Wrap Text
Unaudited condensed consolidated results for the six month period ended 30 June 2012
VUNANI LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/020641/06)
JSE code: VUN
ISIN: ZAE000163382
("Vunani” or “the Company" or “the Group”)
Unaudited condensed consolidated results for the six month period ended 30
June 2012
Salient features
Revenue from continued operations increased by 12% on the back of a
heightened focus on the professional services operations
Benefit of disposal-led restructuring resulted in net finance costs
decreasing by 54%
Earnings per share of 14.2c per share compared to a loss per share of 15.8c
in June 2011
CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE
2012
Figures in R'000s
Unaudited Unaudited
30 June 30 June
Note 2012 2011
CONTINUING OPERATIONS
Revenue 51 183 45 832
Gross profit 51 183 45 832
Other income 4 410 1 489
Investment income 644 1 786
Profit on disposal of assets 1 475 7 725
Fair value adjustments and
impairments 1 27 591 18 991
Operating expenses (62 839) (62 475)
Results from operating activities 22 464 13 348
Finance income 7 753 1 232
Finance costs (22 588) (33 469)
Net finance cost (14 835) (32 237)
Results from operating activities
after net finance cost 7 629 (18 889)
Income from associates (net of
income tax) 2 368 (1 156)
Net profit/(loss) before taxation 9 997 (20 045)
Income tax income/(expense) 7 819 (5 272)
Profit/(loss)from continuing
operations 17 816 (25 317)
DISCONTINUED OPERATIONS
Profit from discontinued
3 - 9 341
operations (net of taxation)
Profit/(loss) for the period 17 816 (15 976)
Profit/(loss) and total
comprehensive income/(loss) for 17 816 (15 976)
the period
Profit/(loss) from continuing
operations and total
comprehensive income/(loss)
attributable to :
Equity holders of Vunani Limited 15 019 (24 209)
Non-controlling interest 2 797 (1 108)
17 816 (25 317)
Profit/(loss) for the period and
total comprehensive income/(loss)
attributable to :
Equity holders of Vunani Limited 15 019 (14 868)
Non-controlling interest 2 797 (1 108)
17 816 (15 976)
Earnings/(loss) per share (cents)
Basic and diluted basic
earnings/(loss) per share* 14.2 (15.8)
Headline and diluted headline earnings/(loss) per
share* 19.3 (25.4)
*- June 2011 loss per share has been adjusted to show the effect of the 50:1
share consolidation as described in note 4.
CONDENSED STATEMENT OF FINANCIAL POSITION AT 30 JUNE 2012
Audited
Unaudited 31
30 June December
Figures in R'000s Note 2012 2011
ASSETS
Investment property 4 000 4 000
Property, plant and equipment 3 676 4 191
Goodwill 33 853 34 123
Investment in and loans to associates 93 245 98 093
Other investments 2 263 888 237 981
Deferred tax asset 101 492 93 886
Other non-current assets 6 539 4 709
Other intangible assets 977 1 466
Total non-current assets 507 670 478 449
Other investments 2 128 354 181 687
Inventory - 3 287
Taxation prepaid 154 154
Trade and other receivables 20 640 21 289
Accounts receivable from trading activities 394 069 95 638
Trading securities 131 1 030
Cash and cash equivalents 12 117 17 169
Total current assets 555 465 320 254
Total assets 063 135 798 703
EQUITY
Share capital and share premium 595 812 595 812
Share based payment reserve 3 658 2 524
Accumulated loss (384 60) (399 480)
Equity attributable to equity holders of Vunani
Limited 215 010 198 856
Non-controlling interest 16 446 13 842
Total equity 231 456 212 698
LIABILITIES
Other financial liabilities 2 94 170 103 140
Deferred tax liabilities 47 224 46 784
Total non-current liabilities 141 394 149 924
Other financial liabilities 2 268 199 298 585
Current tax payable 4 548 445
Trade and other payables 30 585 47 225
Accounts payable from trading activities 386 678 89 407
Trading securities 253 259
Bank overdraft 22 160
Current liabilities 690 285 436 081
Total liabilities 831 679 586 005
Total equity and liabilities 1 063 135 798 703
Shares in issue (000s) 105 415 105 415
Net asset value per share (cents)** 204.0 188.6
Net tangible asset value per share (cents)** 170.9 154.9
**- December 2011 net asset value and tangible net asset value per share
have been adjusted to show the effect of the 50:1 share consolidation as
described in note 4.
CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 30 JUNE 2012
Total
attributable
to equity Non-
holders of controlling Total
Figures in R'000s Vunani interest equity
Balance as at 31 Dec 2010 250 131 174 088 424 219
Transactions with owners,
recorded directly in equity
Cancellation of shares (27 751) - (27 751)
Comprehensive income
Loss and total comprehensive (14 868) (1 108) (15 976)
loss for the period
Balance as at 30 June 2011 207 512 172 980 380 492
Transactions with owners,
recorded directly in equity
Issue of shares 35 832 - 35 832
Treasury shares (14 277) - (14 277)
Share based payment reserve 2 524 - 2 524
Disposal of subsidiaries - (149 014) (149 014)
Comprehensive income
Loss and total comprehensive (32 735) (10 124) (42 859)
loss for the period
Balance as at 31 December 2011 198 856 13 842 212 698
Transactions with owners,
recorded directly in equity
Increase in investment in - (193) (193)
subsidiaries
Share based payment reserve 1 134 - 1 134
Comprehensive income
Profit and total comprehensive 15 020 2 797 17 817
income for the period
Balance as at 30 June 2012 215 010 16 446 231 456
CONDENSED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 30 JUNE 2012
Audited
Unaudited 31 Unaudited
30 June December 30 June
Figures in R'000s 2012 2011 2011
Net cash (outflows)/inflows from (1 628) 16 385 32 430
operating activities
Net cash inflows from investing 27 471 270 600 231 323
activities
Net cash outflows from financing (30 757) (277 686) (244 724)
activities
Net (decrease)/increase in cash and (4 914) 9 299 19 029
cash equivalents
Cash and cash equivalents at 17 009 7 710 7 710
beginning of the year
Total cash and cash equivalents at 12 095 17 009 26 739
end of the period
SEGMENTAL REPORTING FOR THE PERIOD ENDED 30 JUNE 2012
Reportable
segment
profit/
(loss) for Total
Figures in R'000s Revenue the period assets
Unaudited Unaudited Unaudited
30 June 30 June 30 June
2012 2012 2012
Continuing operations
Asset management 10 746 532 49 752
Investment banking and advisory 7 564 (1 854) 8 407
Investment holdings - 21 152 524 092
Securities broking 24 576 (841) 407 734
Properties - developments - (2 328) 38 600
Properties - investments 1 115 1 162 27 578
Properties - asset management 3 209 1 400 1 444
Group overhead 3 973 (1 407) 5 528
51 183 17 816 1 063 135
Discontinued operations
Properties - - -
- - -
Unaudited 30 June 2011 Unaudited Audited
Unaudited 30 June 31
30 June 2011 December
2011 2011
Continuing operations*
Asset management 12 846 6 315 34 895
Investment banking and advisory 9 589 3 492 12 991
Investment holdings - (20 613) 536 972
Securities broking 21 908 (2 171) 129 273
Properties - developments 721 (1 098) 45 567
Properties - investments - 2 384 38 607
Properties - asset management 232 - 398
Group overhead 536 (13 626) -
45 832 (25 317) 798 703
Discontinued operations
Properties 64 180 9 341 -
64 180 9 341 -
* Comparatives have been re-presented to reflect "Group overhead" as a new
segment.
OVERVIEW AND PROSPECTS
Vunani presents promising interim results for the 6 months to 30 June 2012
in the midst of a lethargic domestic economy, which has seemingly struggled
to show clear signs of being in the upward phase of the business cycle
following the recession in 2008 and 2009. Management is encouraged by the
fact that in spite of low business confidence and negative sentiment, Vunani
has returned a profit. This is an indication that the resolve and focus to
address the legacy challenges the business has faced is starting to pay off.
Revenue from continuing operations increased by 12% from R45.8m for the
six months to June 2011 to R51.2m for the 6 months ended June 2012. The
increase is as a result of the continued focus and growth of the
operating businesses within the group. Other income mainly comprises the
amortisation of deferred revenue, client account administration fees and
directors’ fees earned where the group’s executive directors serve on
investee company boards.
Investment income decreased by 64% from R1.8m in June 2011 to R0.6m in
June 2012 owing to the realisation of a number of dividend yielding
investments during 2011 and 2012 to reduce interest bearing debt. In the
current period, profit on disposal of assets amounted to R1.5m (2011:
R7.7m) as asset disposals tapered off. Positive fair value adjustments of
R27.6m (2011:R19.0m) were largely due to the rerating of Vunani’s
investment in Vunani Property Investment Fund Limited (“VPIF”).
Operating expenses remained relatively flat at a level of R62.8m (2011:
R62.5m) reflecting an intensive group-wide cost reducing initiative.
Results from operating activities reflected a positive R22.5m compared to
R13.3m in 2011, a 68% improvement.
Finance income of R7.8m (2011: R1.2m) includes the distribution from
VPIF, which listed on the JSE Limited (“JSE”) in August 2011. Finance
costs have reduced by 33% from R33.5m to R22.6m as a result of the
reduction in other financial liabilities.
Income from associates amounts to R2.4m compared to a loss of R1.2m in
2011. The group’s investment in Integrated Managed Investments
Proprietary Limited (“IMI”) was reduced from 51% to 48% in December 2011,
which has resulted in the investment in IMI now being equity accounted as
opposed to consolidated.
Taxation is reflected as a positive value of R7.8m (2011: charge of
R5.3m) as a result of the reversal of deferred tax liabilities raised in
a special purpose vehicle housing investments resulting from a re-
evaluation in the manner in which the assets and liabilities will be
realised and settled.
Non-current assets increased by 6% from R478.4m in December 2011 to
R507.7m in June 2012. Investments and loans to associates was reduced by
dividends of R2.6m (2011: R5.6m) received from associate companies. Non-
current liabilities decreased by 6% from R149.9m in December 2011 to
R141.4m in June 2012 mainly as a result of the reduction in other
financial liabilities from R103.1m to R94.2m.
Current assets increased from R320.3m in December 2011 to R555.5m in June
2012 and current liabilities increased from R436.1m in December 2011 to
R690.3m in June 2012. Trade receivables and payables from trading
activities relate to the securities broking segment and represent trades
conducted on behalf of clients that are in the process of settlement
through the JSE. Fair value adjustments on other assets and other
liabilities classified as current also contributed to these movements.
Asset management
The asset management segment reported a profit of R0.5m for the 6 months
ended June 2012 compared to a profit of R6.3m in June 2011. The results
to June 2011 included profits attributable to Edge Holding Company
Proprietary Limited, Vunani Portfolio Solutions Proprietary Limited and
IMI. With the exception of IMI, which is now an associate, these
companies were disposed of during the 2011 financial year. These
disposals have led to revenues declining from R12.8m in June 2011 to
R10.7m.
Investment banking and advisory
The corporate finance business had a tough start to the year on the back
of significant uncertainty in the market delaying transactions. A
decision was taken to terminate the designated advisor services business
that services JSE AltX companies as its viability became
questionable. This decision was implemented after period end. While
some bad debt write-offs were incurred, business activity has improved
considerably since the beginning of the second quarter of the year
Investment holdings
Investment holdings reflected a segment profit of R21.2m to June 2012
(2011: loss of R20.6m). Positive fair value adjustments and reduced
interest costs reflect the considerable effort that has been devoted to
restructuring the investment holding portfolio to reduce the legacy debt
issues. Included in this segment are all listed and unlisted equity
investments, together with any related liabilities.
Securities broking
The securities broking segment reflects an improvement for the first 6
months of 2012 compared to 2011. Revenue increased by 12% from R21.9m to
R24.6m despite difficult trading conditions. After the acquisition and
consolidation of Kagiso Securities Limited into the group, cost reduction
became a focus for the 2012 year. The segment loss improved from R2.2m in
2011 to R0.8m in 2012, however management remains dedicated to further
growing revenues and cost rationalisation to return the segment to
profitability.
Properties (including developments, investments and asset management)
Subsequent to the listing of VPIF in 2011, the property business focuses
on property developments and property asset management. One property is
still held as an investment. The securities in VPIF are included in the
investment holdings segment as they are a listed investment. This segment
reflected revenue of R4.3m to June 2012, compared to R1.0m in June 2011.
The segment reflects a profit of R0.2m (2011:R1.3m) despite increased
revenues. This is attributable to developments in progress and equity
accounted earnings from these being limited.
Group overhead
One of the key areas of focus was the group overhead segment. While this
segment services and supports the rest of the group through executive
oversight, opportunistic revenues attributable to executive management
are also included in this segment.
Prospects
The financial and sovereign issues in Europe and the USA mean that the
outlook for the global economy is not bright. The real worry however is
South Africa’s own unique challenges as the country looks for a stimulus
for the economy. There are a number of areas that will need to converge
to create a positive outlook, among which includes addressing the
structural constraints to growth recognised in the government’s various
growth plans.
Vunani management believes that should investment and infrastructure
spending be a key feature in the domestic economy, then the group is very
well placed to take advantage of it. As things stand, with the economy
forecast to grow by only 2.5 %, business will continue to be a challenge for
areas such as the stockbroking broking and corporate finance business.
Nevertheless this will be mitigated by growth potential in the fund
management and property businesses. Management is committed to the
restructuring of outstanding debt which should significantly lower finance
costs in the last quarter of the year and remains a priority for management
for the second half of the year.
NOTES TO THE CONDENSED CONSOLIDATED RESULTS (all figures in R’000)
BASIS OF PREPARATION
The unaudited condensed consolidated results for the 6 months ended 30 June
2012 have been prepared in accordance with International Financial Reporting
Standards (IFRS), IAS 34 Interim Financial Reporting, the AC 500 series
issued by the Accounting Practices Board, the JSE Listing Requirements and
the Companies Act of South Africa.
The accounting policies as set out in the audited financial statements for
the year ended 31 December 2011 have been consistently applied. The
unaudited condensed consolidated results have been presented on the
historical cost basis, except for other investments, investment property and
other financial liabilities, which are fair valued. These condensed
consolidated financial statements are presented in Rand, rounded to the
nearest thousand, which is the group’s functional and presentation currency.
These unaudited condensed consolidated results 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.
1. Fair value adjustments and (impairments) for continuing operations
Unaudited Unaudited
30 June 30 June
2012 2011
R'000 R'000
Financial assets and liabilities
designated as fair value through
profit and loss
34 324 19 192
Impairment of non-current assets
held for sale - (201)
Goodwill impairment (271) -
Impairment of investments and loans
to associates (3 459) -
Other impairments (2 825) -
27 769 18 991
2. Other investments and other financial liabilities
Unlisted investments are fair valued annually by the directors. Listed
investment prices are determined with reference to the share price at
period end. Both listed and unlisted investments are designated as fair
value through profit and loss. Financial liabilities are either accounted
for at amortised cost or designated as fair value through profit and loss.
An independent valuer is used to determine the fair values of listed
assets and their related liabilities.
3. Discontinued operations
A strategic decision was made early in the 2011 year to restructure the
property assets of the group in order to reduce debt. This culminated in
Vunani listing a significant portion of its investment property portfolio
on the JSE on 11 August 2011. As these assets related to a major line of
Vunani's business, the related activities have been presented as a
discontinued operation. The group also disposed of its investment in
Vunani Portfolio Solutions Proprietary Limited.
There were no discontinued operations for the period ended 30 June 2012.
Unaudited Unaudited
30 June 30 June
Figures in R'000s 2012 2011
Results of discontinued operation
Revenue - 64 180
Other income - -
Operating expenses - (30 569)
Operating profit - 33 611
Fair value adjustments and impairments - 6 430
Net finance cost - (29 800)
Results from operating activities - 10 241
Taxation - (900)
Results from operating activities - 9 341
after taxation
Loss on sale of discontinued operation - -
Profit for the year - 9 341
Effect on basic (loss)/earnings per - 9.9
share (cents)*
Effect on diluted earnings per share - 9.9
(cents)*
Cash flows from discontinued operation
Net cash inflows from operating - 1 251
activities
Net cash outflows from investing - (3 862)
activities
Net cash inflows/(outflows) from -
5 677
financing activities
Effect on cash flows - 3 066
*- June 2011 loss per share has been adjusted to show the effect of the
50:1 share consolidation as described in note 4
4. Authorised and issued share capital
The authorised share capital at 30 June 2012 was 200 million ordinary
shares of no par value (2011:10 billion with a par value of R0.001 per
share). At the beginning of the period, 5 270 732 462 shares were in
issue. On 12 March 2012, the share capital was consolidated on a 50:1
basis and the shares were converted to shares of no par value. After
the consolidation, 105 414 649 shares of no par value were in issue.
Unaudited Unaudited Audited
30 June 30 June 31 December
Weighted average number of 2012 2011 2011
ordinary shares (000s)
Issued ordinary shares at the
beginning of the period 5 270 732 4 763 502 4 763 502
Effect of share consolidation (5 165 317) - -
Less cancelled shares - (114 368) (114 368)
Effect of issued shares - - 621 599
Issued ordinary shares at the
end of the period 105 415 4 649 134 5 270 733
Weighted average number of
shares in issue 105 415 4 715 480 4 886 954
5. Headline profit/(loss)
Unaudited Unaudited
30 June 30 June
2012 2011
Total comprehensive profit/(loss) 15 019 14 868)
attributable to equity holders of
Vunani
Adjusted for
Revaluation of investment property -
subsidiaries
Gross revaluation - (6 430)
Deferred taxation - 900
Non-controlling shareholders' - 3 465
interest
Goodwill impairment 271 -
Impairment of investment and loans 3 459 -
to associates
Other impairments 2 825 -
Taxation (527) -
Loss on disposal of assets
Loss on disposal of assets (1 475) (7 725)
Taxation 413 1 082
Non-controlling shareholders' 234
interest
20 219 (23 576)
Headline earnings/(loss) per share (cents)
Basic and diluted headline 19.3 (25.4)
earnings/(loss) per share
SUBSEQUENT EVENTS
Subsequent to year end:
There have been no material subsequent events since the period end to the
date of signing of the results.
DIVIDENDS
No dividends were declared or paid to shareholders during the year under
review (2011: R nil).
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 group will not continue as
a going concern for the foreseeable future.
CORPORATE INFORMATION
Executive directors Independent non-executive directors
EG Dube (Chief Executive Officer) WC Ross (Chairman)
BM Khoza (Managing Director) Dr.BA Khumalo
A Judin (Chief Financial Officer) NS Mazwi
CE Chimombe-Munyoro G Nzalo
NM Anderson JR Macey
Company secretary A Judin
Physical and registered address Postal address
Vunani House PO Box 652419
Athol Ridge Office Park Benmore
151 Katherine Street 2010
Sandown
Sandton
2196
Telephone number +27 11 263 9500
Facsimile number +27 11 784 3095
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street
Johannesburg
2001
Designated Adviser
Grindrod Bank Limited
EG Dube A Judin
31 August 2012 31 August 2012
Date: 31/08/2012 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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