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VUN - Vunani Limited - Reviewed Condensed Financial Results For The Year Ended 31 December 2007 Vunani Limited (formerly Vunani Capital Holdings (Pty) 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") Highlights - Attributable profit derived from Financial Services up 183% to R88 million - Fully diluted earnings per share up 184% to 48.0 cents per share - Headline earnings up 393% to R330 million - Fully diluted headline earnings per share up to 385% to 32.5 cents per share (1) - Net tangible asset value per share up 219% to 66.7 cents per share REVIEWED CONDENSED FINANCIAL RESULTS FOR THE YEAR ENDED 31 December 2007 Condensed Group Income Statement Reviewed Audited December December
2007 2006 12 months 15 months R`000 R`000 Revenue 131 981 79 203 Other income 59 369 2 145 Operating expenses (105 086) (59 651) Operating profit 86 264 21 697 Investment income 10 962 4 372 Fair value adjustments 689 958 266 125 Income from equity accounted 31 620 3 604 investments Profit before finance costs 818 804 295 798 Net finance costs (107 080) (18 928) Profit before taxation 711 724 276 870 Taxation (154 102) (53 746) Attributable profit for the 557 622 223 124 period Attributable to: Equity shareholders 487 786 168 233 Minority interests 69 836 54 891 Attributable profit for the 557 622 223 124 period Reconciliation of headline earnings Earnings attributable to equity 487 786 168 233 shareholders Adjusted for: Revaluation of investment (157 831) (101 293) properties Headline earnings attributable to 329 955 66 940 equity shareholders Fully diluted weighted average 1 015 443 836 995 000 000 shares in issue Shares in issue at period end 1 177 000 000 995 000 000 Fully diluted earnings per share 48.0 16.9 (cents) Basic earnings per share (cents) 41.4 16.9 Fully diluted headline earnings 32.5 6.7 per share (cents) (1) Headline earnings per share 28.0 6.7 (cents) (1)
Note: (1). The headline earnings calculation included in the prospectus dated 19 November 2007 ("the prospectus") did not exclude the revaluation of investment properties. Headline earnings has been recalculated in terms of IAS 33 and the headline earnings circular (08/07) which requires that the revaluation of investment properties are excluded from the headline earnings calculation. This has resulted in the restatement of the headline earnings per share in the prospectus from 46.8 to 34.7 cents per share. Condensed Group Balance Sheet Reviewed Audited December December 2007 2006
R`000 R`000 ASSETS Non-current assets 2 745 035 928 270 Investment property 700 935 524 600 Property and equipment 4 685 2 019 Goodwill 11 215 6 475 Investment in associates 65 866 32 570 Investments 1 958 040 360 537 Deferred tax 2 729 1 263 Other non-current asset 1 565 806 Current assets 283 744 287 270 Inventory 34 458 113 226 Trade and other receivables 11 773 16 465 Accounts receivable from trading 150 108 129 821 activities Trading securities - 78 Cash and cash equivalents 87 405 27 680 Total assets 3 028 779 1 215 540 EQUITY Equity attributable to equity 796 425 214 739 holders of the company Share capital and premium 198 020 24 706 Reserves 504 143 159 782 Retained income 94 262 30 251 Minority interests 184 036 57 807 Total equity 980 461 272 546 Liabilities Non-current liabilities 1 780 765 646 786 Financial liabilities 1 593 978 598 726 Deferred tax 186 787 48 060 Current liabilities 267 553 296 208 Financial liabilities 28 786 149 576 Receiver of Revenue 14 984 4 088 Trade and other payables 51 716 16 863 Accounts payable from trading 172 067 125 681 activities Total equity and liabilities 3 028 779 1 215 540 Number of equity shares in issue 1 177 000 000 995 000 000 Net asset value per share (cents) 67.7 21.6 Net tangible asset value per share 66.7 20.9 (cents)
Condensed Group Statement of Changes in Equity Share Share Revaluati Retained Minority Total capital premium on income interests equity R`000 R`000 reserves R`000 R`000 R`000
R`000 Balance 30 - 24 706 20 321 31 467 3 209 79 703 September 2005 Profit for 168 232 54 891 223 123 the period Issue of - shares Transfer to 165 448 (165 - revaluation 448) reserves Transfer of (25 987) 1 658 (24 329) portion of revaluation reserve attributable to participating funders Minority (1 951) (1 951) share of equity Dividends (4 000) (4 000) Total changes - - 139 461 (1 216) 54 598 192 843 Balance at 31 24 706 159 782 30 251 57 807 272 546 December 2006 Profit for 487 786 69 834 557 620 the period Issue of 118 173 196 173 314 shares Transfer to 344 361 (423 56 395 (23 019) revaluation 775) reserves Total changes 118 173 196 344 361 64 011 126 229 707 915 Balance at 31 118 197 902 504 143 94 262 184 036 980 461 December 2007 Condensed Group Cash Flow Statement Reviewed Audited December December 2006
2007 15 months 12 months R`000 R`000
Cash inflows/(outflows) from operating 138 860 (76 230) activities Cash outflows from investing activities (833 660) (552 076) Cash inflows from financing activities 754 525 636 252 Increase in cash and cash equivalents 59 725 7 946 Cash and cash equivalents at beginning of 27 680 19 734 period Cash and cash equivalents at end of 87 405 27 680 period Segmental Reporting Reviewed Audited
December December 2007 2006 12 months 15 months R`000 R`000
By lines of business Revenue Financial Services 131 981 79 203 Investment Services 689 958 266 125 821 939 345 328
Attributable profit for the period Financial Services 88 050 31 097 Investment Services 469 572 192 027 557 622 223 124 Total Assets Financial Services 292 723 291 358 Investment Services 2 736 056 924 182 3 028 779 1 215 540
OVERVIEW The directors of Vunani have pleasure in presenting the reviewed results for the year ended 31 December 2007 ("2007 year end"). The results for the 2007 year end are in line with group forecasts, as set out in its prospectus dated 19 November 2007. Vunani listed on ALTX on 28 November 2007. Vunani is a majority black owned and managed financial services group with offices in Johannesburg and Cape Town. FINANCIAL RESULTS The financial performance of the group for the 2007 year end is in line with forecasts as set out in the prospectus and substantially exceeded the results for the comparative 15 month period ended 31 December 2006. The growth experienced in the Financial Services business during the 2007 year is in line with the intended strategic direction of building an operationally focused Financial Services business. Vunani`s Investment Services business also showed substantial growth resulting from its ability to successfully execute and implement a number of Black Economic Empowerment ("BEE") transactions. The group`s attributable earnings for the 2007 year end increased by 149.9% to R557.6 million (2006: R223.1 million). Headline earnings grew by 392.9% to R330.0 million (2006: R66.9 million). Profit before finance costs increased 176.8% to R818.8 million (2006: R295.8 million) mainly as a result of favourable market conditions and growth in the Financial Services business which increased 183.2% to R88.1 million (2006: R31.1 million) and the Investment Services business grew 144.5% to R469.6 million (2006: R192.0 million). The group increased its investments during the year as disclosed in the prospectus which led to an increase in its related borrowings. The equity attributable to ordinary shareholders and cash resources strengthened as a result of the R175 million proceeds of the private placement as part of the JSE Limited ("JSE") listing. BASIS OF PREPARATION OF THE REVIEWED RESULTS Statement of compliance The condensed financial statements comprise a consolidated balance sheet at 31 December 2007, a consolidated income statement, consolidated statement of changes in equity and summarised consolidated cash flow statement for the year ended 31 December 2007. The condensed financial statements have been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards ("IFRS") and the presentation and disclosure requirements of IAS 34, Interim Financial Reporting, JSE listings requirements and South African Companies Act. The accounting policies applied for the year are consistent with those of the prior year with the exception of the adoption of IFRS 7 and 8. The condensed financial statements were approved by the Board of Directors on 21 February 2008. Basis of measurement The condensed financial statements have been prepared on the historical cost basis except for certain financial instruments measured at fair value. REVIEWED RESULTS The auditors, Deloitte & Touche, have reviewed these results and their unmodified review opinion is available for inspection at the company`s registered office. PROSPECTS Vunani will seek acquisitions in the Financial Services sector that can expand and strengthen its Financial Services business and in this regard shareholders are referred to the subsequent events paragraph listed below. Vunani will continue to take advantage of attractive investment deal flow to grow its balance sheet. The capital injection as a result of the listing has enabled the company to refinance funding provided by third parties where such funding has been used to acquire equity interests. This is expected to provide significant short, as well as long term benefits to the company. The group`s operations are well placed to grow organically and emphasis will be placed on extracting cash flows from these activities. In line with the forecast as set out in the prospectus for the period ending 31 December 2008, the current economic environment is less favourable than in the 2007 financial year, which potentially can result in a reduced fair value adjustment on investments. SUBSEQUENT EVENTS The recent down-turn and volatility experienced by securities listed on the JSE could have an effect on the fair value of the group`s investments. Shareholders are referred to the announcement dated 22 February 2008 and are advised that Vunani has, subject to certain conditions precedent, acquired certain assets previously owned by Exchange Sponsors (Pty) Limited and SME Corporate Solutions (Pty) Limited from Wessel van der Merwe and 51% of Retirement Fund Solutions Holdings (Pty) Limited for a maximum aggregate purchase consideration of R139.71 million. The purchase considerations are subject to certain profit warranties. In addition shareholders are referred to the announcement dated 22 February 2008 in which shareholders were advised that Vunani has also entered into further negotiations, which if successfully concluded may have a material effect on the price of the company`s securities. Accordingly, shareholders are advised to exercise caution when dealing in the company`s securities until a full announcement is made. SHARE CAPITAL Vunani has, through a private placement, placed 175 000 000 ordinary shares at 100 cents per share to selected investors of Vunani with the listing on the JSE on 28 November 2007. DIVIDEND POLICY Initially all earnings generated by the group will be utilised to fund future growth and acquisitions. The company will periodically reconsider its cash position with the intention to distribute dividends to shareholders as soon as prevailing circumstances allow. No dividend will be declared in respect of the year ended 31 December 2007. STATEMENT ON GOING CONCERN The condensed financial statements have been prepared on the going-concern basis since the directors have every reason to believe that the company has adequate resources in place to continue in operation for the foreseeable future. APPRECIATION The invaluable contribution of our directors, management and staff is clearly reflected in these results. Their sustained support and performance will enable Vunani to continue growing and prospering into the future. Our sincere appreciation is extended to each and every one of our employees for their efforts and performance. To all our shareholders, a special thank you for your continued support. Your loyalty and confidence in our group is appreciated. On behalf of the Board E G Dube W G Frawley Chief Executive Officer Chief Financial Officer 25 February 2008 CORPORATE INFORMATION Non executive directors: A C Nissen (Chairman), B B Finca, A F Pieterse, W C Ross Executive directors: E G Dube (CEO); W G Frawley (CFO), B M Khoza, N M Anderson, C E Chimombe-Munyoro Registration number: 1997/020641/06 Postal address: PO Box 652419, Benmore, 2010 Company secretary: William Guy Frawley CA (SA) Telephone: (011) 263 9500 Facsimile: (011) 784 3095 Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited Auditors: Deloitte & Touche Designated Adviser: Vunani Corporate Finance These results and an overview of Vunani Limited are available at www.vunanilimited.co.za. Date: 25/02/2008 08:22:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). 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