| Thu 10 Sep 2009, 17:19 | | VUN - Vunani - Unaudited Condensed Consolidated Interim Financial Results For |
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VUN
VUN
VUN - Vunani - Unaudited Condensed Consolidated Interim Financial Results For
The 6 Months Ended 30 June 2009
VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN ISIN: ZAE000110359
("Vunani" or "the company" or "the group")
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS FOR THE 6 MONTHS
ENDED 30 JUNE 2009
"We are pleased with our improved performance, which is mainly due to the
higher valuations in our empowerment investments. Our financial services
business produced a solid result despite the difficult economic conditions.
We are well on the path to concluding the company`s recapitalisation which
will be a major step forward and we continue to invest in our business, having
finalised two acquisitions in the last six months, in order to build a
platform for sustainable future growth" said Ethan Dube (Chief Executive
Officer).
SALIENT FEATURES
Signed Heads of Agreement with funders which will include the capitalisation
of R313,6m debt.
Vunani`s empowerment investments turn in positive fair values.
Financial Services attributable profit was down 23%, due to difficult economic
conditions.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the 6 months ended 30 June 2009
Figures in R`000s Note Unaudited Unaudited 6 Audited
s 6 months months 30 12 months
30 Jun Jun 2008 31 Dec
2009 2008
Revenue 1 74,785 105,177 223,065
Other income 14,399 1,284 18,765
Cost of property developments 1 (18,032) (34,097) (52,097)
sold
Operating expenses (57,249) (46,925) (116,599)
Operating profit 13,903 25,439 73,134
Investment revenue 8,533 6,593 17,552
Fair value adjustments 2 (9,132) (338,919) (854,915)
Income from associates (before 6,952 1,248 26,539
tax)
Finance cost (108,001) (88,334) (201,505)
Net loss before taxation (87,745) (393,973) (939,195)
Taxation 32,900 76,302 155,073
Net loss for the period (54,845) (317,671) (784,122)
Net loss for the period (54,845) (317,671) (784,122)
Other comprehensive income - - -
Total comprehensive loss net (54,845) (317,671) (784,122)
of tax for the period
(Loss) / profit attributable
to:
Equity holders of Vunani 49,872 (319,679) (707,845)
Limited
Minority interest 4,973 2,008 (76,277)
54,845 (317,671) (784,122)
Total comprehensive
(loss)/income :
Equity holders of Vunani 49,872 (319,679) (707,845)
Limited
Minority interest 4,973 2,008 (76,277)
Total comprehensive loss for 54,845 (317,671) (784,122)
the period
Earnings per share
Basic (loss)/earnings per share (4.24) (26.04) (60.7)
(cents)
Diluted (loss)/earnings per share (4.24) (26.54) (60.7)
(cents)
Headline (loss)/earnings per share (3.18) (26.04) (58.8)
(cents)
Diluted headline (loss)/earnings per (3.18) (26.54) (58.8)
share (cents)
Dividends
Dividends per share - - -
CONDENSED CONSOLIDATED BALANCE SHEET
As at 30 June 2009
Figures in R`000s Note Unaudited Restated Audited
s 6 months unaudited 6 12 months
30 Jun months 30 31 Dec
2009 Jun 2008 2008
ASSETS
Non current assets
Investment property 793,078 881,606 817,132
Property and equipment 8,065 5,416 5,540
Goodwill 75,948 104,550 75,596
Investments in associates 192,862 155,191 206,077
Other investments 3 614,535 1,431,967 488,828
Deferred tax 59,602 - 24,517
Other non current assets 2,556 1,480 1,891
Other intangible assets 5,142 - 10,284
1,751,788 2,580,210 1,629,865
Current assets
Other investments 3 - - 180,531
Inventory 8,362 23,863 6,406
Loans to group companies - - -
Trade and other receivables 7,258 33,387 4,890
Accounts receivable from 196,861 201,040 161,066
trading activities
Trading securities 854 327 456
Cash and cash equivalents 5,910 26,194 37,588
219,245 284,811 390,937
Total assets 1,971,033 2,865,021 2,020,802
EQUITY
Share capital 250,263 251,144 250,263
Non-distributable reserve 128,312 211,082 180,524
Accumulated loss / retained (274,790) 84,361 (277,130)
earnings
Equity attributable to equity 103,785 546,587 153,657
holders
Minority interest 89,755 170,693 94,728
Total equity 193,540 717,280 248,385
LIABILITIES
Non current liabilities
Other financial liabilities 3 1,476,681 1,744,292 1,003,335
Deferred tax 44,874 103,406 48,930
1,521,555 1,847,698 1,052,265
Current liabilities
Other financial liabilities 3 - 32,551 486,659
Receiver of revenue 6,999 7,440 3,258
Trade and other payables 63,606 63,227 79,797
Accounts payable from trading 185,333 196,825 150,438
activities
255,938 300,043 720,152
Total liabilities 1,777,493 2,147,741 1,772,417
Total equity and liabilities 1,971,033 2,865,021 2,020,802
Shares in issue (adjusted for 1,176,444 1,227,636 1,176,444
treasury shares held by the company)
(000`s)
Weighted average number of shares in 1,176,444 1,204,502 1,166,516
issue (000`s)
Net asset value per share (cents) 8.8 43.5 13.1
Net tangible asset value per share 2.4 35.0 5.8
(cents)
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the 6 months ended 30 June 2009
Figures in R`000s Total Minority Total
attributable interest equity
to equity
holders
Balance as at 31 December 2007 809,257 171,204 980,461
(restated)
Comprehensive (loss)/income for (319,679) 2,008 (317,671)
the period
Issue of shares 57,184 - 57,184
Purchase of treasury shares (4,067) - (4,067)
Other change in equity 3,892 (2,519) 1,373
Total changes (262,670) (511) (263,181)
Balance as at 30 June 2008 546,587 170,693 717,280
(restated)
Comprehensive (loss)/income for (392,056) (75,766) (467,822)
the period
Purchase of treasury shares (874) - (874)
Dividends paid to minorities - (199) (199)
Total changes (392,930) (75,965) (468,895)
Balance as at 31 December 2008 153,657 94,728 248,385
Comprehensive (loss)/income for (49,872) (4,973) (54,845)
the period
Total changes (49,872) (4,973) (54,845)
Balance as at 30 June 2009 103,785 89,755 193,540
CONDENSED CONSOLIDATED CASH FLOW
STATEMENT
For the 6 months ended 30 June 2009
Figures in R`000s Unaudited Unaudited 6 Audited
6 months months 30 12 months
30 Jun Jun 2008 31 Dec
2009 2008
Cash (outflows)/inflows from (27,335) 15,928 56,144
operating activities
Cash inflows/(outflows) from 27,637 (361,441) (298,022)
investing activities
Cash (outflows)/inflows from (31,980) 284,303 192,062
financing activities
Decrease in cash and cash (31,678) (61,210) (49,816)
equivalents
Cash and cash equivalents at 37,588 87,404 87,404
beginning of period
Cash and cash equivalents at end of 5,910 26,194 37,588
period
SEGMENTAL REPORTING
For the 6 months ended 30 June 2009
Figures in R`000s Unaudited Unaudited 6 Audited
6 months months 30 12 months
30 Jun Jun 2008 31 Dec
2009 2008
Revenue
Financial Services 86,637 80,205 233,824
Investment Services (9,132) (338,919) (854,915)
77,505 (258,714) (621,091)
Attributable (loss) / profit for the
year
Financial Services 22,520 29,241 88,514
Investment Services (77,365) (346,912) (872,636)
(54,845) (317,671) (784,122)
Total assets
Financial Services 296,765 402,437 294,041
Investment Services 1,674,268 2,462,584 1,726,761
1,971,033 2,865,021 2,020,802
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL RESULTS
1. Revenue includes the gross amount of property sales, the costs of which
are disclosed separately in the income statement
2. Fair value adjustments
Figures in R`000s Unaudited Unaudited 6 Audited
6 months months 30 12 months
30 Jun Jun 2008 31 Dec
2009 2008
Investment property (27,000) (2,855) (72,713)
Financial assets and liabilities 17,868 (336,064) (782,202)
designated at fair value through
profit and
(9,132) (338,919) (854,915)
3. Vunani uses an independent valuer to determine the fair values of funded
listed investments and their connected liabilities. The value of the listed
investments is determined with reference to the market value of the share
price at the relevant period end. Both the listed and unlisted investments are
designated at fair value through profit and loss ("FVTPL"). In 2007 the fair
value of liabilities, relating to the above investments were added to the
value of the respective investments. These amounts were reclassified in 2007
to be included in the fair value of the liability. The 2008 figures have been
correctly classified. The debt related to the investments is stated at fair
value. Debt covenants breached during 2008 led to the value of the sureties
being provided in current liabilities. On 30 June 2009 the company entered
into a Heads of Agreement with its funders which will result in these sureties
being severed or limited thereby reducing group risk and reversing the
breaches. The value of the sureties and guarantees subject to the breach, and
disclosed as current liabilities in December 2008, have now been disclosed as
non-current liabilities in compliance with the Heads of Agreement.
OVERVIEW
The directors of Vunani present the unaudited interim financial results for
the six months ended 30 June 2009 ("the interim period"). Vunani is a black-
owned and managed financial services enterprise with a balance sheet
underpinned by various investments in equities and property assets.
During the first six months of this financial year markets stabilised and then
rallied resulting in a share price recovery. In general, the listed shares
showed the beginnings of a recovery and therefore an improvement in asset
values. The decrease in interest rates that commenced in December 2008 also
contributed favourably to the results. The positive influence of these factors
was, however negated by the slow recovery in property valuations, which
normally lag market recoveries. This resulted in some fair value losses, but
to a far lesser degree than experienced during the same period last year.
Subsequent to the six months ended June 2009 the company concluded the
acquisition of an indirect 20.4% equity investment in Civils 2000 Holdings
(Proprietary) Limited ("Civils"). The Civils transaction became unconditional
on 9 July 2009 as all the conditions precedent was met. The "agterskot" in
respect of the Edge Holding Company (Proprietary) Limited acquisition
concluded in March 2008 was paid via the issue of 114 367 925 Vunani shares on
27 July 2009.
FINANCIAL RESULTS
Revenue decreased during the interim period by 28.9% to R74.8 million (30 June
2008: R105.2 million) mainly as a result of the slow down in the financial
markets and our scheduled cutback in property developments in response to the
decline in property markets. Operating profit decreased by 45.3% to R13.9
million (30 June 2008: R25.4 million) mainly due to the amortisation of
intangible assets on the acquisition of Vunani Corporate Finance in 2008. The
increase in expenses was largely due to the acquisition of new businesses in
the second half of 2008, included for the full interim period in 2009. The
fair value adjustments after tax of R9.1 million (30 June 2008: R338.9
million) was an improvement from last year. This was largely due to the
recovery in share prices during the six months ended 30 June 2009. Finance
costs increased to R108 million (30 June 2008: R88.3 million) due to increased
borrowings in the second half of 2008.
Vunani`s total assets decreased to R1.97 billion (31 December 2008: R2.02
billion) as a result of fair value adjustments. The increase in Accounts
receivable from trading activities is off-set by a similar increase in
Accounts payable from trading activities. Cash resources decreased as a result
of the deterioration in trading conditions and the shortfall in the financing
of investing activities from prior periods.
BASIS OF PRESENTATION
The interim results have been prepared in accordance with the recognition and
measurement requirements of International Financial Reporting Standards
(IFRS), the Companies Act (Act 61 of 1973), as amended, and the presentation
and disclosure requirements of International Accounting Standards (IAS 34 :
Interim Financial Reporting). The accounting policies as set out in the
audited financial statements for the year ended 31 December 2008 have been
consistently applied.
These consolidated interim financial statements incorporate the financial
statements of the company, its subsidiaries and special purpose entities that,
in substance, are controlled by the group. Results of subsidiaries are
included from the effective date of acquisition or up to the effective date of
disposal. All significant transactions and balances between group enterprises
are eliminated on consolidation.
STATEMENT ON GOING CONCERN
In terms of an announcement dated 20 March 2009, Vunani shareholders were
advised that the decline in the share prices of certain of Vunani`s
empowerment investments resulted in a breach of certain of the debt covenant
ratios with a number of financial institutions which funded Vunani`s
participation in such investments. Vunani`s ability to continue as a going
concern is dependent on the restructuring of its debt. Vunani and its lenders
entered into a Heads of Agreement on 30 June 2009, to restructure Vunani`s
existing debt and recapitalise Vunani to the extent of R313.6 million, to
ensure the continued sustainability of Vunani and its subsidiaries. The
detailed implementation of this restructure is currently under way and is
expected to result in a formal circular being sent to shareholders.
SEGMENT RESULTS
The Financial Services businesses comprise Asset Management, Investment
Banking and Properties. Revenues increased to R86.6million (2008: R80.2
million) however profits after tax declined to R22.5 million (2008: R29.2
million) due to increased operating expenses largely resulting from the
inclusion of businesses acquired in the second half of the 2008 financial
year, the expenses of which are now included for a full year for the first
time. Financing costs also contributed materially to this decline. The Asset
Management business has continued to show growth as expected - net profit
after tax grew to R4,8 million (2008: R0.4 million). The Investment Banking
sector was the worst effected by the downturn in the economy with the net
profit after tax declining to a loss of R9.5 million (2008: profit R2.4
million). Properties held their performance at a net profit after tax of R27.0
million (2008: R26.5 million).
Investment Services continued to feel the decline in global market conditions.
The sector delivered R77.4 million (2008: R346.9 million) net loss after tax.
The decline in markets, however, appears to be slowing which bodes well for
the group`s investments.
AUTHORISED AND ISSUED SHARE CAPITAL
The authorised share capital was increased from 2,000,000,000 ordinary shares
of R 0.0001 each to 10,000,000,000 ordinary shares of R 0.0001 each on 22 July
2009. At 30 June 2009 there were 1,234,250,000 (30 June 2008: 1,227,636,477)
ordinary shares in issue.
DIVIDENDS
No dividends were declared or paid to shareholders during the 6 months ended
30 June 2009 (2008: R nil).
PROSPECTS
The recovery in the equity markets experienced since March this year has had a
positive impact on the economy; however the full impact of this recovery has
not yet been fully felt in the Vunani businesses. Vunani remains committed to
deliver on its vision to become the pre-eminent medium sized black-owned and
managed financial services business. The directors expect trading conditions
to remain volatile in the short to medium term and will use this as an
opportunity to continue to build a platform for the sustainable future growth
in the core businesses.
CHANGE TO THE BOARD OF DIRECTORS
Mr AF Pieterse, who was due to retire by rotation at the company`s annual
general meeting held on 20 August 2009, decided not to make himself available
for re-election and accordingly his appointment as a non-executive director of
the company terminated on that date.
There were no other changes to the Board of Directors during the interim
period ended 30 June 2009.
EG Dube (Chief Executive Officer)
WG Frawley (Chief Financial Officer)
10 September 2009
CORPORATE INFORMATION
EXECUTIVE DIRECTORS
E Dube
WG Frawley
BM Khoza
NM Anderson
CE Chimombe-Munyoro
NON-EXECUTIVE DIRECTORS
WC Ross (Chairman) (Independent)
BA Khumalo (Independent)
NS Mazwi (Independent)
Registration number: 1997/020641/06
Registered address: Vunani House, Athol Ridge Office Park, 151 Katherine
Street, Sandown, Sandton, 2196
Postal address: PO Box 652419, Benmore 2010
Company secretary: WG Frawley CA(SA)
Telephone: +2711 263 9500
Facsimile: +2711 784 3095
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
Lead Designated Adviser: Grindrod Bank Limited
Joint Designated Adviser: Vunani Corporate Finance
Date: 10/09/2009 17:19:02 Produced by the JSE SENS Department.
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