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VUN - Vunani Limited - Reviewed condensed consolidated financial results for the
year ended 31 December 2009
Vunani Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1997/020641/06)
(JSE code: VUN ISIN: ZAE0000110359)
("Vunani" or "the company")
REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER
2009
SALIENT FEATURES
- Fair value gains of R1.1 million (2008: R854.9 million loss) posted
- Tough trading conditions resulted in lower revenues of R121.9 million (2008:
R223.1 million)
- Debt restructure finalised post year-end in March 2010 with R313,6m debt
converted to equity
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2009
Notes Reviewed Audited
2009 2008
Figures in R`000s
Revenue 1 121,935 223,065
Other income 15,685 18,765
Cost of property developments sold 1 (177) (52,097)
Operating expenses (129,294) (116,599)
Operating profit 8,149 73,134
Investment income 16,876 17,552
Fair value adjustments and impairments 2 1,069 (854,915)
Income from associates 20,419 17,729
Finance cost (199,746) (201,505)
Net loss before taxation (153,314) (948,005)
Taxation (5,548) 163,883
Total comprehensive loss for the period (158,781) (784,122)
Total comprehensive loss attributable to:
Equity holders of Vunani Limited (167,720) (707,845)
Non-controlling interest 8,939 (76,277)
Total comprehensive loss for the period (158,781) (784,122)
Earnings per share
Basic loss per share (cents) (13.2) (60.7)
Diluted loss per share (cents) (13.2) (60.7)
Headline loss per share (cents) (10.8) (58.8)
Diluted headline loss per share (cents) (10.8) (58.8)
Dividends
Dividends per share - -
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2009
Reviewed Audited
2009 2008
Figures in R`000s
Net cash (outflows) / inflows from operating
activities (135,398) 56,144
Net cash inflows / (outflows) from investing
activities 60,113 (298,022)
Net cash (outflows) / inflows from financing
activities 41,471 192,062
Decrease in cash and cash equivalents (33,815) (49,816)
Cash and cash equivalents at beginning of the period 37,588 87,404
Cash and cash equivalents at end of the period 3,773 37,588
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2009
Total Non-
attributable to controlling Total equity
equity holders interest
of Vunani
Figures in R`000s
Balance as at 31 December 2007 809,259 171,204 980,463
Total comprehensive loss
for the period (707,845) (76,277) (784,122)
Issue of shares 57,184 - 57,184
Purchase of treasury shares (4,941) - (4,941)
Dividends paid to minorities - (199) (199)
Total changes (655,602) (76,476) (732,078)
Balance as at 31 December 2008 153,657 94,728 248,385
Issue of shares 27,675 - 27,675
Equity settled share based payments 3,825 - 3,825
Total comprehensive loss
for the period (166,720) 8,939 (157,781)
Total changes (136,139) 8,939 (127,200)
Balance as at 31 December 2009 17,518 103,667 121,185
SEGMENTAL REPORTING
For the year ended 31 December 2009
Reviewed Audited
2009 2008
Figures in R`000s
Revenue
Financial Services 143,329 233,824
Investment Services (20,326) (854,915)
123,003 (621,091)
Attributable (loss) / profit for the year
Financial Services 6,036 88,514
Investment Services (164,817) (872,636)
(158,781) (784,122)
Total assets
Financial Services 216,528 227,934
Investment Services 1,685,726 1,726,761
1,902,254 1,954,695
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2009
Notes Reviewed
2009
Figures in R`000s
ASSETS
Non current assets
Investment property 800,398
Property, plant and equipment 25,963
Goodwill 39,436
Investments in associates 232,944
Other investments 3 612,948
Deferred tax 104,696
Other non current assets 2,395
Other intangible assets 1,250
1,820,030
Current assets
Other investments 3 -
Inventory 4,254
Loan to holding company 29
Taxation prepaid 1,261
Trade and other receivables 24,556
Accounts receivable from trading activities 34,166
Trading securities 7,659
Cash and cash equivalents 10,299
82,224
Total assets 1,902,254
EQUITY
Share capital and share premium 278,019
Non-distributable reserve 4,824
Other reserves 3,825
(Accumulated loss) / retained earnings (269,150)
Equity attributable to equity holders of Vunani 17518
Non-controlling interest 103,667
Total equity 121,185
LIABILITIES
Non current liabilities
Other financial liabilities 3 1,568,131
Deferred tax 126,049
1,694,180
Current liabilities
3 986
Other financial liabilities
Taxation payable 2,657
Trade and other payables 43,109
Accounts payable from trading activities 33,611
Bank overdraft 6,526
86,889
Total liabilities 1,781,069
Total equity and liabilities 1,902,254
Shares in issue (adjusted for treasury shares held by
the company) (000`s) 1,340,562
Weighted average number of shares in issue (000`s) 1,274,135
Net asset value per share (cents) 1.3
Net tangible asset value per share (cents) (1.7)
Restated Restated
Audited Audited
2008 2007
Figures in R`000s
ASSETS
Non current assets
Investment property 817,132 700,935
Property, plant and equipment 5,540 4,685
Goodwill 75,596 11,215
Investments in associates 206,077 65,866
Other investments 488,828 1,927,597
Deferred tax 24,517 2,729
Other non current assets 1,891 1,565
Other intangible assets 10,284 -
1,629,865 2,714,592
Current assets
Other investments 180,531 -
Inventory 6,406 34,458
Loan to holding company - -
Taxation prepaid - -
Trade and other receivables 4,890 11,773
Accounts receivable from trading activities 94,959 47,893
Trading securities 456 -
Cash and cash equivalents 37,588 87,404
324,830 181,528
Total assets 1,954,695 2,896,120
EQUITY
Share capital and share premium 250,263 198,020
Non-distributable reserve 180,524 504,143
Other reserves - -
(Accumulated loss) / retained earnings (277,130) 107,094
Equity attributable to equity holders of Vunani 153,657 809,257
Non-controlling interest 94,728 171,204
Total equity 248,385 980,461
LIABILITIES
Non current liabilities
Other financial liabilities 1,003,335 1,563,534
Deferred tax 48,930 186,787
1,052,265 1,750,321
Current liabilities
486,659 28,786
Other financial liabilities
Taxation payable 3,258 14,984
Trade and other payables 79,797 51,847
Accounts payable from trading activities 84,331 69,721
Bank overdraft - -
654,045 165,338
Total liabilities 1,706,310 1,915,659
Total equity and liabilities 1,954,695 2,896,120
Shares in issue (adjusted for treasury
shares held by the company) (000`s) 1,176,444 1,127,250
Weighted average number of shares in issue (000`s) 1,166,516 965,694
Net asset value per share (cents) 13.1 71.8
Net tangible asset value per share (cents) 5.8 70.8
NOTES TO THE REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS
1. Revenue includes the gross amount of property sales, the costs of which are
disclosed separately in the statement of comprehensive income
2. Fair value adjustments and impairments Reviewed Audited
2009 2008
Investment property (8,878) (72,713)
Goodwill impairment 35,416) -
Financial assets and liabilities
designated at FVTPL 45,363 (782,202)
1,069 (854,915)
3. Vunani uses an independent valuer to determine the fair values of funded
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
relevant period. Both listed and unlisted investments are designated at fair
value through profit or loss ("FVTPL").
4. The published 31 December 2007 and 2008 values for accounts receivable
from trading activities and accounts payable from trading activities have been
restated to reflect the legal right of set-off for cash held with JSE Trustees
against client account balances. Previously this was reflected on a gross
basis. The effect of the set-off is to reduce both the receivables and the
payables by R66.1 million (2007: R102.2 million). The comparative figures for
2008 and 2007 are the prior years audited figures restated.
5. As a result of debt covenants being breached during 2008, a Heads of
Agreement for the restructure of the Group`s debt was entered into with the
company`s major funders on the 30 June 2009 that alleviated the going concern
issues. The mechanism of effecting the Heads of Agreement was through a
renounceable claw-back offer, which closed on 5 March 2010. The claw-back offer
resulted in R313.6 million worth of debt being converted into equity. Share
issue expenses amounting to R17.3 million arose as a result of the restructure
and will set off against share premium. The effect of the claw-back offer was
to increase the number of issued shares to 4 621 942 216 (including the shares
issued to advisors and funders).
The effect on the net asset value and the net tangible asset values, had it
occurred on 31 December 2009 would have been as follows:
Adjusted Reviewed Change
2009 2009
Net asset value per share (cents) 6.8 1.3 423.1%
Net tangible asset value per share (cents) 5.9 (1.7) 447.1%
Reviewed Audited
2009 2008
6. Headline loss
Total comprehensive loss attributable to Equity
holders of Vunani: (167,720) (707,845)
Adjust for:
Revaluation of investment property
Subsidiaries
- Gross revaluation 8,878 72,713
- Deferred tax (2,493) (20,360)
- Non-controlling shareholders interest 5,111 (31,854)
Associates
- Gross revaluation (28,644) -
- Deferred tax 7,540 -
- Non-controlling shareholders interest 13,724 -
Disposals of investment property
- Profit on disposal (1,213) (13,408)
- Capital gains tax 145 1,877
- Non-controlling shareholders interest (298) 7,015
Goodwill
- Impaired 35,416 -
- Non-controlling shareholders interest (341) -
Profit on disposal of associates
-Profit on disposal (228) 7,842
- Tax 32 (2,196)
- Non-controlling shareholders interest 43 -
Profit on disposal of non-trading asset
- Profit on disposal (9,181) -
- Tax 1,285 -
(137,944) (686,215)
OVERVIEW
The directors of Vunani present the reviewed financial results for the year
ended 31 December 2009 ("the period"). Vunani is a black-owned and managed
financial services enterprise with a statement of financial position
underpinned by various investments in equities and property assets.
During the financial year, markets stabilised initially and then rallied
resulting in a recovery in share prices towards the end of the year. In
general, listed shares showed the beginnings of a recovery which resulted in an
improvement in the Group`s asset values. Trading operations, however continued
to feel the affects of depressed markets. The Corporate Finance business
suffered under the constricted market.
The Asset Management business, in its growth phase, performed well continuing
to show growth in a difficult market. In the property sector the level of
vacancies continued for longer than anticipated with its effect on rental
income. There was a recognisable slow-down in the demand for developments
during the year and the Group was well placed in anticipating this and
scheduling its developments to come to market from late 2010.
The general decrease in interest rates that commenced in December 2008
contributed favourably to the results, however the full effect was off-set by
the increase in borrowings resulting from capitalised interest. The positive
influence of these factors was negated by the slow recovery in property values,
which normally lag market recoveries and resulted in some fair value losses in
properties, but to a far lesser degree than that experienced during the same
period last year.
During the second half of the period, the company concluded an indirect 20.4%
investment in Civils 2000 Holdings (Proprietary) Limited which became
unconditional on 9 July 2009.
The Edge Holding Company (Proprietary) Limited`s "agterskot" in respect of the
acquisition concluded in March 2008, was settled via the issue of 114 367 925
Vunani shares on the 31 July 2009.
FINANCIAL RESULTS
Revenue decreased during the period by 45.4% to R121.9 million (2008: R
223.1million) mainly as a result of the slow down in the financial markets and
our scheduled cutback in residential property developments in anticipation of
the decline in property markets. Operating profit decreased by 89.0% to R8.1
million (2008: R73.1 million) mainly as a result of the decline in revenue. The
improvement in market prices of underlying investments resulted in fair value
gains of R1.1 million (2008: loss of R854.9 million). Finance costs decreased
to R199.7 million (2008: R201.5 million) as a result of declining interest
rates off-set by increased borrowings and capitalised interest.
The Financial Services business profit after tax of R6.9 million (2008: R88.5
million) resulted from the slow recovery of markets compounded by the low base
in 2008.
The Asset management business continued to grow of the small base of 2008 with
profit after tax of R9,6 million (2008: R5,6 million) mainly from the effects
of a full year`s contributions from associates.
Properties business sector, in anticipating the length and depth of the current
depressed market, scheduled developments to come to completion only in the
later part of 2010 and early 2011. Together with rental vacancies continuing
for longer as a result the depressed market conditions, saw a loss after tax of
R13,2 million (2008: R61,3 million profit).
Vunani`s total assets decreased by 2.6% to R1.9 billion (2008: R2.0 billion)
mainly as a result of the decrease in accounts receivable from trading
activities after off-set with accounts payable from trading activities and the
impairment of goodwill on acquisition countered by an increase in deffered tax
as a result of the increase in assessed losses and the net gain in fair value
adjustments. Fair value adjustments in Investment properties resulted in a
decrease to R800.4 million (2008: R817.1 million) as a result of owner occupied
property being transferred to property and equipment with a similar increase
over the prior year. 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 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 and the Companies Act (Act
61 of 1973), as amended. The accounting policies as set out in the audited
financial statements for the year ended 31 December 2009 have been consistently
applied, except for the accounting for the off-set of cash held with JSE
Trustees referred to in note 4 above.
These 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 Change date of
acquisition 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 was 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 was fulfilled through the renounceable claw-back offer that
closed on 5 March 2010 resulting in R313,6m of debt capitalised through the
issue of 3 136 000 000 shares in the company.
SEGMENT RESULTS
The Financial Services businesses comprise Asset Management, Investment Banking
and Properties. Revenues decreased to R143.3 million (2008: R233.8 million)
resulting in profits after tax declining to R6.9 million (2008: R88.5million).
Added to this, the slow and late recovery in markets put further pressure on
the operating divisions. The Investment Banking sector, with its reliance on
corporate activities declined to R10.5 million (2008: R21.6 million). Asset
Management, through its full year of associate`s earnings showed growth to R9.6
million (2008: R5.6 million). Properties earnings slowed as a result of the
decision to reschedule residential developments into 2010 and later.
Vacancies in its investment properties continued for longer than anticipated
and together with financing costs further contributed to the decline in
Properties earnings with a loss of R13.2 million (2008: R61.3 million profit).
Investment Services continued to feel the slow return in global market
conditions. The sector delivered a reduced net loss of R164.8 million (2008:
R872.6 million loss). The decline in fair market value at December 2008 was
reversed with net fair value gains of R1.1 million (2008: R854.9 million loss).
This was made up by fair value gains on investments off-set by fair value
losses in Properties and the fair value of liabilities guaranteed by Vunani
Limited.
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. On 31 July 2009 114 367 925 shares were issued. On 27 October 2009,
8,055,709 shares were cancelled. At 31 December 2009 there were 1,340,562,216
(2008: 1,176,444,291) ordinary shares in issue. Subsequent to year end a
further 3 281 380 000 shares were issued pursuant to the Claw-back offer.
DIVIDENDS
No dividends were declared or paid to shareholders during the year ended 31
December 2009.
SUBSEQUENT EVENTS AND CAPITAL COMMITMENTS
There were no material subsequent events other than the debt restructuring
referred to earlier in the report. There were no significant capital
commitments within the Group.
PROSPECTS
The finalisation of the Group`s debt restructure, albeit subsequent to the year
end, has re-enforced the Group`s resolve. The recovery in the equity markets
experienced in the latter part of the year has had a positive impact on the
economy; however the full impact of this recovery has not yet materialised.
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.
CHANGES 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 non-executive director of
the company terminated on that date. Mr G Nzalo and Mr JR Macey were appointed
as non-executive directors with effect from 1 November 2009. On the 16 March
2010 BM Khoza was appointed Managing Director.
REVIEW REPORT
The Group`s auditors KPMG Inc. have reviewed the financial information for the
year ended 31 December 2009. Their unmodified review report is available for
inspection at the registered office of the company.
EG Dube (Chief Executive Officer) WG Frawley (Chief Financial Officer)
31 March 2010
CORPORATE INFORMATION
EXECUTIVE DIRECTORS NON-EXECUTIVE DIRECTORS
E Dube WC Ross (Chairman) (Independent)
WG Frawley BA Khumalo (Independent)
BM Khoza NS Mazwi (Independent)
NM Anderson G Nzalo (Independent)
CE Chimombe-Munyoro JR Macey (Independent)
Registration number: 1997/020641/06
Registered address: Vunani House, Athol Ridge Office Park, 151 Katherine
Street Sandown, Sandton, 2196
Telephone: + 27 11 263 9500
Facsimile: +27 11 784 3095
Postal address: PO Box 652419, Benmore, 2010
Company secretary: WG Frawley CA(SA)
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
Lead Designated Adviser: Grindrod Bank Limited
Joint Designated Adviser: Vunani Corporate Finance
Visit our website: www.vunanilimited.com
Date: 31/03/2010 17:16:02 Supplied by www.sharenet.co.za
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