Wrap Text
VUN - Vunani Limited - Reviewed Condensed Consolidated Financial Results for the
year ended 31 December 2008
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")
SALIENT FEATURES
- Attributable profit derived from Financial Services segment in line with
prior year at R88.5 million
- Concluded a number of acquisitions which have strengthened the group`s
Financial Services segment
- Material decline in market prices of Vunani`s listed empowerment
investments
- Modified review opinion
REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS
FOR THE YEAR ENDED 31 DECEMBER 2008
Condensed Consolidated Income Statement
Reviewed Audited
December December
2008 2007
R`000 R`000
Revenue 171 270 131 981
Other income 18 395 59 369
Operating expenses (107 827) (105 086)
Operating profit 81 838 86 264
Investment income 17 552 10 962
Fair value adjustments (856 768) 689 958
Income from equity accounted investments 19 845 31 620
(Loss)/profit before finance costs (737 533) 818 804
Net finance costs (201 505) (107 080)
(Loss)/profit before taxation (939 038) 711 724
Taxation 180 810 (154 102)
Attributable (loss)/profit for the year (758 228) 557 622
Attributable to:
Equity shareholders (756 582) 487 786
Minority interests (1 646) 69 836
Attributable (loss)/profit for the year (758 228) 557 622
Reconciliation of headline
(loss)/earnings
(Loss)/earnings attributable to equity (756 582) 487 786
shareholders
Adjusted for:
Profit on disposal of associates (11 028) -
Revaluation of investment properties 72 713 (157 831)
Headline (loss)/earnings attributable to (694 897) 329 955
equity shareholders
Fully diluted weighted average number 1 216 266 1 015 443 836
shares in issue 210
Shares in issue at year end 1 234 250 1 177 000 000
000
Basic (loss)/earnings per share (cents) (62.2) 48.0
(1)
Headline (loss)/earnings per share (57.1) 32.5
(cents) (1)
Fully diluted (loss)/earnings per share (62.2) 48.0
(cents)
Fully diluted headline (loss)/earnings (57.1) 32.5
per share (cents)
Note:
(1). Basic and headline earnings per share as at 31 December 2007 have been
recalculated in terms of IAS 33 and the headline earnings circular (08/07).
This has resulted in the restatement of basic earnings per share to 48.0
cents from 41.4 cents and headline earnings per share to 32.5 cents from
28.0 cents.
Condensed Consolidated Balance Sheet
Reviewed Audited
December December
2008 2007(1)
R`000 R`000
ASSETS
Non-current assets 1 671 355 2 714 593
Investment property 807 767 700 935
Property and equipment 5 540 4 685
Goodwill (2) 92 591 11 216
Investment in associates 181 077 65 866
Investments 480 821 1 927 597
Deferred tax 101 668 2 729
Other non-current asset 1 891 1 565
Current assets 390 685 283 743
Investments (3) 180 531 -
Inventory 6 406 34 458
Trade and other receivables 4 352 11 773
Accounts receivable from trading 161 822 150 108
activities
Cash and cash equivalents 37 574 87 404
Total assets 2 062 040 2 998 336
EQUITY
Equity attributable to equity holders of 103 831 796 426
the company
Share capital and premium 250 263 198 020
Reserves 195 809 504 143
Accumulated (loss)/retained earnings (342 241) 94 263
Minority interests 172 528 184 036
Total equity 276 359 980 462
Liabilities
Non-current liabilities 1 063 133 1 750 321
Financial liabilities 968 548 1 563 534
Deferred tax 94 585 186 787
Current liabilities 722 548 267 553
Financial liabilities(3) 525 340 28 786
Receiver of Revenue 2 621 14 984
Trade and other payables 44 149 51 716
Accounts payable from trading activities 150 438 172 067
Total equity and liabilities 2 062 040 2 998 336
Shares in issue at year end 1 234 250 1 177 000
000 000
Net asset value per share (cents) 8.4 67.7
Net tangible asset value per share 0.9 66.7
(cents)
Notes:
(1) The fair value adjustment of financial liabilities amounting to R30,4
million in 2007, was previously included in the fair value of investments,
has now been reclassified under financial liabilities.
(2) The increase in goodwill is as a result of the acquisitions of various
financial services businesses during the year under review to strengthen
the Financial Services segment as set out in the Business Combinations
paragraph below.
(3) Investments amounting to R180.5 million, the funding of which is in breach
of certain debt covenant ratios are included under current assets. The
related liability of R513.9 million is included in the current portion of
financial liabilities pending final negotiations with funders as set out in
the Statement on Going Concern paragraph below.
Condensed Consolidated Statement of Changes in Equity
Shar Share Revaluat Accumu Minor Total
e premiu ion lated ity equity
capi m reserves (loss) inter R`000
tal R`000 R`000 / ests
R`00 Retain R`000
0 ed
earnin
gs
R`000
Balance at 31 - 24 706 159 782 30 251 57 272
December 2006 807 546
Profit for the year 487 69 557
786 836 622
Issue of shares 118 173 173
196 314
Transfer to 344 361 (423 56 (23
revaluation 774) 393 020)
reserves
Total changes 118 173 344 361 64 012 126 707
196 229 916
Balance at 31 118 197 504 143 94 263 184 980
December 2007 902 036 462
Loss for the year (756 (1 (758
582) 646) 228)
Issue of shares 6 57 178 57 184
Purchase of (8) (4 (4
treasury shares 933) 941)
Transfer to (308 320 (9 1 882
revaluation 334) 078 862)
reserves
Total changes (2) 52 245 (308 (436 (11 (704
334) 504) 508) 103)
Balance at 31 116 250 195 809 (342 172 276
December 2008 147 241) 528 359
Condensed Consolidated Cash Flow Statement
Reviewed Audited
December December
2008 2007
R`000 R`000
Cash inflows from operating 33 915 138 860
activities
Cash outflows from investing (336 450) (833 661)
activities
Cash inflows from financing 252 705 754 525
activities
(Decrease)/increase in cash and cash (49 830) 59 724
equivalents
Cash and cash equivalents at 87 404 27 680
beginning of year
Cash and cash equivalents at end of 37 574 87 404
year
Segmental Reporting
Reviewed Audited
December December
2008 2007
R`000 R`000
Revenue
Financial Services 171 270 131 981
Investment Services (856 768) 689 958
(685 498) 821 939
Attributable (loss)/profit for the
year
Financial Services 88 508 88 050
Investment Services (846 736) 469 572
(758 228) 557 622
Total assets
Financial Services 298 317 292 723
Investment Services 1 763 723 2 705 613
2 062 040 2 998 336
OVERVIEW
Vunani is a black-owned and managed financial services company
that operates through two distinct segments, Financial Services
and Investment Services. Financial Services comprises the
asset management, investment banking and property business
units. The Investment Services segment houses Vunani`s
strategic empowerment equity investments ("the empowerment
investments").
The global economic downturn has resulted in a material decline
in the market value of Vunani`s listed empowerment investments
during the year. These investments are carried in the
Investment Services segment, which reflected material
unrealised negative fair value adjustments.
To strengthen its Financial Services segment, the group
acquired an additional 35% stake in Edge Holding Company
(Proprietary) Limited ("Edge"), a fund of hedge funds manager,
increasing its shareholding to 45%. The company also acquired
the businesses of Vunani Corporate Finance ("VCF") and Vunani
Treasury Resources ("VTR") and a 51% stake in Integrated
Managed Investments (Proprietary) Limited ("IMI"). The
investment in Edge was funded through borrowings and the VCF,
VTR and IMI acquisitions were funded from a combination of cash
resources and the issue of shares.
The profit after tax generated by Financial Services in respect
of the year ended 31 December 2008 is in line with the previous
financial year at R88.5 million.
FINANCIAL RESULTS
As a result of the negative fair value adjustments the
financial performance of the group for the 2008 year is
substantially below the forecasts as set out in the prospectus.
Despite difficult trading conditions, Vunani experienced a 30%
growth in revenue to R171.3 million (2007: R132.0 million).
Other income decreased to R18.4 million (2007: R59.4 million)
and with concerted cost containment resulted in a 5% decrease
in operating profit to R81.8 million (2007: R86.3 million).
These core operations will remain the platform for future
growth of the group. The Financial Services segment
contributed R88.5 million (2007: R88.0 million) to attributable
income.
The group`s attributable earnings for the 2008 year decreased
by 236% to a R758.2 million loss (2007: R557.6 million profit).
Headline earnings declined by 307% to R683.9 million loss
(2007: R330.0 million profit). Profit/loss before finance
costs decreased 190% to R737.5 million loss (2007: R818.8
million profit) as a result of fair value adjustments on the
empowerment investments. The group remains committed to its
core empowerment investments which are regarded as quality
assets with strong management and are well-positioned to
benefit from future economic growth in the South African
environment. Vunani is committed to continuing its empowerment
investment strategy as set out in the Subsequent Events
paragraph below.
BASIS OF PREPARATION OF THE REVIEWED RESULTS
Statement of compliance
The condensed financial statements comprise a consolidated
balance sheet at 31 December 2008, a consolidated income
statement, consolidated statement of changes in equity and
summarised consolidated cash flow statement for the year ended
31 December 2008. 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, the JSE Listings
Requirements and the South African Companies Act.
The accounting policies applied for the year are consistent
with those of the prior year.
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 annual financial statements of the group have been reviewed
by the company`s auditors, Deloitte & Touche. The review report
has been modified to draw attention to a material uncertainty
which may cast significant doubt on the company`s ability to
continue as a going concern which has been disclosed in the
Statement On Going Concern and Subsequent Events below. Their
modified report is available for inspection at the registered
office of the company.
STATEMENT ON GOING CONCERN
The decline in the share prices of Vunani`s empowerment
investments has caused a breach in the respective debt covenant
ratios with certain financial institutions. The company was
advised that these breaches constituted events of default in
terms of the finance agreements entered into with these
institutions. To date, these institutions have not initiated
any formal legal processes in order to recover the amounts
owing. These institutions have subsequently commenced
negotiations that could lead to the restructuring of the
group`s debt and underlying commitments which would ensure the
continued solvency of the company. The company`s ability to
continue as a going concern is dependent on the successful
completion of these negotiations regarding the restructure of
the debt and/or the recovery of share prices of the underlying
empowerment investments and/or additional security being
provided.
The condensed financial statements have been prepared on the
going concern basis anticipating the successful outcome of the
negotiations with the financial institutions in the foreseeable
future.
SUBSEQUENT EVENTS
The group is currently in negotiations with its funders to
remedy loan covenant breaches that will potentially lead to a
restructuring of the group`s funding commitments as more fully
disclosed in the Statement On Going Concern paragraph above.
Vunani is committed to continuing its empowerment investment
strategy and announced on 4 March 2009, the subscription of a
20.4% equity holding in Civils 2000 Holdings (Proprietary)
Limited, a well established construction company in the Western
Cape. Vunani also acquired a 30% investment in Solethu
Investments (Proprietary) Limited, a black-owned investment
group focused on investments in road, rail, sea and related
sectors.
BUSINESS COMBINATIONS
The acquisition of the businesses of VCF and VTR became
effective on 1 January 2008 and the acquisition of IMI became
effective on 1 July 2008. The revenue from these acquisitions
during the period amounted to R33.9 million and profit after
tax to R9.2 million. The goodwill and intangible assets on
these acquisitions amounted to R81.4 million.
SHARE CAPITAL
The company issued 57 million shares in settlement of a portion
of the purchase consideration for its acquisition of VCF and
VTR. During the year the company repurchased 8 million of its
own shares at various prevailing market prices.
DIVIDEND POLICY
No dividend will be paid in respect of the year ended 31
December 2008 in order to preserve liquidity and reduce debt.
PROSPECTS
The group is committed to resolving the challenges in its
Investments Services segment. Vunani continues to experience
good investment deal flow and has developed its Financial
Services segment which is now well-positioned to show strong
growth once stability returns to the financial markets.
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
31 March 2009
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, 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: Merchantec (Proprietary) Limited
Joint Designated Adviser: Vunani Corporate Finance
These results and an overview of Vunani Limited are available at
www.vunanilimited.co.za.
Date: 31/03/2009 13:52:01 Supplied by www.sharenet.co.za
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