by a beneficiary

• At 15 November 2013, the closing price of an A class share was R25,00. Each beneficiary received an average of 1 206 A class shares worth

R30 150• A class shares are listed on

the OTC platform and start trading in November

Value created

• Two dividend payments distributed to shareholders, totalling

R21,1 million• Net asset value of an

A class Ukhamba

share is R39,93 • The Ukhamba A class

share holds an average

trade price of R21,44• Ukhamba holds a

net asset value of

R1 958 million• The value of a C class

share unit is approximately R5 035, around

R15 105 per beneficiary

Value created

Two dividend payments distributed to shareholders, totalling

R14,7 million

Ukhamba share capital restructured into three share classes.

The number of convertible shares recalculated to ensure that the effective percentage shareholding in Imperial remained at 10,1%. The total number of shares held reduced to 20 876 312 due to the reduction in the number of Imperial Holdings’ issued shares.

2013 2014 2015Ukhamba restructure and

OTC tradingDividend payments At 30 June

Value created = value to Ukhamba shareholders


Creating social value

The Imperial and Ukhamba Community Development Trust (the Trust), established in 2003, undertakes education projects such as the setting up of school libraries and interventions that improve literacy outcomes at Gauteng schools. This commitment aligns to national and provincial education goals in South Africa, the vision set out in the government’s National Development Programme and the philosophies of lobby groups such as Equal Education, which advocate libraries in

schools. The Trust derives its income from two sources: donations from the Imperial Group, and from its 6% shareholding in Ukhamba.

The Trust focuses on historically disadvantaged communities to the south of Johannesburg. In 2005, the Trust’s strategy shifted to focus more directly on the school learners themselves, directly leveraging their hunger for knowledge. With the support of the department of education in the area, 16 fully resourced school libraries have

R19,2 millionreceived by the Imperial

and Ukhamba Community Development Trust in 2015: R17,6 million in donations and

R1,6 million in dividends.

R11,5 millionof Imperial’s corporate social

investment spend was invested in the Imperial and Ukhamba

Community Development Trust.

2017 objectives

26school libraries

reaching

35 000

previously disadvantaged

learners and employing

90trained librarians

from the local community.


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been established in the past ten years, with a further two scheduled for completion by the end of 2015. The Trust plans to deliver a further ten libraries over the next two years.

The Trust converts unutilised classrooms into fully resourced libraries, stocked with a start-up collection of between 5 000 to 6 000 books as well as resources and reference materials for studying, research and lesson planning and preparation. Unemployed youth, sourced from the community, are upskilled and employed as librarians that support learners in literacy

and numeracy using programmes designed in-house.

Positive outcomes of the project include improved literacy, engagement and social skills among learners. The project also supports the outreach efforts of schools to improve their teacher and learning impact. The use of the libraries for homework and research has had a positive impact on learning outcomes and continuous improvement has been demonstrated in the participating schools’ annual national assessment results.

Pages 13 and 14: the opening of the school library at Pitseng Primary in July 2015. This is the 14th library to be handed over in the partnership between Imperial Holdings and the Imperial and Ukhamba Community Development Trust.


Literacy outcomes are further improved through complementary reading programmes. These include book, dictionary and general knowledge quizzes and spelling programmes and the recently introduced enrichment packs for reading, language acquisition and mathematics.

The graded and guided reading programme remains at the centre of the Trust’s engagement with schools. Participating schools schedule an hour of structured reading per week for every learner in grades one to seven. Younger children participate in a vocabulary development programme and are later introduced to core, high-frequency words. Older, more mature readers are taught in smaller groups to improve their proficiency in English as a second language.

The libraries are open from early morning, Monday through to Saturday, and during school holidays. In addition to being places to read and do homework, the libraries have become safe havens for children where they can spend time playing board games and watching age-appropriate DVDs and documentaries.

The Imperial and Ukhamba Community Development Trust is recognised by the provincial education department as a critical partner in its educational objectives. The Trust also encourages the involvement of Imperial’s employees in the communities they serve through staff volunteer days, during which they can interact with learners and educators.


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Sale of investments

Sale of investments

Ukhamba’s strategy

Distribution of Imperial shares to A class shareholders

Distribution of Imperial shares to A class shareholders

Dividend payments to A class shares

Dividend payments to A class shares

Deferred ordinary shares will continue to convert in tranches of 831 469 shares a year.

Dividends earned on the Imperial investment will continue to be distributed.

2015

Unpledged Imperial ordinary shares (gross, subject to taxes payable) will be distributed to shareholders.

Hedged ordinary shares will settle the ring-fenced loan (taken out in 2012) in full.

If Imperial’s share price is in excess of the loan collar price cap, the difference between the cap price and the floor price will be distributed to shareholders.

Future dividends will be earned on Imperial shares distributed.

All shareholders at the time of the 2013 restructure who received C class shares will be entitled to C class dividends.

2025

Ukhamba has a defined strategy to create value for its shareholders to 2025.

Strategies are in place to divest from investments other than the investment in Imperial. As investments are sold, shareholders will receive C class dividends.

Once all the rights to the Ukhamba shares have been transferred, the trust will be dissolved.

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Ukhamba’s investmentsListed investmentsIMPERIAL

A total of 831 469 deferred ordinary shares convert in 12 equal tranches from June 2014 to June 2025. To date, Ukhamba holds 12 561 622 ordinary shares in Imperial, with 8 314 690 deferred shares still to convert over the next ten years.

Imperial produced a satisfactory result in challenging trading environments in all its key markets. All divisions showed good revenue and operating growth, except the Logistics International division which was marginally up on last year and the Vehicle Import, Distribution and Dealerships division, which declined.

The group achieved record revenue growth of 7% mainly due to the acquisitions of Pharmed, Imres and S&B Commercials during the year. Operating profit grew 1% and operating margins reduced from 6,0% to 5,6% mainly due to a decrease in profits and margins in the Vehicle Import, Distribution and Dealerships division, as a weaker rand impacted the division’s competitiveness and profitability.

These results reflect the progress made on Imperial’s previously reported intent to decouple the group’s performance from the impact of a weakening rand on directly imported vehicles. Progress towards this objective has been achieved by developing less correlated activities within the vehicles value chain, and by increasing non-vehicle and foreign revenues and operating profits.

Non-vehicle revenue increased 8% to R48,9 billion (43% of group revenue) and operating profit increased 14% to R3,7 billion (59% of group operating profit). Foreign revenue increased 17% to R41,1 billion (37% of group revenue) and foreign operating profit increased 23% to R2 billion (32% of group operating profit). Rest of Africa revenue increased 50% to R11,2 billion (10% of group revenue) and operating profit increased 60% to R835 million (13% of group operating profit).

For more information refer to www.imperial.co.za.


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Imperial highlights

1 624 centsHeadline earnings per share (HEPS) remained stable at

per share

1 754 centsCore earnings per share (EPS) down 3% to

per share

12%

Return on invested capital of

17%

Return on equity of

Revenue up 7% to

R110,5 billion

Free cash flow increased from R2,1 billion to

R4,5 billion

R6,2 billion

Operating profit up 1% to

795 centsFull year dividend ofper share

(2014: 820 cents per share)

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Effective 14 November 2014, Grohe Luxemburg Four AG (Grohe), Europe’s largest and the world’s leading single-brand manufacturer and supplier of sanitary fittings, acquired 51% of DAWN’s Watertech Companies. Now known as Grohe DAWN Watertech (GDW), this partnership will grow the group’s core distribution competency, enhance volume throughput and increase efficiencies. DAWN has changed its year end to 31 March, to match that of GDW, therefore the results reported have been prepared for the nine-month period 1 July 2014 to 31 March 2015 and are not comparable to those for the year ended 30 June 2014. At 30 June 2015, Ukhamba owned 78 133 488 DAWN shares.

DAWN

DAWN manufactures and distributes quality branded hardware, sanitary ware, plumbing, kitchen, engineering and civil products through a national, strategically positioned branch network in South Africa, as well as in selected countries in the rest of Africa and Mauritius.

Highlights from DAWN’s financial results for the nine-month period 1 July 2014 to 31 March 2015:

A drop in revenue by 18% to R3,6 billion.

A 472% increase in operating profit to R460 million.

Earnings per share increasing 547% to 204,7 cents per share.

Headline earnings per share declining 151% to a loss of 25,5 cents per share.

An increase of 31% in net asset value to 845,4 cents per share.

For more information, refer to www.dawnltd.co.za.

Ukhamba’s investments continued

Unlisted investmentsPROBE CORPORATION SAProbe Corporation SA (Probe) serves the heavy duty trucking, commuter, mining and construction equipment industries. Its services include the sale and distribution of alternators, starters and associated spares, as well as complementary products such as safety lighting, cooling fans and batteries. Probe also has fully equipped workshop facilities for comprehensive electrical repairs and installation.


19

PROBE CORPORATION SA continued

The Probe Group performed reasonably well during 2015. All branches of Probe Batteries were operationally profitable and sales trends look positive going forward. The devaluation of the Rand and the implementation of increased duties from 5% to 15% on imported batteries has created cash flow challenges. In response, Probe plans to import batteries from a supplier in Europe which is duty free into South Africa. The devaluation of the Brazilian Real has enabled Probe to reduce its battery prices in Brazil and strengthen its position in the market. The mining division is well positioned to take advantage of the opportunities presented by the requirement from the Department of Mineral Resources that mines implement collision avoidance equipment. However, the depressed mining segment in South Africa could create risk in terms of decreased installation and electrical contracting business volumes. The consolidation of the mining entities into one structure under Probe IMT has resulted in operational efficiencies and further consolidation of operations is planned for 2015/2016.

LIFE GREEN GROUP INVESTMENT HOLDINGSLife Green Group Investment Holdings (Life Green Group) focuses on the development of golf courses and sports grounds, contracting services to landscapers and developers, installation of irrigation systems, landscaping and garden maintenance, as well as plant brokerage.

The Life Green Group achieved one of the most profitable years in the group’s 10-year history. This performance is attributed to the successful completion of the Bay West Mall shopping centre in Port Elizabeth, improved performances in the maintenance divisions, continued reduction of overheads and the management of contracts at acceptable margins. During 2015, Life Green Group sold its subsidiary, Tshala Plant Brokers, enabling the group to focus solely on its landscaping, sports field construction and interior plantscaping businesses. The group’s investment in various farming properties through UGS Investment Holdings has remained static throughout the year.

GIURICICH BROTHERS CONSTRUCTIONGiuricich Brothers Construction (Giuricich Bros), was founded in 1940 in Johannesburg and is run by the Giuricich family. The firm has developed over its 75-year history into a multi-disciplinary BEE-compliant (Level 3) company that specialises in building construction, project management and property development.

Giuricich Bros’ strategy is to cement its position as a premium quality builder in the contracting market. The company is currently involved in the extension and upgrade of the Vaal Mall shopping centre in Vanderbiljpark and the construction of the new 50 000m2 Blue Crane Eco Mall shopping centre in Springs. Together, both projects will provide over R800 million of revenue over the next two years.

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The Ukhamba board

Veli Mokoena

BA – UJ, Post Graduate Diploma in Management PDM – WBS, Executive Development Program - Graduate school management & urban policy (New York)

Veli was appointed a trustee and the chairperson of Ukhamba Trust in 2000 and is also a trustee of the Imperial and Ukhamba Community Development Trust since 2004. He became the chief executive officer (CEO) of Ukhamba Holdings in 2003, a position he held until 2010 when he left to start his own investment company, Ninathi Investment Holdings (Pty) Ltd (Ninathi). Veli held various roles in fleet management and finance in Eskom, RTG and Stannic.

Veli is a non-executive director of two listed companies, Eqstra Holdings and DAWN. He also serves on the following unlisted companies: Giuricich Brothers Construction and various companies where Ninathi Investment Holdings own shares.

He was appointed to the Ukhamba board in May 2012.


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Fundiswa Roji

BCom Acc (Hons), BCompt, Postgraduate Diploma in Financial Planning, CA (SA)

Fundiswa is the CEO of Dlondlobala Capital (Pty) Ltd, an investment holding company. She was previously a senior manager responsible for investor relations at Imperial. Prior to joining the Imperial Group, she worked at Kagiso Tiso Holdings as a director of investments. She is a non-executive director of the following entities: Probe Corporation SA, Mix Telematics Enterprise SA and the Soul City Health Institute. She is a trustee of the following trusts; Ikwezi Trust and the Imperial and Ukhamba Community Development Trust.

She was appointed to the Ukhamba board in April 2013.

Mohammed Akoojee

BCom Acc (Hons), CA (SA), CFA

Mohammed is the CEO of the rest of Africa Logistics division of Imperial. He was previously the executive director responsible for mergers, acquisitions, strategy and investor relations at Imperial. He joined the group in 2009, having previously worked within the corporate finance and investment banking team at Investec. Prior to joining Investec, Mohammed worked for Nedbank Securities as an investment analyst. He is also a director of DAWN, and various subsidiary and divisional boards of Imperial.

He was appointed to the Ukhamba board in April 2013.

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One and a half years on from the restructure of the Ukhamba scheme and the listing of the A class shares on the OTC platform, 9,6 million shares have been traded realising approximately R210 million in cash payouts for Ukhamba’s beneficiaries. The restructure has provided beneficiaries with an investment choice, enabling them to realise value in the short term or retain their investment in Imperial and potentially gain greater returns in the future. It gives me great pleasure to be able to report back to shareholders on the value created through this partnership between Imperial’s shareholders and its black employees.

Chairman’s statement


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The need for changeThe shareholding in Imperial is Ukhamba’s biggest asset. It is made up of ordinary shares and deferred shares, where the deferred shares are not listed on the stock exchange and therefore cannot be traded. Over time the deferred shares become tradable ordinary shares listed on the JSE. Prior to the Ukhamba restructure in 2013, the rate at which the deferred shares converted to ordinary shares depended on Imperial’s financial performance. The better Imperial performed, the quicker the shares converted. This meant that in tough economic conditions, the rate of conversion was slow and uncertain. In addition, because beneficiaries had to wait for deferred shares to become ordinary shares, they received irregular dividend payouts.

In 2011, it became apparent that beneficiaries wanted to access the value they held. In response, we developed a plan to restructure the scheme and after acquiring agreement from beneficiaries and Imperial shareholders, the Ukhamba shares were split into A, B and C class shares, with the A class shares listed on the OTC trading platform in November 2013. This allowed beneficiaries to sell their units and enabled other black individuals and 100% black-owned companies to buy shares in Ukhamba.

In addition, the time period required for deferred shares to convert to ordinary shares was shortened and fixed to 12 years, thereby delinking the rate of conversion from Imperial’s financial performance. This introduced a level of certainty and set an end date to the conversion profile. To preserve Imperial’s BEE ownership, Ukhamba agreed not to sell the converted Imperial shares for the duration of the 12 years to 2025.

Creating wealthIn 2012, we made our first major payout to beneficiaries through a special dividend of R850 million. Each beneficiary received on average a payment of approximately R26 000.

To finance this payout, a loan was raised using the 9 538 147 Imperial ordinary shares that had already converted as security. The loan will be settled with these shares at the end of the 12-year period with the associated dividends used to service the loan in the interim. In addition to the dividend payout, the loan was used to settle Ukhamba’s previous debt.

The scheme is set to unlock future value for shareholders as more deferred ordinary shares convert to ordinary shares. The dividends received by Ukhamba on the Imperial shares that convert from 30 June 2014 are distributed to Ukhamba shareholders as dividends net of costs. To date, R35,8 million has been paid out on these shares. The loan is ring-fenced to ensure that there is no impact on the shares that convert from 30 June 2014. In 2025, these shares will be distributed to the existing shareholders, net of debt and tax.

9,6 million shares have been traded

realising approximately

R210 million in cash payouts for

Ukhamba’s beneficiaries

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At June 2015, the net asset value of A class Ukhamba shares was R39,93 (2014: R41,53) and the average trade price was R21,44 (2014: R21,18). The Ukhamba share tracks Imperial’s ordinary share price on the JSE, which at June 2015 had decreased to R185,50 (June 2014: R200,00). This accounts for the 4% drop in the net asset value of the A class shares.

At June 2015, the net asset value of the C class shares was R459 708 (2014: R592 492). The value of a C class share unit is approximately R5 035. With beneficiaries having received on average three units each, this equates to R15 105 per beneficiary.

Ukhamba received dividend payments of R90,3 million (2014: R92,9 million) and R12,8 million (2014: R12,8 million) from Imperial and DAWN respectively. In April 2015, an interim dividend of 20,44 cents per OTC listed share was paid to shareholders.

A final dividend of 35,85 cents per share was approved and paid on 30 September, bringing the total dividend for 2015 to 56,29 cents per OTC listed share.

Outstanding amounts due to beneficiariesTracing beneficiaries is an ongoing challenge for Ukhamba, as some beneficiaries or their families have not provided the scheme with updated contact information. This means that the scheme currently holds a significant outstanding balance of cash which it is unable to pay out to beneficiaries. To date, outstanding payments total around R39.9 million to 2 092 beneficiaries who are

unaccounted for. Some 3% of this amount is due to unitholders who bought into the original scheme prior to 2003 and to whom Ukhamba owes the buyback value of their units. The balance of the outstanding amount are dividends accrued to beneficiaries holding ‘B’ units prior to the Ukhamba restructure in 2013. We make every effort to trace unitholders and their families given the urgency of distributing this wealth.

The table below discloses the number of original ‘B’ unit beneficiaries that received A class shares at the time of the restructure. To date, a total of 6 749 shareholders have not registered on the OTC trading platform and may either be unaware of their right to sell their shares or are unaccounted for. Finding A class shareholders and encouraging them to register on the platform is critical, not only to empower them to access wealth, but also to ensure that they receive the A class dividend payments that accrue to them.

Breakdown of original shareholders

Number of shareholders registered on the OTC trading platform 8 826

● Shareholders that have registered and still hold some shares 1 419

● Shareholders that have registered and sold all their shares 7 407

Number of shareholders that have not registered 6 749

Total number of original shareholders 15 575

Chairman’s statement continued


25

Suspension of OTC trading In July 2014, the Financial Services Board (FSB) issued a notice regarding the facilitation by companies of trading in their shares on the OTC market. The FSB advised that companies facilitating the trading of their own shares through the OTC trading platform, without being licensed as an ‘exchange’ as defined in the Financial Markets Act, 2012 (Act), are in contravention of the Act. Subsequently, the Registrar of the FSB has urged all entities to comply with the provisions of the directive and guideline, either by (i) ceasing the unlicensed exchange activities, or (ii) obtaining the requisite license to operate an exchange or (iii) obtaining the appropriate exemption.

Ukhamba has applied for the appropriate exemption and is seeking a solution to comply with the FSB requirements, to achieve a satisfactory outcome in the interest of our shareholders. At the time of publication, the trading of Ukhamba A class shares had been suspended on the current trading platform, pending the decision by the FSB to extend the exemption.

We will continue to engage with our trading service provider and the FSB to find a solution that meets their requirements and our objectives.

Ukhamba’s strategyThe Ukhamba scheme has demonstrated agility in the face of difficult economic conditions and in response to the needs of its beneficiaries. In an environment where a number of BEE schemes have not succeeded, Ukhamba has remained sustainable and has created significant value for shareholders and social value through the work of the Imperial and Ukhamba Community Development Trust.

Some level of uncertainty still exists in relation to the Ukhamba C class share. We are looking to sell our investments related to this class of share, provided that we are able to achieve good market value for these assets. As these investments are sold, additional value will be realised for our shareholders in the form of C class dividends.

Appreciation I would like to thank my fellow board members for their support during the year. The Ukhamba board remains strong and independent, and will continue to make the necessary decisions to ensure the sustainability of the scheme.

Veli Mokoena

26

Why are Ukhamba shares worth less than Imperial shares?Ukhamba’s investment in Imperial is made up of deferred shares and ordinary shares. The deferred shares result in Ukhamba shares trading at a discount to the value of Ukhamba’s Imperial shares on the JSE for two reasons. Firstly, the deferred shares cannot be traded until they convert and secondly, they do not earn dividends. Over time, as the deferred shares become ordinary shares and dividends are paid, this discount will reduce, and the value held by investors will increase.

How is share price determined?The value of the Ukhamba share depends on how well Imperial’s share price performs. Share price is determined by the market, meaning that the price of the share is decided by matching how much a seller is willing to receive to how much a buyer is willing to pay for the shares. The limited liquidity of the OTC market, together with trade restrictions, means that the A class shares trade at a discount to the net asset value. To obtain a valuation of the A class shares, shareholders can visit www.ukhambashares.co.za.

What must I do if I want to realise the most value from my investment?When considering whether or not to sell their shares, shareholders should consider their short-term needs against what they may require in the longer term. Shareholders can either sell their shares, earning an immediate cash payout or they can wait for the full conversion period to run its course, where all deferred shares have converted to ordinary shares, and potentially hold a share of higher value. In addition, for as long as they keep their shares shareholders will get dividends when Ukhamba declares a dividend payout.

Frequently asked questions from Ukhamba shareholders


27

As an Ukhamba shareholder I have A class and C class Ukhamba shares. What is the difference between these two classes of shares?Under the new Ukhamba structure, beneficiaries received two type of shares. The A class shares relate to Ukhamba’s investment in Imperial and can be bought and sold. The C class shares relate to Ukhamba’s other investments and do not trade on the OTC platform. Payouts or cash distributions to C class shareholders (who are original beneficiaries of the scheme) occur when Ukhamba sells an investment or if an investment pays a dividend. It is therefore important that all shareholders keep their details updated so that when investments are disposed of, Ukhamba is able to pay out the value of the C class shares to them. Shareholders can update their details at www.ukhambashares.co.za, the call centre on 011 321 5566 or the walk-in centre at 71 Corlett Drive Birnam, 2196.

I have decided to sell my shares. What must I do?Before shareholders can trade their A class shares they have to register on the OTC platform. Shareholders can register online at www.ukhambashares.co.za, phone the call centre on 011 321 5566 or visit the walk-in centre at 71 Corlett Drive Birnam, 2196. To understand the terms and conditions associated with trading Ukhamba shares, please visit the website.

To register, shareholders require certain documentation, including:

A recently certified copy of their South African ID document (not older than three months).

A bank statement not older than three months (an Internet statement is not allowed), or a signed and stamped letter from a bank confirming their banking details.

Proof of residence (also certified and not older than three months).

In the case of a company, proof that the organisation is a 100% black-owned entity and the company’s BEE rating certificate.

28

Once registered a trading account is opened. There are no monthly costs attached to the registration. Shareholders wishing to trade place an order which is entered into the market for potential buyers and sellers to view for matching.

Can I sell some of my shares and keep others?Yes. Selling A class shares on the OTC platform is just like selling shares on the normal stock market. The only difference is that Ukhamba A class shares can only be transacted between black people or black-owned companies.

Are there costs associated with the sale of shares?Yes. When selling A class shares, shareholders have to pay a transaction fee, as well as tax on the earnings received from the sale of the shares.

The transaction fee is charged at either a minimum of R169 or 1,5% (excluding VAT) on the value of the transaction, depending on whichever cost is greater.

With regards to tax payments, it is the shareholder’s responsibility to consult with an accountant or tax advisor as to what tax is payable. Shareholders can make an appointment with the South African Revenue Service (SARS) for a free consultation.

What happens to my shares if I retire or leave Imperial’s employ?Shareholders still receive payouts even if they retire or were previously employed by Imperial provided that Equity Express (the trading platform) has the correct details. In the event that a shareholder dies, their beneficiaries can claim the A class shares.

Frequently asked questions continued

29

Summarised consolidated annual financial statements

FOR THE YEAR ENDED 30 JUNE 2015

30

Contents31 Statement of responsibility by the directors

32 Report of the independent auditors

33 Directors’ report

35 Summarised consolidated statement of financial position

36 Summarised consolidated statement of comprehensive income

37 Summarised consolidated statement of changes in equity

38 Summarised consolidated statement of cash flows

39 Notes to the summarised consolidated annual financial statements


31

The directors of the company are responsible for the maintenance of adequate accounting records and the preparation and integrity of the consolidated financial statements and related information. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and its interpretations adopted by the International Accounting Standards Board (IASB) in issue and effective for the group at 30 June 2015 and the SAICA Financial Reporting Guides, as issued by the Accounting Practices Committee and financial reporting pronouncements as issued by the Financial Reporting Standards Council.

The directors are also responsible, for the systems of internal control. These are designed to provide reasonable but not absolute, assurance as to the reliability of the financial statements, and to adequately safeguard, verify and maintain accountability for assets and to prevent and detect material misstatements and losses. The systems are implemented and monitored by suitably trained personnel with an appropriate segregation of authority and duties. Nothing has come to the attention of the directors to indicate that any material breakdown in the functioning of these controls, procedures and systems has occurred during the year under review.

The consolidated financial statements are prepared on the going concern basis. Nothing has come to the attention of the directors to indicate that the group will not remain a going concern for the foreseeable future.

The summarised consolidated annual financial statements, which have been prepared using information required by IAS 34: Interim Financial Reporting, set out on pages 35 to 45 are an extract of the audited consolidated annual financial statements. The consolidated and separate annual financial statements are electronically available on the compact disc attached and on the group website at www.ukhamba.co.za.

The group’s independent external auditors, SizweNtsalubaGobodo Inc have confirmed that the summarised consolidated annual financial statements are derived from the consolidated annual financial statements and their unmodified report appears on page 32.

The summarised consolidated annual financial statements were approved by the board of directors on 16 October 2015 and are signed on their behalf by:

VJ MokoenaDirector

M AkoojeeDirector

Statement of responsibility by the directorsfor the year ended 30 June 2015

32

Report of the independent auditors

To the Members of Ukhamba Holdings (Proprietary) LimitedThe summarised consolidated annual financial statements of Ukhamba Holdings (Proprietary) Limited, contained in the accompanying summarised report, which comprise the summarised consolidated statement of financial position as at 30 June 2015, the summarised consolidated statement of comprehensive income, summarised consolidated statement of changes in equity and summarised consolidated statement of cash flows for the year then ended, and related notes, are derived from the audited consolidated annual financial statements of Ukhamba Holdings (Proprietary) Limited for the year ended 30 June 2015. We expressed an unmodified audit opinion on those consolidated annual financial statements in our report dated 10 September 2015. Our auditor’s report on the audited consolidated annual financial statements contained an Other Matter paragraph titled “Other reports required by the Companies Act” (included alongside).

The summarised consolidated annual financial statements do not contain all the disclosures required by the International Financial Reporting Standards and the requirements of the Companies Act of South Africa as applicable

to annual financial statements.

Auditor’s responsibilityOur responsibility is to express an opinion on the summarised consolidated annual financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810, Engagements to Report on Summary Financial Statements.

OpinionIn our opinion the summarised consolidated annual financial statements derived from the audited consolidated annual financial statements of Ukhamba Holdings (Proprietary) Limited for the year ended 30 June 2015 are consistent, in all material respects, with those audited consolidated annual financial statements and the requirements of the Companies Act of South Africa as applicable to summarised financial statements.

Other reports required by the Companies ActThe “Other reports required by the Companies Act” paragraph in our audit report dated 16 October 2015 states that as part of our audit of the consolidated annual financial statements for the year ended 30 June 2015, we have read the directors’ report for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated annual financial statements. These reports are the responsibility of the respective preparers. The paragraph also states that, based on reading these reports, we have not identified material inconsistencies between these reports and the audited consolidated annual financial statements. The paragraph furthermore states that we have not audited these reports and accordingly do not express an opinion on these reports. The paragraph does not have an effect on the summarised consolidated annual financial statements or our opinion thereon.

SizweNtsalubaGobodo Inc Director: M Mthimkhulu Registered Auditor

16 October 2015 Johannesburg


33

Directors’ reportfor the year ended 30 June 2015

The directors are pleased to present the summarised consolidated annual financial statements of the company for the year ended 30 June 2015.

Nature of businessUkhamba Holdings (Proprietary) Limited is an investment holding company.

Share capitalDuring the year all the authorised and issued share capital was converted from ordinary par value shares to ordinary no par value shares. The share capital was divided into three classes of shares, “A”, “B”, and “C” shares with terms and conditions attached to each class of shares as set out in the company’s memorandum of incorporation and summarised in note 7.

The Ukhamba Trust has a 47,1% share-holding in the company. The Ukhamba Trust’s beneficiaries indicated that they would like to receive cash for their units in Ukhamba. As a result an over-the-counter (OTC) trading platform was set up on which the Ukhamba “A” shares are traded. This allows the beneficiaries to monetise their investments.

FSB developments – OTC marketsThe Financial Services Board (FSB) issued a directive in May 2014 which stated that the FSB believes that all OTC markets are operating illegally. It suggested that for these

markets to operate legally, the issuers of these shares must either apply and be granted their own exchange license or these issuers must list their shares on a recognised exchange. Ukhamba applied for an exemption in October 2014 in terms of the FSB directive issued and an exemption was granted on 17 February 2015, which is valid for six months. The FSB asked Ukhamba to advise on its future trading model. They listed three options, namely:

(i) To change the existing trading model to fall outside of the Financial Markets Act definition of an “.0exchange”;

(ii) To list on an exchange like the JSE; and(iii) To apply for an exchange licence.

Ukhamba’s preferred option is to list on an exchange that meets its criteria with minimal impact to its existing model. Ukhamba has sent a letter to the FSB outlining its intention and a request for an extension to the exemption.

DividendsA dividend of R16 878 220 (2014: R5 442 051) was declared in the current year and paid to the “A” and “B” shareholders.

Financial resultsThe results of operations for the period under review are fully disclosed in the financial statements.

34

Group restructureTo rationalise the group structure during the year, Ukhamba Investments (Proprietary) Limited, a subsidiary of the company, issued an additional 500 shares at a premium of R15 358 610 to Ukhamba Holdings. The proceeds of the share issue were used to settle all payables of Ukhamba Investments and all loans receivable were recovered. All expenses that used to be incurred by Ukhamba Investments are now incurred by Ukhamba Holdings. Ukhamba Investments will be deregistered.

DirectorsThe directors of the company during the accounting period and up to the date of this report were as follows:

Mr VJ Mokoena (Appointed as Chairperson on 1 September 2014) Mrs J Vetter (Resigned on 10 March 2015) Mr M Akoojee Ms F Roji

SecretaryJeannet Johnson

Registered addressesPostal PO Box 725 Edenvale 1610

Business 79 Boeing Road EastBedfordviewJeppe Quondam2008

AuditorsSizweNtsalubaGobodo Inc will continue as auditors of the company in terms of Section 90 (6) of the Companies Act, Act 71 of 2008.

Holding companyThe company has no holding company.

Directors’ reportcontinued


35

Notes2015

R’0002014

R’000

ASSETSInvestments in associates 3 488 597 625 964Investment in Imperial Holdings Limited ordinary shares 4 2 330 181 2 346 030Investment in deferred ordinary shares 5 1 247 536 1 453 107Trade and other receivables 19 1 155Cash and cash equivalents 6 67 931 84 795

Total assets 4 134 264 4 511 051

EQUITY AND LIABILITIESEquity 1 958 288 2 151 075

Share capital 7 1 1Fair value reserve 780 926 897 467Retained earnings 1 177 361 1 253 607

Liabilities 2 175 976 2 359 976

Loans from shareholders 15 000 42 729Other financial liabilities 8 1 556 614 1 705 645Deferred tax liability 9 598 442 606 473Current tax liability 285 –Trade and other payables 5 635 5 129

Total equity and liabilities 4 134 264 4 511 051

Summarised consolidated statement of financial positionAt 30 June 2015

36

Summarised consolidated statement of comprehensive incomefor the year ended 30 June 2015

2015R’000

2014R’000

Operating expenses (6 170) (5 248)

Operating loss (6 170) (5 248)Dividends received 90 322 92 904Other income 440 284Loss on disposal of investments – (1 452)Fair value adjustments on investments (73 785) 575 790Fair value adjustments on derivative liability 169 664 53 692Impairment – associates and other investments (316 500) (19 499)

(Loss)/profit before net financing cost and income from associates (136 029) 696 471Net finance costs (92 454) (124 982)Income from associates 189 023 23 703

(Loss)/profit before taxation (39 460) 595 192Taxation (19 908) (117 467)

(Loss)/profit for the year (59 368) 477 725

Other comprehensive income(Loss)/gain on revaluation of available for sale financial assets (116 542) 41 149

Total comprehensive (loss)/income (175 910) 518 874


37

Summarised consolidated statement of changes in equity for the year ended 30 June 2015

Share capitalR’000

Fair value reserve

R’000

Retained earnings

R’000

Total attributable

to equity holders of the group

R’000

Balance at 30 June 2013 – 856 318 781 324 1 637 642Issue of shares 1 – – 1Revaluation of investments – 50 590 – 50 590Tax effect of revaluation of investments – (9 441) – (9 441)Profit for the year – – 477 725 477 725Dividend paid – – (5 442) (5 442)

Balance at 30 June 2014 1 897 467 1 253 607 2 151 075Revaluation of investments – (143 280) – (143 280)Tax effect of revaluation of investments – 26 739 – 26 739Loss for the year – – (59 368) (59 368)Dividend paid – – (16 878) (16 878)

Balance at 30 June 2015 1 780 926 1 177 361 1 958 288

38

Summarised consolidated statement of cash flows for the year ended 30 June 2015

Note2015

R’0002014

R’000

Cash flows from operating activitiesCash utilised in operations (4 856) (323)Dividends received 103 148 105 664Net finance costs (92 454) (124 982)Taxation paid (147) (1 490)Dividend paid (16 878) (5 442)

Net cash flows from operating activities (11 187) (26 573)

Cash flows from investing activitiesLoans repaid by/(advanced to) group companies 1 419 (569)

Net cash flows from investing activities 1 419 (569)

Cash flows from financing activitiesIssue of shares – 1Net movement in other financial liabilities 20 633 108 022Repayment of loans from shareholders (27 729) –

Net cash flows from financing activities (7 096) 108 023

Net (decrease)/increase in cash and cash equivalents for the year (16 864) 80 881Cash and cash equivalents at the beginning of the year 84 795 3 914

Cash and cash equivalents at the end of the year 7 67 931 84 795


39

Notes to the summarised consolidated annual financial statementsfor the year ended 30 June 2015

1. Basis of preparation The summarised consolidated financial statements have been prepared in accordance

with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) and its Interpretations adopted by the International Accounting Standards Board (IASB) in issue and effective for the Group at 30 June 2015 and the SAICA Financial Reporting Guides.

These summarised consolidated financial statements do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements as at and for the year ended 30 June 2015.

2. Accounting policies The accounting policies adopted and methods of computation used in the preparation of

the summarised consolidated financial statements are in accordance with IFRS and are consistent with those of the annual financial statements for the year ended 30 June 2014 except where the Group has adopted new or revised accounting standards. The adoptions of new and revised accounting standards had no significant impact.

2015R’000

2014R’000

3. Investment in associatesCost 264 257 259 901Accumulated share of post-acquisition reserves 212 357 352 661

Carrying amount 476 614 612 562Indebtedness by associates 11 983 13 402

488 597 625 964

4. Investment in Imperial Holdings Limited ordinary sharesAvailable for sale investments – at fair value through other comprehensive incomeListed Imperial Holdings Limited – ordinary shares – number of shares 12 561 622 (2014: 11 730 153) 2 330 181 2 346 030

40

Notes to the summarised consolidated annual financial statements continuedfor the year ended 30 June 2015

2015R’000

2014R’000

5. Investment in deferred ordinary sharesDesignated at fair value through profit and lossImperial Holdings Limited – deferred ordinary sharesnumber of shares 8 314 690 (2014: 9 146 159) 1 247 536 1 448 386Distribution and Warehousing Network Limited (DAWN)– deferred ordinary shares number of shares nil (2014: 400 000) – 4 721

1 247 536 1 453 107

Deferred ordinary shares in Imperial Holdings The investment in deferred ordinary shares represents the right to convert the deferred

ordinary shares in Imperial Holdings Limited to ordinary shares in the company. The conversion profile was changed in the current year to whereby the deferred ordinary shares will convert in 12 equal tranches of 831 469 shares commencing 30 June 2014 and ending 30 June 2025.

The investment has been recorded at fair value and with the resulting gain on initial recognition recognised directly in equity and movements on subsequent measurement through profit or loss.

The fair value of the investment is calculated as the difference between the value of the deferred ordinary shares calculated using the Imperial Holdings quoted share price and the present value of the dividends not received on the deferred ordinary shares. The forgone dividends are calculated based on an assumed future dividend growth rate as determined by management. These forgone dividends are then present valued using a discount rate (risk free rate plus a risk premium) as determined by management.


41


5. Investment in deferred ordinary shares continued Deferred ordinary shares in DAWN The investment in the prior year comprises 400 000 deferred ordinary shares of 1 cent

each in Distribution and Warehouse Network Limited (DAWN). The deferred ordinary shares initially issued were 10 000 000 and to date all 10 000 000 have converted to ordinary shares. In the prior year the listed ordinary shares were fair valued at the quoted share price for the listed ordinary shares.

Fair value hierarchy The financial instruments carried at fair value are analysed in the table below and the

different levels have been identified as follows:

Level 1: quoted prices (unadjusted) in active markets from identical assets or liabilities.

Level 2: inputs other than quoted prices included in level one observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: inputs for the financial asset or liability that are not based on observable market data.

Level 1R’000

Level 2R’000

Level 3R’000

TotalR’000

Available for sale 2 330 181 – – 2 330 181Fair value through profit and loss designated – 1 247 536 – 1 247 536

42


2015R’000

2014R’000

6. Cash and cash equivalentsCash and cash equivalents consist of:Bank balances 18 383 8 871Short term deposit 49 548 75 924

67 931 84 795

Cash and cash equivalents held by the entity that are not available for use by the group. 2 107 3 753

The group maintains an account for the over-the-counter share trading scheme. This account may only be used for receipt and payments.

7. Share capitalAuthorised1 593 “A” shares of no par value 2 21 407 “B” shares of no par value 1 11 000 “C” shares of no par value 1 1

4 4

Issued478 “A” shares of no par value 1 1422 “B” shares of no par value – –100 “C” shares of no par value – –

1 1

Unissued shares are under the control of directors subject to restrictions contained in the company’s memorandum of incorporation.


43


7. Share capital continued

“A” shares

The “A” shares may only be held by: ● The Ukhamba Trust; ● The Imperial and Ukhamba Community Development Trust; and ● BEE compliant persons.

The “A” shares are traded on the OTC trading platform.

The “A” shares shall be eligible to participate in any right, title and interest of the company in, and any distributions by the company of, or in respect of, or relating to the Imperial shares and the deferred ordinary shares.

“B” shares

The “B” shares are held by Imperial Holdings.

The “B” shares shall be eligible to participate in any right title, and interest of the company in, and any distributions by the company of, or in respect of, or relating to the Imperial shares and the deferred ordinary shares.

“C” shares

Only the “C” shares shall be eligible to participate in any right, title and interest of the company in, and any distributions by the company of, or in respect of, or relating to the DAWN shares and the minor investments.

44


2015R’000

2014R’000

8. Other financial liabilitiesLoan from Investec Bank Limited

In October 2011 Ukhamba entered into a loan agreement with Investec for the amount of R843 040 887. During the prior year the loan was extended to 2025. The loan amount is payable on specific dates between July 2025 and September 2025 in 14 equal instalments.

In October 2012 Ukhamba entered into a second loan agreement with Investec for the amount of R130 854 118. The term of this loan was also extended during the prior year. The loan amount is now payable in two equal instalments during September 2025.

On extension of the loans in the prior year additional funding of R59 180 931 was raised.

The applicable interest rate for both loans has a fixed interest component of 0,615% naca for the first loan and 2,165% naca for the second loan and a variable interest component which is calculated as the amount equal to the assumed dividends multiplied by the remaining shares payable on dividend payment date as contemplated in the assumed dividend table as set out in the agreement.

1 094 875 1 074 242

Collar hedge loan (derivative liability)

Pursuant to the Investec loan (noted above), Ukhamba pledged 8 644 397 shares, held in Imperial Holdings Limited, to Investec. In terms of the agreement the shares ceded are subject to a collar hedge repurchase agreement in terms of which Ukhamba is liable for all amounts by which the Imperial share price exceeds R138 at exercise date, and Investec is liable for all amounts by which the Imperial share price falls short of R106. The hedge will be settled in 14 equal tranches in line with the new extended loan repayments.

461 739 631 403


45


2015R’000

2014R’000

8. Other financial liabilities continuedCollar hedge loan (derivative liability) continued

Pursuant to the second Investec loan (noted on page 44), Ukhamba pledged 893 750 shares held in Imperial Holdings Limited, to Investec. In terms of the agreement the shares ceded, are subject to a collar hedge repurchase agreement in terms of which Ukhamba is liable for all amounts by which the Imperial share price exceeds R309 at exercise date, and Investec is liable for all amounts by which the Imperial share price falls short of R193. The hedge will be settled in two equal tranches in line with the new extended loan repayments.

1 556 614 1 705 645

9. Deferred tax liabilityOn other financial assets at fair value 684 612 724 305On other financial liabilities at fair value (86 170) (117 832)

598 442 606 473

Deferred capital gains tax is raised on the fair value adjustments to the investments in the ordinary shares (through equity) and the deferred ordinary shares (through profit or loss).

10. Events after the reporting period There were no significant events after the reporting period.

46

Statement of financial position per class of shares for the year ended 30 June 2015

2015A share-holders

R’000

2015B share-holders

R’000

2015C share-holders

R’000

2015Total

R’000

ASSETSInvestments in associates – – 488 597 488 597Investment in Imperial Holdings Limited ordinary shares 1 237 326 1 092 855 – 2 330 181Investment in deferred ordinary shares 662 442 585 094 – 1 247 536Trade and other receivables – – 19 19Cash and cash equivalents 31 425 27 756 8 750 67 931

Total assets 1 931 193 1 705 705 497 366 4 134 264

EQUITY AND LIABILITIESEquity 795 746 702 834 459 708 1 958 288

Share capital 1 – – 1Fair value reserve 414 672 366 254 – 780 926Retained earnings 381 073 336 580 459 708 1 177 361

Liabilities 1 135 447 1 002 871 37 658 2 175 976

Loans from shareholders – – 15 000 15 000Other financial liabilities 826 562 730 052 – 1 556 614Deferred tax liability 308 885 272 819 16 738 598 442Current tax liability – – 285 285Trade and other payables – – 5 635 5 635

Total equity and liabilities 1 931 193 1 705 705 497 366 4 134 264

Number of issued shares:A shares 19 929 012B shares 17 602 084C shares 1 000

NAV per share R39,93 R39,93 R459 708


47

Notice of annual general meeting

Ukhamba Holdings (Pty) Limited (Incorporated in the Republic of South Africa) (Registration number: 1998/017702/07) (Ukhamba or the company)

Notice is hereby given that the annual general meeting of shareholders will be held on Thursday, 26 November 2015 at 09h00 at the Birchwood Hotel, Viewpoint Road, Boksburg, or any adjournment or postponement thereof, to transact the following business and resolutions with or without amendments approved at the meeting.

Record date The record date for the purpose of determining which shareholders of the company are entitled to receive notice of the annual general meeting is Monday, 26 October 2015.

The record date for purposes of determining which shareholders of the company are entitled to participate in and vote at the annual general meeting is Wednesday, 25 November 2015.

Accordingly, only shareholders who are registered in the register of members of the company on 25 November 2015 will be entitled to attend, speak and vote at the annual general meeting.

1. Ordinary resolution 1 – approval of the financial statements “Resolve that the audited consolidated company annual financial statements of Ukhamba

for the year ended 30 June 2015, including the directors’ report and the auditors’ report, be adopted.”

Percentage voting rights The minimum percentage of voting rights that is required for this resolution to be adopted

is 50% (fifty percent) of the voting rights plus 1 (one) vote to be cast on the resolution.

2. Ordinary resolution 2 – appointment of the auditors “Resolve that SizweNtsalubaGobodo Inc be appointed as auditors of the company

and Mr Mxolisi Mthimkhulu as designated partner until the date of the next annual general meeting.”


is 50% (fifty percent) of the voting rights plus 1 (one) vote to be cast on the resolution.

48

3. Special resolution number 1 – directors’ fees “Resolve that in terms of section 66(9) of the Companies Act 71 of 2008, as amended

(the Companies Act), the company be and is hereby authorised, by a separate vote in respect of each item, to remunerate its directors for their services as directors on the following basis:

Fee from 1 July 2015 to 30 June 2016

Chairperson R160 000Board member* R110 000

* Only external, non-Imperial board members.

Reason and effect The reason for special resolution number 1 is for the company to obtain the approval

of shareholders by way of special resolution for the payment of remuneration to its non-executive directors in accordance with the requirements of the Companies Act.

The effect of special resolution number 1 is that the company will be able to pay its non-executive directors for the services they render to the company as directors without requiring further shareholder approval until the next annual general meeting.

4. Special resolution number 2 – section 45(2) Ukhamba be authorised by way of a special resolution to provide financial assistance

as contemplated in section 45(2) of the Act, including lending money, guaranteeing a loan or other obligation, and securing any debt or obligation, to any subsidiary or associate company, a director or prescribed officer of the company or of a related or inter-related company, or to a related or inter-related company or corporation, or to a member of a related or inter-related corporation, or to a person related to any such company, corporation, director, prescribed officer or member, the company’s board being satisfied that:

● immediately after providing the financial assistance, the company would satisfy the solvency and liquidity test as contemplated in the Act; and

● the terms under which the financial assistance is proposed to be given are fair and reasonable to the company; and

● any conditions or restrictions respecting the granting of financial assistance set out in the company’s memorandum of incorporation have been satisfied.

Special resolution 2 above shall remain effective until the next annual general meeting.


is 75% (seventy-five percent) of the voting rights to be cast on the resolution.


49

5. To transact such other business as may be transacted at an annual general meeting of shareholders

Voting and proxies Duly completed forms of proxy must be lodged at the registered office of the company or

at the transfer secretaries at the addresses on the form of proxy, by no later than 09h00 on Wednesday, 25 November 2015.

Every person present and entitled to vote at the general meeting shall, by a show of hands, have one vote only, and on a poll, shall have one vote for every ordinary share held or represented.

By order of the board

J JohnsonCompany secretary

16 October 2015


51

Ukhamba Holdings (Pty) Limited(Incorporated in the Republic of South Africa)(Registration number: 1998/017702/07)Share Code: IPLISIN: ZAE000067211(Ukhamba or the company)

An ordinary shareholder entitled to attend and vote at the annual general meeting to be held at the Birchwood Hotel, Viewpoint Road, Boksburg, or any adjournment or postponement thereof on Thursday, 26 November 2015 at 09h00 (the AGM), is entitled to appoint a proxy to attend, speak or vote thereat in his/her stead. A proxy need not be a shareholder of the company.

All forms of proxy must be lodged at the transfer secretaries, Equity Express, 71 Corlett Drive, Birnam, 2196 (PO Box 1266, Bramley, 2018) to be received by no later than 09h00 on Wednesday, 25 November 2015.

I/We (Please print name in full)

Of (address)

Email address Cell number

being an ordinary shareholder(s) of the company, holding ordinary shares

in the company do hereby appoint

1. or failing him/her

2. or failing him/her

3. the chairperson of the AGM

as my/our proxy to vote for me/our behalf at the AGM (and any adjournment thereof) for the purpose of considering and, if deemed fit, passing, with or without modifications, the following resolutions to be considered at the AGM.

Number of votes (one per share)

In favour of Against Abstain

1. Ordinary resolution 1 – financial statements

2. Ordinary resolution 2 – appointment of auditors

3. Special resolution 1 – directors’ fees

Fee from 1 July 2015 to 30 June 2016

Chairperson R160 000

Board member R110 000

4. Special resolution 2 – financial assistance

Insert an X in the appropriate block. If no indications are given, the proxy will vote as he/she deems fit. Each shareholder entitled to attend and vote at the meeting may appoint one or more proxies (who need not be a shareholder of the company) to attend, speak and vote in his/her stead.

Please read the notes on the reverse side hereof.

Signed at on 2015

Signature

Assisted by (where applicable)

Form of proxy

52

1. A shareholder may insert the names of a proxy or the names of two alternative proxies of the shareholder’s choice in the space provided, with or without deleting “the chairperson of the meeting”, but any such deletion must be initialled by the shareholder. The person whose name appears first on the proxy and which has not been deleted shall be entitled to act as proxy to the exclusion of those whose names follow.

2. The authority of a person signing a proxy in a representative capacity must be attached to the proxy unless that authority has already been recorded with the company’s transfer secretaries.

3. Proxies must be lodged at Equity Express offices, 71 Corlett Drive, Birnam, 2196 (PO Box 1266, Bramley, 2018), to be received by no later than 09h00 on Wednesday, 25 November 2015.

4. The completion and lodging of this proxy shall not preclude the relevant shareholder from attending the meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.

The chairperson of the meeting may reject or accept a proxy which is completed other than in accordance with these instructions, provided that he is satisfied as to the manner in which a shareholder wishes to vote.

Notes to the form of proxy

UK

HA

MB

A H

OL

DIN

GS

AN

NU

AL

RE

PO

RT

2015

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