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VUN - Vunani Limited - Unaudited condensed financial results for the six months
ended 30 June 2008
Vunani Limited
(formerly Vunani Capital Holdings (Proprietary) 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 INTERIM FINANCIAL RESULTS
FOR THE SIX MONTHS ENDED 30 JUNE 2008
Condensed Group Income Statement
R`000 Unaudited Reviewed
6 months 6 months
June 2008 June
2007
Revenue
71 080 56 779
Other income
1 284 1 699
Operating expenses (35 187)
(46 925)
Operating profit
25 439 23 291
Investment income
7 841 8 339
Fair value adjustments 397 389
(338 919)
Finance costs (38 383)
(88 334)
(Loss) / profit before taxation 390 636
(393 973)
Taxation
76 302 (58 579)
Attributable (loss) / profit for
the period (317 671) 332 057
Attributable to:
Equity holders
(319 679) 312 939
Minority interest
2 008 19 118
Attributable (loss) / profit for
the period (317 671) 332 057
Basic (loss)/earnings per share
(cents) (26.04) 31.50
Fully diluted (loss)/earnings per
share (cents) (26.54) 31.50
Headline earnings per share
(cents) (26.04) 31.50
Shares in issue at period end 1 227
(adjusted for treasury shares held 636 477 995 000
by the company) 000
Weighted average number of shares 1 204 995 000
in issue 501 897 000
Condensed Group Balance Sheet
R`000 Unaudited Reviewed
June 2008 June
2007
ASSETS
Non-current assets
Investment property 881 606 524 682
Property and equipment 5 416 2 016
Intangible assets and 104 550 6 475
goodwill
Investments in associates 155 191 44 948
Other investments 1 431 1 156
967 807
Other non-current asset 1 480 958
2 580 1 735
210 886
Current assets
Inventory 23 863 65 112
Trade and other receivables 33 387 5 558
Accounts receivable from 201 040 205 060
trading activities
Trading securities 327 2 677
Cash and cash equivalents 26 194 27 590
284 811 305 997
Total assets 2 865 2 041
021 883
EQUITY AND LIABILITIES
Capital and reserves
Share capital 251 144 24 706
Revaluation reserve 198 258 466 013
Retained earnings 84 361 36 959
Equity attributable to 533 763 527 678
equity holders
Minority interest 183 525 76 925
Total equity 717 288 604 603
LIABILITIES
Non-current liabilities
Other financial liabilities 1 744 1 028
292 901
Deferred tax 103 406 104 009
1 847 1 132
698 910
Current liabilities
Other financial liabilities 32 551 74 938
Receiver of revenue 7 440 1 887
Trade and other payables 63 219 16 982
Accounts payable from 196 825 210 563
trading activities
300 035 304 370
Total liabilities 2 147 1 437
733 280
Total equity and liabilities 2 865 2 041
021 883
Shares in issue at period 1 227
end (adjusted for treasury 636 477 995 000
shares held by the company) 000
Net asset value per share
(cents) 43.5 53.0
Net tangible asset value per
share (cents) 35.0 52.4
Condensed Group Statement of Changes in Equity
R`000 Total Total
attributable Minority equity
to equity interest
holders of
the group
Balance at 31 December
2006 214 740 57 807 272 547
Profit for the period
312 938 19 118 332 056
Total changes
312 938 19 118 332 056
Balance at 30 June 2007
527 678 76 925 604 603
Balance at 31 December
2007 796 426 184 036 980 462
(Loss) / profit for the
period (319 679) 2 008 (317
671)
Issue of shares
57 191 - 57 191
Purchase of treasury
shares (4 067) - (4 067)
Other changes in equity
3 892 (2 519) 1 373
Total changes (262
663) (511) (263
174)
Balance at 30 June 2008
533 763 183 525 717 288
Condensed Group Cash Flow Statement
R`000 Unaudited Reviewed
6 months 6 months
June 2008 June 2007
(restated)
1
Cash flows from operating 85 701
activities 15 928
Cash flows from investing (251 793)
activities (361 441)
Cash flows from financing
activities 284 303 166 002
Net decrease in cash and cash
equivalents (61 210) (90)
Cash and cash equivalents at the
beginning of the period 87 404 27 680
Total cash and cash equivalent at
end of the period 26 194 27 590
1 June 2007 cash flow has been restated by treating "rolled up" interest as
financing activities
Segmental Reporting
Revenue
R`000 June 2008 June
2007
Financial Services 2
80 205 66 817
Investment Services 3
(338 919) 397 389
Total
(258 714) 464 206
2 Includes Other income and
Investment income
3 Revenue for Investment
Services segment includes
fair value adjustments
Net profit after tax
R`000 June 2008 June
2007
Financial Services
29 241 24 408
Investment Services
(346 912) 307 648
Total
(317 671) 332 056
OVERVIEW
The directors of Vunani present the unaudited interim financial
results for the six months ended 30 June 2008 ("the
interim period"). Vunani is a black-owned and managed
financial services enterprise with a balance sheet underpinned
by various listed investments.
The overall economic environment was challenging in the first
half of the financial year and was characterised by a sharp
decline in listed share prices, as well as a substantial
increase in the interest rate. These factors have severely
affected the value of Vunani`s listed investments and
consequently its Investment Services business, resulting in
fair value losses in the interim period, compared to fair value
gains for the same period last year.
During the interim period the company concluded certain
strategic acquisitions to enhance its Financial Services
segment. Vunani acquired an additional 35% equity investment
in Edge Holding Company (Proprietary) Limited, increasing
Vunani`s equity investment from 10% to 45% and 51% of
Integrated Management Investments (Proprietary) Limited ("IMI")
- both fund management businesses focusing on different
sectors. The results of these investments will only be
consolidated with effect from 1 July 2008.
During the interim period, Vunani also concluded the
acquisition of a corporate finance and a treasury advisory
business and rebranded them as Vunani Corporate Finance and
Vunani Treasury Resources, respectively.
FINANCIAL RESULTS
Trading revenue increased during the interim period by 25.2% to
R71.1 million (2007: R56.8 million).
Operating profit increased by 9% to R25.4 million (2007: R23.3
million). Expenses increased mainly as a result of the
consolidation of new businesses and their associated costs.
Negative fair value adjustments of R338.9 million relate to the
decline in share prices of the underlying investments.
Finance costs increased to R88.3 million (2007: R38.4 million)
due to additional strategic investments in the Investment
Services business and an increase in interest rates. R80
million of finance costs was capitalised in the interim period.
These investments were made in line with the group`s strategy
to focus on construction and infrastructure related
investments.
Vunani`s total assets increased significantly through the
acquisition of properties, trading operations and strategic
investments in line with group focus. The increase in goodwill
arose from the acquisition of the corporate finance trading
division which supplemented existing financial service
offerings. These acquisitions were funded from existing
resources, funds generated from the company`s listing in
November 2007, the additional issue of shares and external
borrowings. Vunani`s net assets have increased marginally.
SEGMENT RESULTS
The group`s aim is to continue to grow organically and to make
strategic acquisitions in the Financial Services segment of the
business. Revenue for this segment increased by 20.0% to R80.2
million (2007: R66.8 million) and profit after tax increased by
19.7% to R29.2 million (2007: R24.4 million). This segment
generates the realised and sustainable income for the group.
The Investment Services segment houses the strategic
empowerment equity investments and its revenue is derived from
fair value adjustments influenced by market conditions. With
the decline in listed share prices in the interim period, this
segment incurred unrealised losses. Overall, however, the
value of these investments exceeds their original cost and
there are no fundamental changes to the underlying businesses.
SHARE CAPITAL
Vunani issued 57 250 000 ordinary shares during the interim
period to the senior management and staff of the corporate
finance and treasury advisory businesses acquired during the
interim period. During the interim period Vunani repurchased 6
613 523 of its own shares. These shares are treated as
"treasury" shares in the share capital of the company and
deducted from equity.
BUSINESS COMBINATIONS
The acquisition of the businesses of Vunani Corporate Finance
and Vunani Treasury Resources became effective on 1 January
2008. The revenue during the period amounted to R14.6 million
and profit after tax to R8.6 million. The goodwill and
intangible assets upon acquisition amounted to R64.8 million.
PROSPECTS
Despite the general downturn in market conditions, the
Financial Services division is well-positioned to take
advantage of current conditions. The recently announced
acquisitions are expected to generate further profits in the
second half of the year for the Financial Services division.
The performance of the Investment Services segment is linked to
the share prices of the listed investments. As a result of the
decline in the share prices of its investments, the group has
made the necessary downward fair value adjustments against
profits. Management is of the opinion that, for the most part,
the share prices of these investments are trading at a discount
to net book value and are accordingly undervalued.
DIVIDEND POLICY
Initially all earnings generated by the group will be utilised
to fund future growth and acquisitions. The company will
reconsider its cash position with the intention to distribute
dividends annually to shareholders as soon as prevailing
circumstances allow.
DIRECTORS
The composition of the Board changed as follows during the
period:
- A C Nissen resigned as Chairman and was unavailable for re-
election as a director,
- W C Ross was elected Chairman,
- N M Anderson and B M Khoza were re-elected as executive
directors,
- Dr. B A Khumalo and N Mazwi were appointed as non-executive
directors.
STATEMENT ON GOING CONCERN
The 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.
BASIS OF PREPARATION
The interim results have been prepared in accordance with
International Financial Reporting Standards, the Companies Act
(Act 61 of 1973), as amended, and International Accounting
Standards (IAS 34 : Interim Financial Reporting). The
accounting policies used to prepare these interim financial
statements are consistent with those applied in the prior
interim period and at previous year-end.
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.
On behalf of the Board
E G Dube W G Frawley
Chief Executive Officer Chief Financial Officer
26 August 2008
CORPORATE INFORMATION
Non-executive directors: W C Ross (Chairman), A F Pieterse, Dr
B A Khumalo, N S Mazwi
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
Registered address: Vunani House Block C, Athol Ridge Office
Park, 151 Katherine Street
Sandown, Sandton, 2196
Postal address: PO Box 652419, Benmore, 2010
Company secretary: W G Frawley CA(SA)
Telephone: (011) 263 9500
Facsimile: (011) 784 3095
Transfer secretaries: Computershare Investor Services
(Proprietary) Limited
Lead Designated Adviser: Merchant Sponsors (Proprietary)
Limited
Joint Designated Adviser: Vunani Corporate Finance
Date: 26/08/2008 07:05:03 Supplied by www.sharenet.co.za
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