Wrap Text
VUN - Vunani Limited - Reviewed condensed consolidated results for the year
ended 31 December 2010
VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN
ISIN: ZAE000110359
("Vunani" or "the Group")
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31
December 2010
Notes Reviewed 31 Dec Restated
2010 Audited 31 Dec
2009
Figures in R`000s
Revenue 195 801 125 046
Other 14 937 6 183
income
Cost of property (177)
developments sold -
Operating expenses (144 382) (129 294)
Operating profit 66 356 1 758
Investment income 12 747 16 876
Fair value adjustments and (29 654) 1 069
impairments 2
Income from 54 094 21 076
associates
Net finance cost (158 344) (193 355)
Net loss before (54 801) (152 576)
taxation
Taxation (11 581)
724
Loss for the year and total comprehensive (54 077) (164 157)
loss for the year
Total comprehensive loss attributable
to :
Equity holders of (104 926) (172 880)
Vunani Limited
Non-controlling 50 849 8 723
interest
Loss for the year and total comprehensive (54 077) (164 157)
loss for the year
Earnings per share
Basic loss per
share (cents) (2.5) (13.6)
Diluted loss per
share (cents) (2.5) (13.6)
Headline loss per
share (cents) (3.0) (11.4)
Diluted headline loss per
share (cents) (3.0) (11.4)
Dividend
s
Dividends per
share - -
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December
2010
Notes Reviewed Restated Restated Audited 31 Dec
31 Dec Audited 2008
2010 31 Dec
2009
Figures in R`000s
ASSETS
Non current
assets
Investment 918 818 800 398 817 132
properties
Property, plant and 29 319 25 963 5 540
equipment
Goodwill 47 523 39 436 75 596
Investments in 94 957 246 469 206 077
associates
Other investments 385 373 572 757 488 828
1
Deferred tax 62 475 90 056 24 517
asset
Other non current 3 656 2 395 1 891
assets
Other intangible 2 443 1 250 10 284
assets
1 544 564 778 724 1 629 865
Current
assets
Other investments 175 435 44 207 180 531
1
Non-current asset 146 085 -
held for sale -
Inventor 3 335 4 254 6 406
y
Loan to holding -
company - 29
Taxation prepaid 1 261 -
389
Trade and other 19 323 20 583 4 890
receivables
Accounts receivable from 124 939 34 166 94 959
trading activities
Trading 19 249 456
securities
Cash and cash 22 073 10 299 37 588
equivalents
491 598 115 048 324 830
Total 2 036 162 1 893 772 1 954 695
assets
EQUITY
Share capital and share 602 008 278 019 250 263
premium
Revaluation - 4 824 180 524
reserve
Share based payment - 3 825 -
reserve
Accumulated loss (361 251) (264 975) (267 795)
Equity attributable to 240 757 21 693 162 992
equity holders of Vunani
Non-controlling 174 088 117 960 109 237
interest
Total 414 845 139 653 272 229
equity
LIABILIT
IES
Non current
liabilities
Other financial 935 049 1 525 371 1 003 335
liabilities 1
Deferred tax 72 188 99 096 25 084
liabilities
1 007 237 1 624 467 1 028 419
Current
liabilities
Other financial 307 888 43 746 486 659
liabilities 1
Non-current liabilities 111 871 - -
held for sale
Taxation payable 3 538 2 657 3 258
Trade and other 51 286 42 979 79 799
payables
Accounts payable from 122 668 33 611 84 331
trading activities
Trading - 133 -
securities
Bank 16 829 6 526 -
overdraf
t
614 080 129 652 654 047
Total 1 621 317 1 754 119 1 682 466
liabilit
ies
Total equity and 2 036 162 1 893 772 1 954 695
liabilities
Shares in issue (adjusted for treasury shares held by the company) (000`s)
4 763 1 340 1 176 444
502 562
Weighted average number of shares in
issue (000`s)
4 282 1 274 1 166 516
465 135
There are no dilutionary instruments
in issue.
Net asset value 13.9
per share (cents) 5.1 1.6
Net tangible asset value 6.6
per share (cents) 4.0 (1.4)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31
December 2010
Reviewed Restated Audited 31 Dec
31 Dec 2009
2010
Figures in R`000s
Net cash inflows from operating 44 657 56 872
activities
Net cash inflows from 33 269 29 965
investing activities
Net cash outflows from (76 456) (120 652)
financing activities
Increase / (decrease) in cash and cash 1 470 (33 815)
equivalents
Cash and cash equivalents at beginning 3 773 37 588
of the year
Cash and cash equivalents at end of the 5 243 3 773
year
CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For the year ended 31
December 2010
Total Non- Total equity
attributable controll
to equity ing
holders of interest
Vunani
Figures in R`000s
Balance as at 31 December
2008
As previously 153 655 94 728 248 383
presented
Prior year 9 337 14 509 23 846
adjustment
Balance as at 31 December 162 992 109 237 272 229
2008 as restated
Issue of shares 27 756 - 27 756
Equity settled share based 3 825 - 3 825
payments
Total comprehensive loss as (167 720) 8 939 (158 781)
previously presented
Prior year (5 160) (5 376)
adjustment (216)
Total comprehensive loss as (172 8 (164 157)
restated 880) 723
Total (141 8 (132 576)
changes 299) 723
Balance as at 31 December 21 117 960 139 653
2009 693
Issue of shares 323 323 990
990 -
Acquisition of 5 5 279
subsidiary - 279
Total comprehensive loss (104 50 (54 077)
for the year 926) 849
Total 219 56 275 192
changes 064 128
Balance as at 31 December 240 174 088 414 845
2010 757
SEGMENTAL Reviewed 31 Dec Restated
Audited 31 Dec
REPORTING 2010 2009
For the year ended 31
December 2010
Figures in R`000s
Revenue
Asset Management 21 419 12 629
Investment Banking and 20 125 6 646
Advisory
Investment 2 573 (34 276)
Holdings
Securities Broking 26 271 27 950
Properties Investments and 125 413 112 096
Developments
195 801 125 046
Attributable loss for the
year
Asset Management (16 160) 10 150
Investment Banking and (20 525) (55 910)
Advisory
Investment (108 015) (80 068)
Holdings
Securities 4 023 (10 587)
Broking
Properties Investments and 86 600 (27 742)
Developments
(54 077) (164 157)
Total
assets
Asset Management 202 475 231 721
Investment Banking and 139 693 200 857
Advisory
Investment 505 663 559 757
Holdings
Securities 155 147 48 596
Broking
Properties Investments and 1 033 184 852 842
Developments
2 036 162 1 893 772
1. Vunani uses an independent valuer to determine the fair values of listed
investments and their related liabilities. The values of the listed investments
and related liabilities are determined with reference to the share price at the
end of the year. Both listed and unlisted investments are designated at fair
value through profit or loss ("FVTPL").
During the year, investment properties were revalued by external independent
valuers. Revaluations are performed annually and independent valuers are used in
alternate years.
2. Fair value adjustments Reviewed 31 Restated Audited 31 Dec
and impairments Dec 2010 2009
Figures in R`000s
Investment 116 580 (8 878)
properties
Financial assets and liabilities (126 189) 42 867
designated at FVTPL
Goodwill (20 045) (32 920)
impairment
(29 654) 1 069
3. Business acquisitions
On 22 June 2010, Vunani increased its holding in Peregrine iQ (Proprietary)
Limited (subsequently renamed Vunani Fund Managers) from 11% to 51% for R20.6m.
This purchase price was settled partly through the issue of 137 million Vunani
Limited shares at a value of 10c each, with the balance payable in cash. The
fair value of Vunani`s previous 11% investment in Peregrine iQ (Proprietary)
Limited of R12.3m was added to the cost of the investment in the subsidiary at
acquisition date, resulting in the total cost of Vunani`s 51% investment in the
subsidiary being R32.9m. The acquisition resulted in goodwill of R27.4m,
intangible assets of R2.9m and related deferred taxation of R0.8m. R5.2m of the
acquisition date net asset value of Peregrine iQ (Proprietary) Limited was
allocated to the non-controlling interests. Since acquisition, an after tax loss
of R0.6m has been included in Vunani`s profit or loss. R0.3m of this loss is
attributable to non-controlling shareholders` interests. If the acquisition had
taken place at the beginning of the year, after tax loss of R0.5 would have been
included in Vunani`s profit or loss. R0.3m of this loss would be attributable to
non-controlling shareholders` interests. Peregrine iQ (Proprietary) Limited`s
name was subsequently changed to Vunani Fund Managers (Proprietary) Limited
("VFM").
On 1 December 2010, Vunani acquired 100% of the shares in Kagiso Securities
Limited ("KSL") at nominal value. The purchase price was settled in cash. The
acquisition resulted in a bargain purchase of R11.1 million, which has been
included in profit or loss. No post acquisition profits or losses have been
recognised in Vunani`s results. If the acquisition had taken place at the
beginning of the year, after tax loss of R7.7m would have been included in
Vunani`s profit or loss.
The table below indicates the net assets acquired on the business combinations
above.
VFM KSL
Figures in R`000s
Net assets
acquired
Property, plant 235 1 634
and equipment
Available for sale - 19 780
financial assets
Intangible assets 2 932 -
Deferred taxation on (821) -
intangible asset
Goodwill (Bargain 27 433 (11 096)
purchase)
Trade and other 7 360 87 311
receivables
Cash and cash 3 223 5 245
equivalents
Deferred taxation on 142 247
intangible asset
Trade and other (2 (103 121)
payables 298)
Outside (5 -
shareholders` 279)
interest
Cost of investment -
32 927
Reviewed Restated Audited 31 Dec
31 Dec 2009
2010
4. Headline loss
Total comprehensive loss attributable (172 880)
to Equity holders of Vunani: (104
926)
Adjust
for:
Revaluation of investment properties
- subsidiaries
- Gross (116 8 878
revaluation 580)
- Deferred tax 16 321 (1 339)
- Non-controlling 58 730 5 444
shareholders interest
Revaluation of investment properties
- associates
- Gross (20 (12 874)
revaluation 859)
- Deferred tax 4 045 2 756
- Non-controlling 3 699 2 226
shareholders interest
Disposals of investment
properties
- Profit on (1 213)
disposal -
- Capital gains 145
tax -
- Non-controlling (298)
shareholders interest -
Goodwill
- 32 920
Impaired 20 045
- Non-controlling (341)
shareholders interest -
Profit on disposal
of associates
- Profit on (228)
disposal -
- Tax 32
-
- Non-controlling 43
shareholders interest -
Profit on disposal of other
investments
- Profit on (2 (9 181)
disposal 573)
- Tax 1 285
360
Loss on disposal
group
- -
Impairme 30 700
nt
- Tax (4 -
298)
Business
acquisitions
- Bargain (11 -
purchase 096)
Headline (126 (144 624)
loss 432)
OVERVIEW AND PROSPECTS
Vunani began the year with a recapitalising of the balance sheet, raising R 313
million in the process. Following this, significant progress has been made
during the year under review towards achieving the objectives of the
restructuring.
The board is proud to report that Vunani`s commitment has paid off with revenue
increasing by R 70,78 million on the corresponding figure in 2009; operating
profits of R66,3 million compared to R 1,7 million last year and income from
investments and associate companies of R 66,8 million (2009: R 38 million).
Notwithstanding the R 35 million reduction in finance costs compared to 2009,
these costs remain uncomfortably high. Accordingly, management has engaged in
further restructuring of the balance sheet and operations which has resulted in
the disposal of investments such as Vunani`s interest in JHI, and the
rationalisation of some operating divisions. Whilst the restructuring has
resulted in impairments of goodwill and fair value adjustments of R 29,7 million
in the 2010 financial year, management believes this was necessary to eliminate
loss making activities and non-performing investments and will benefit the group
going forward. Vunani believes that the existing business platform is now
positioned correctly to start fulfilling its ambitions.
Our asset management business was enhanced through the acquisition of the
Peregrine iQ business (renamed Vunani Fund Managers) and Vunani now has
management and operating control of its asset management businesses, with a
strong institutional and private wealth product and service offering. Revenue in
2010 was R 21 million, up R 8,8 million on 2009. The division incurred an
attributable loss of R 16,1 million after adjusting for R 30,7 million
impairments on our minority interests in Edge Holding Company (Proprietary)
Limited and Vunani Private Equity Partners (Proprietary) Limited. Following the
conclusion of negotiations to dispose of Vunani`s interest in these entities,
the investments in these companies have been disclosed as "assets held for sale"
in the balance sheet. The upshot is that Vunani will no longer have any debt
associated with these investments.
The investment banking and corporate advisory businesses did very well in tough
market conditions, contributing over R20 million to the revenue line, up R13,4
million on the previous year; the bulk of which was earned in the second half of
2010. But for R20 million of goodwill impairments associated with the
rationalisation of the corporate finance and treasury operations, and bad debts
written off, the business would have been profitable. The platform is sound and
the team has been consistently ranked in the top 10 of the deal makers rating
for sponsor activities and was ranked the 6th most active M&A Advisor in the
market in 2010.
The securities broking business had a relatively good trading year despite a
slow period during the months in which the 2010 FIFA Soccer World Cup was
hosted. There was also a fair amount of volatility as the equity markets
grappled with sovereign debt challenges in Greece and other European Union
countries. Management is pleased that in spite of these challenges the
securities broking division generated total income of R 38,7 million (2009: R 29
million) and attributable profit of R 4 million (2009: R 10,5 million loss).
The highlight for the securities division was the acquisition of Kagiso
Securities which bolstered our equity research offering and equity, bonds and
money market dealing capability and enabled Vunani to create R 11,1 million from
arbitrage in the deal.
The properties business was the biggest contributor to the group, contributing
revenues of R 125,4 million (2009: R 112,1 million) and attributable profits of
R 86,6 million, (2009: R 27,7 million loss). The business is spilt into
development and property investments divisions. The developments business was
relatively quiet with only two significant projects taking place, undertaken in
partnership with other developers, both of which are at an advanced stage.
Development activities contributed R 15,6 million (2009: R 3,4 million) of the
attributable profit whilst property investments delivered revenue of R 121,1
million and R 71,1 million (2009: R 30,6 million loss) of the profits, net of
finance costs of R 98,3 million (2009: R 84,2 million). In addition to the
profits there was a fair value adjustment of R 116,6 million associated with the
investment properties increasing the fair value of the investment property
portfolio to R 918,8 million as at 31 December 2010. Debt associated with the
investment portfolio is R 641,2 million. Cash flows from the portfolio are more
than adequate to service the debt.
The investments business comprises investments in both publicly listed and
unlisted companies. These investments have historically been highly geared; the
expectation being that gearing will be serviced from dividends and redeemed from
capital profits. This has not gone according to plan and management have been
reviewing existing investments; taking advantage to dispose of those investments
which are not meeting the designated criteria and to redeem associated debt in
the process. This will continue in the foreseeable future whilst management
looks to restructure the investment portfolio. Management believes the bulk of
the investment write-down has taken place with R 23,9 million of the fair value
write-down in 2010 being attributable to the investment portfolio. Investment
income associated with the portfolio amounted to R 11,9 million (2009: R11,7
million) whilst attributable finance costs were R 64,4 million (2009: R 107,4
million).
The restructuring of the group debt necessitated some renegotiation of funding
arrangements with its major bankers. The principal arrangement was the provision
of secured guarantees to these funders in return for the restructuring of the
debt. In terms of IAS 39 it is a requirement that these guarantees be fair
valued and as a result a fair value charge of R 65 million was made to the
income statement to reflect the fair valuing of these guarantees, with the
corresponding amount being reflected in liabilities. These charges will reverse
as the assets are disposed of and the debt is repaid. The group generated R 1,5
million of positive cash flow during the year (2009: R 33,8 million negative).
Management`s focus is on building the core businesses whilst reducing the legacy
interest burden on the balance sheet. The current year`s results reflect
management`s determination to achieve this goal. In order to accomplish this,
certain facilities with lenders will need to be renegotiated before their
October 2011 moratorium date.
FINANCIAL RESULTS
Revenue increased by 57% to R 195.8 million (2009: R 125 million), on the back
of increased asset management fees and fee income from new advisory mandates.
Despite operating expenses having increased by 12% compared to 2009, operating
businesses succeeded in generating an operating profit of R 66.4 million (2009:
R 1.8 million). This increase reflects management`s focus on the operational
businesses within the group and the drive to increase profitability.
At R12.7 million (2009: R 16.8 million), investment income was 24% lower than
the comparable 2009 figure, reflecting lower dividend income, partly as a result
of disposals. However this was more than compensated by increased performance
by associate companies. Income from associates of R54.1 million (2009: R21.1
million) was 157% higher than the corresponding period in 2009.
The fair value adjustments and impairment charge of R 29,7 million (2009: income
of R1.1 million) arose out of the impairment of goodwill and investments held
for sale totalling R57.4 million and other favourable fair value adjustments
totalling R27.8 million. The decision to dispose of the group`s investment in
Edge Holdings (Proprietary) Limited and Vunani Private Equity Partners
(Proprietary) Limited resulted in an impairment of the carrying value of the
investments. The remaining goodwill relating to the acquisition of the Vunani
Corporate Finance and Vunani Treasury Resources businesses in 2008 was also
impaired. Other favourble fair value adjustments totalling R27,8 million was the
net result of favourable fair value adjustments relating to property investments
and negative fair value adjustments relating to investment holdings and the
related guarantees provided to lenders.
A significant area of benefit has been in the reduction of net finance costs,
where the repayment of debt and lower interest rates have reduced finance
charges from R193,4 million to R158,3 million, an 18% reduction.
Changes in IAS 12 Income Taxes relating to the rate at which deferred taxation
assets on the revaluation of buildings forming part of investment properties is
recognised, resulted in a retrospective restatement of prior years amounting to
a favourable cumulative restatement of R18,5 million.
BASIS OF PRESENTATION
These consolidated 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 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 early adoption of IAS 12 amendments. 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 date of acquisition up to the
effective date of disposal. All significant transactions and balances between
Group enterprises are eliminated on consolidation.
REVIEW RESULTS
The Group`s auditors KPMG Inc. have reviewed the financial information for the
year ended 31 December 2010. Their unmodified review report is available for
inspection at the registered office of the company.
STATEMENT ON GOING CONCERN
`The directors have made an assessment of the group`s ability to continue as a
going concern and have no reason to believe the business will not be a going
concern in the year ahead.
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. The following issues of shares took place to 31 December 2010:
Date issued Number of shares issued Purpose of issue
15 February 2010 3,136,000,000 Claw back offer
16 February 2010 145,380,000 Issue for services rendered
22 June 2010 137,000,000 Acquisition of Vunani Fund Managers
22 June 2010 4,560,000 Issue for services rendered
At 31 December 2010 there were 4,763,502,216 (2009: 1,176,444,291) ordinary
shares in issue.
DIVIDENDS
No dividends were declared or paid to shareholders during the year under review
(2009: R nil).
SUBSEQUENT EVENTS AND CAPITAL COMMITMENTS
Post year-end Vunani has disposed of its entire shareholding in BSI Steel
(Proprietary) Limited for R35 million. The proceeds were applied to reducing
debt. There were no significant capital commitments within the Group.
CHANGES TO THE BOARD OF DIRECTORS
On the 16 March 2010 BM Khoza was appointed Managing Director and A Judin was
appointed as Financial Director on 19 August 2010. WG Frawley tendered his
resignation as director with effect from 18 August 2010.
EG Dube (Chief A Judin
Executive (Financial
Officer) Director)
31 March
2011
Date: 31/03/2011 08:00:22 Supplied by www.sharenet.co.za
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