| Mon 5 Sep 2011, 8:08 | | VUN - Vunani - Unaudited Condensed Consolidated Financial Results |
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VUN
VUN
VUN - Vunani - Unaudited Condensed Consolidated Financial Results
VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN
ISIN: ZAE000110359
("Vunani or the company")
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS
OVERVIEW AND PROSPECTS
Vunani continued to deliver on its restructuring objectives during the period
under review, following the successful recapitalisation of its balance sheet in
the previous financial year. The group posted encouraging results despite
persistent international market volatility, largely as a result of continued
sovereign debt concerns in the USA and Europe.
Revenue from continuing operations increased by 13% from R40.5 million to R45.8
million for the six months ended 30 June 2011. Operating expenses increased by
52% from R41.1 million in 2010 to R62.5 million in the current reporting period,
mainly attributable to the integration of Kagiso Securities and the full period
effect of the Vunani Fund Managers acquisition. This resulted in an operating
loss for the period of R15.2 million from a profit of R2.2 million reported in
the prior period.
Net profit on the disposal of the group`s investments in Edge and Peregrine
Holdings Limited ("Peregrine") amounted to R7.7 million.
The group made headway in further reducing finance costs from continuing
operations, down 32% from R47.1 million in June 2010 to R32.3 million in the
review period.
Positive fair value adjustments to financial assets and liabilities of R19.0
million was reported against an impairment of R81.5 million in the corresponding
period. Income from associates reduced to a loss of R1.2 million against a
profit of R15.0 million in June 2010, mainly as a result of the disposal of the
investment in Edge.
Profit from discontinued operations of R8.9 million (2010: R1.1 million) relates
to Vunani`s property investment segment, which was sold and successfully listed
on the Johannesburg Stock Exchange on 11 August this year.
Vunani posted positive cash flow of R19 million for the period (2010: R3.1
million).
As a result, the board is pleased to report that the total comprehensive loss
for the period decreased by 83% to R16.4 million, compared to R95.1 million in
the corresponding period. Consequently, the basic loss per share reduced to 0.3
cents (2010: basic loss of 2.5 cents) and the headline loss per share reduced to
0.5 cents against a loss of 2.5 cents in the comparative period.
Our asset management business showed a 102% increase in revenue, up from R6.0
million in 2010 to R12.1 million in the review period. This is primarily due to
revenues from Vunani Fund Managers that were consolidated post 1 July 2010. The
division reported attributable earnings for the period is R6.3 million, down
R12.7 million on the corresponding period`s R19 million as a result of the
disposal of the investment in Edge during the reporting period. Cash amounting
to R13.3 million flowed to the group from the disposal.
The investment banking and corporate advisory business reported earnings in line
with those of the corresponding period. Market conditions remain challenging as
reflected in the division`s attributable loss having increased to R10.1 million
from a loss of R8.7 million compared to the prior corresponding period. This was
primarily on the back of a delay in the commencement in significant mandates.
While investment banking and advisory revenue is volatile, advisory mandates in
progress are expected to improve on the situation in the second half of the
year.
The investments business comprises investments in both publicly listed and
unlisted companies. Management continued to deliver on its strategy of reviewing
existing investments and disposing of those investments not meeting designated
criteria with the objective of redeeming associated debt in the process. This is
reflected in the reduction of the attributable segment loss from R98.8 million
in June 2010 to R20.6m in June 0211. Despite the improvement, the segment
continues to reflect losses as a result of finance costs. The group disposed of
its holdings in Peregrine during the review period. The net proceeds on the
disposal amounted to R25 million. The investment in BSI Steel was disposed of
during the review period, with proceeds of R35 million reducing associated debt.
Subsequent to the period-end, an additional investment in 20 million BSI Steel
shares was made for R14.4m on an unencumbered basis.
The securities broking segment remains focused on building a robust business and
experienced an improved trading period with revenue increasing to R23.2 million
from R10.6 million in 2010. Attributable income consequently decreased from R0.5
million in June 2010 to a loss of R2.2 million in the review period. In December
2010, Kagiso Securities Limited was acquired and the team was fully integrated
into the existing securities operations of the group. The group`s new focus on
building a private client business resulted in Kagiso Securities Limited being
used as the platform for this new initiative. As the private client initiative
is in a start up phase, cost reduction was critical, so in order to take
advantage of economies of scale, a decision was made to consolidate the private
client business into the existing securities businesses. The resultant net loss
for the period for this segment is attributable to once off closure costs
relating to this consolidation.
Global market conditions remain uncertain and no doubt will impact on the local
trading environment. Despite these uncertainties, Management remains cautiously
optimistic that the impetus provided by the successful degearing of the balance
sheet, together with the refocus on the Group`s core business will ensure
Vunani`s sustainability and return to profit in the future.
Renegotiation of facilities with lenders before the October 2011 moratorium is
ongoing and is supported by a continuous reduction of the legacy interest burden
of the Group. Opportunities for further optimisation and cost management are
being pursued. Enhanced cash flows will be used prudently to further reduce
debt.
Statements contained throughout this announcement regarding prospects of the
group have not been reviewed or reported on by the group`s external auditors.
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
For the period ended 30 June
2011
Notes Unaudited Unaudited
30 June 30 June
2011 2010
Figures in R`000s
Continuing operations
Revenue 45 832 40 495
1
Other income 1 489 2 755
Operating expenses (62 475) (41 074)
Operating (loss)/profit (15 154) 2 176
Investment income 1 786 6 988
Profit on disposal of assets 7 725 1 054
Fair value adjustments and 18 991 (81 454)
impairments 3
(Loss)/income from associates, net of (1 156) 14 957
taxation
Net finance cost (32 237) (47 071)
Net loss before taxation (20 045) (103 350)
Taxation (5 272) 7 199
Loss from continuing operations (25 317) (96 151)
Discontinued operations
Profit from discontinued 5 9 341 1 051
operation (net of tax)
Total comprehensive loss for the (15 976) (95 100)
period
Total comprehensive loss
attributable to :
Equity holders of Vunani Limited (14 868) (94 077)
Non-controlling interest (1 108) (1 023)
Total comprehensive loss for the (15 976) (95 100)
period
Earnings per share
Basic and diluted loss per share (0.3) (2.5)
(cents)
Headline loss and diluted headline loss (0.5) (2.5)
per share (cents)
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
As at 30 June 2011
Notes Unaudited Audited
Figures in R`000s 30 June 31 Dec 2010
2011
ASSETS
Non current assets
Investment property - 915 623
Property, plant and equipment 4 430 32 514
Goodwill 46 858 46 858
Investments in associates 74 878 93 434
Other investments 184 077 380 243
2
Deferred tax asset 89 411 62 475
Other non current assets 333 3 323
Other intangible assets 1 954 2 443
401 941 1 536 913
Current assets
Other investments 139 111 180 565
2
Non-current asset held for sale 978 123 147 939
6
Inventory 3 335 3 335
Taxation prepaid 169 389
Trade and other receivables 9 324 19 253
Accounts receivable from 310 233 124 939
trading activities
Trading securities 176 19
Cash and cash equivalents 26 966 22 073
1 467 437 498 512
Total assets 1 869 378 2 035 425
EQUITY
Share capital and share premium 574 257 602 008
7
(Accumulated loss) / retained (366 745) (351 877)
earnings
Equity attributable to equity 207 512 250 131
holders of Vunani
Non-controlling interest 172 980 174 088
Total equity 380 492 424 219
LIABILITIES
Non current liabilities
Other financial liabilities 163 731 843 013
2
Deferred tax liabilities 49 973 73 823
213 704 916 836
Current liabilities
Other financial liabilities 288 371 391 825
2
Non-current liabilities held 6 657 773 111 871
for sale
Taxation payable 2 163 3 538
Trade and other payables 21 044 50 105
Accounts payable from trading 305 560 122 668
activities
Loans from holding company 43 -
Bank overdraft 228 14 363
1 275 182 694 370
Total liabilities 1 488 886 1 611 206
Total equity and liabilities 1 869 378 2 035 425
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
For the period ended 30 June
2011
Total Non-
attributable controlling
interest
to equity
holders
Figures in R`000s of Vunani Total
equity
Balance as at 31 Dec 2009 17 516 103 667 121 183
Issue of shares 323 989 - 323 989
Acquisition of subsidiary - 5 279 5 279
Total comprehensive loss for (94 077) (1 023) (95 100)
the period
Total changes 229 912 4 256 234 168
Balance as at 30 June 2010 247 428 107 923 355 351
Total comprehensive loss for 2 703 66 165 68 868
the period
Total changes 2 703 66 165 68 868
Balance as at 31 December 250 131 174 088 424 219
2010
Cancellation of shares (27 751) - (27 751)
Total comprehensive loss for (14 868) (1 108) (15 976)
the period
Total changes (42 619) (1 108) (43 727)
Balance as at 30 June 2011 207 512 172 980 380 492
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
For the period ended 30 June 2011
Unaudited Unaudited
Figures in R`000s 30 June 2011 30 June
2010
Net cash inflows from operating activities 32 430 24 623
Net cash inflows from investing activities 231 323 17 629
Net cash outflows from financing (244 724) (39 195)
activities
Increase in cash and cash equivalents 19 029 3 057
Cash and cash equivalents at beginning of 7 710 3 773
the period
Cash and cash equivalents at end of the 26 739 6 830
period
SEGMENTAL REPORTING
For the period ended 30 June 2011 Unaudited Unaudited
Figures in R`000s 30 June 11 30 June 11
Revenue
Asset Management 12 846 5 960
Investment Banking and Advisory 10 125 9 192
Investment Holdings - -
Securities Broking 21 908 10 633
Properties Investments and Developments 953 14 710
continuing operations
Properties Investments and Developments 64 180 46 690
discontinued operations
110 012 87 185
Reportable segment profit/(loss) for the
period
Asset Management 6 315 18 996
Investment Banking and Advisory (10 134) (8 664)
Investment Holdings (20 613) (98 750)
Securities Broking (2 171) 518
Properties Investments and Developments 1 286 (8 251)
continuing operations
Properties Investments and Developments 9 341 1 051
discontinued operations
(15 976) (95 100)
Total assets
Asset Management 53 706 202 466
Investment Banking and Advisory 110 453 136 229
Investment Holdings 319 850 504 996
Securities Broking 336 475 158 550
Properties Investments and Developments 70 771 1 033 184
continuing operations
Properties Investments and Developments 978 123 -
discontinued operations
1 869 378 2 035 425
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS
(Figures in R`000s)
BASIS OF PRESENTATION
The results have been prepared in accordance with the listing requirements of
the JSE Limited, the recognition and measurement requirements of International
Financial Reporting Standards (IFRS), the presentation and disclosure
requirements of IAS 34 Interim Financial Reporting, the AC 500 series issued by
the Accounting Practices Board and the Companies Act (Act 71 of 2008), as
amended. The accounting policies as set out in the audited financial statements
for the period ended 31 December 2010 have been consistently applied. These
condensed consolidated financial statements incorporate the financial statements
of the company, its subsidiaries and special purpose entities that, in
substance, are controlled by the group and the group`s interest in associates.
Results of subsidiaries and associates are included from the effective date of
acquisition up to the effective date of disposal. All significant transactions
and balances between group enterprises are eliminated on consolidation.
NOTES (Figures in R`000s)
1. Revenue includes the gross amount of property sales, the costs of which are
disclosed separately in profit or loss.
2. Vunani uses an independent valuer to determine the fair values of listed
investments and their related liabilities. The value of the listed investments
is determined with reference to the share price at the end of the period. Both
listed and unlisted investments are designated at fair value through profit or
loss ("FVTPL").
3. The fair value adjustment relating to financial assets and liabilities
resulted in a profit/(loss) amounting to R 18 991 (2010: (R81 454)).
Unaudited Unaudited
June June
2011 2010
4. Headline loss
Total comprehensive loss attributable to (14 868) (94 077)
Equity holders of Vunani:
Adjust for:
Revaluation of investment property -
subsidiaries
- Gross revaluation (6 430) -
- Deferred tax 900 -
- Non-controlling shareholders interest 3 465 -
Profit on disposal of non-trading asset
- Profit on disposal (7 725) (1 054)
- Tax 1 082 148
(23 576) (94 983)
5. Discontinued operation
Management committed to a plan to sell this division early in 2011 following a
strategic decision to list its investment property division on the Johannesburg
Stock Exchange. On 11 August 2011 the group successfully listed the investment
portfolio. The segment was not classified as held for sale or a discontinued
operation at 31 December 2010 and the comparative condensed consolidated
statement of comprehensive income has been re-presented to show the discontinued
operation separately from continuing operations for the period ended 30 June
2011.
Unaudited Unaudited
June 2011 June 2010
Results of discontinued operation
Revenue 64 180 46 690
Other income - 858
Operating expenses (30 569) (16 302)
Operating profit 33 611 31 246
Fair value adjustments 6 430 -
Net finance cost (29 800) (30 195)
Results from operating activities 10 241 1 051
Income tax benefit (900) -
Profit/(loss) for the period 9 341 1 051
Basic earnings/(loss) per share 0.2 -
(cents)
Diluted earnings per share (cents) 0.2 -
Cash flows from/(used in)
discontinued operation
Net cash inflows from operating 1 251 12 812
activities
Net cash inflows from investing (3 862) (1 807)
activities
Net cash outflows from financing 5 677 (7 189)
activities
Effect on cash flows 3 066 3 816
6. Non-current assets and non-current liabilities held for sale
Part of the investment property in the Property Investments and Developments
segment is presented as a disposal group held for sale following the commitment
of the group`s management, to a plan to sell the property. The sale was
concluded on 11 August 2011 as part of the listing described in note 5. As at
30 June 2011 the disposal group comprised assets of R978.1 million less
liabilities of R657.8 million detailed as follows:
Non-current assets held for sale
Investment property 923 845
Property, plant and equipment 27 047
Other non current assets 3 631
Deferred tax assets 1 014
Trade and other receivables 14 432
Cash and cash equivalents 8 154
978 123
Non-current liabilities held for sale
Other financial liabilities 580 142
Deferred tax liabilities 49 554
Trade and other payables 28 077
657 773
7. Share capital and share premium
The values in this note are unrounded, unless stated otherwise.
The authorised share capital as at 30 June 2011 was 10,000,000,000 (2010:
10,000,000,000) ordinary shares of R 0.0001 each. The following movements of
shares took place to 30 June 2011:
Date cancelled Number of shares Purpose of cancellation
15 April 2011 114,367,925 Edge Holdings Company
(Proprietary) Limited
Transaction unwinding
At 30 June 2011 there were 4,649,134,291 (2010: 4,763,502,216) ordinary shares
in issue.
On 11 April 2011 the company entered into a settlement agreement with the Edge
vendors in terms of which Vunani disposed of its entire investment in Edge
Holding Company (Proprietary) Limited ("Edge") by virtue of unwinding the entire
transaction thereby placing the parties in substantially the same position as
prior to the conclusion of Vunani`s investment in Edge. The settlement included
the cancellation of the agterskot shares comprising 114 367 925 Vunani Limited
shares ("the agterskot shares") which agterskot shares had been allotted and
issued erroneously to the Edge vendors and duly listed on the JSE Limited
("JSE").
Following conclusion of the settlement agreement between the parties during the
current period, he effect of unwinding the transaction resulted in the
cancellation of the agterskot shares and in so doing, Vunani`s investment in
Edge. Consequently the Edge vendors were removed from the share register of
Vunani and the agterskot payment of R27 751 034 was reversed in the accounting
records of the group.
Audited
Unaudited Unaudited December
Expressed in R000`s June 2011 June 2010 2010
Shares in issue at end of 4 649 4 763 502 4 763 502
period 134
Weighted average number of
shares in
issue for the period ended 30 4 715 3 775 620 4 282 465
June 2011 (000`s) 480
Net asset value per share 5.2 5.3
(cents) 4.5
Net tangible asset value per 3.7 4.2
share (cents) 3.4
STATEMENT ON GOING CONCERN
The directors have made an assessment of the company`s ability to continue as a
going concern and have no reason to believe the business will not be a going
concern in the period ahead.
DIVIDENDS
No dividends were declared or paid to shareholders during the period under
review (2010: R nil).
SUBSEQUENT EVENTS AND CAPITAL COMMITMENTS
1. The group disposed of its investment in Vunani Portfolio Solutions.
2. The group acquired an additional 49% in Vunani Fund Managers (Proprietary)
Limited, the purchase price was settled by an issue of 100 000 000 Vunani
Limited shares at 5 cents per share.
3. The group listed Vunani Property Investment Fund Limited ("VPIF"), its
property investment segment on the JSE Limited. This was achieved through a
disposal of certain of the groups` investment property to the fund. It also
resulted in the dilution of the group`s investment in VPIF from 50.2% to 14.8%.
Proceeds from the listing will be used to settle debt within the group and for
acquisitive growth in VPIF.
4. The group acquired an additional 20 million BSI Steel Limited shares for
R14.4 million. The purchase price was settled through the issue of Vunani
Limited shares.
5. The group disposed of 2.3 million Esor Limited shares for R5 million. The
proceeds were used to settle debt within the group.
EG Dube (Chief Executive Officer) A Judin (Financial Director)
5 September 2011
CORPORATE INFORMATION
EXECUTIVE DIRECTORS NON-EXECUTIVE DIRECTORS
E Dube WC Ross (Chairman) (Independent)
A Judin BA Khumalo (Independent)
BM Khoza NS Mazwi (Independent)
NM Anderson G Nzalo (Independent)
CE Chimombe-Munyoro JR Macey (Independent)
Date: 05/09/2011 08:08:01 Produced by the JSE SENS Department.
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