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Reviewed provisional annual financial statements (provisional report) for the year ended 28 February 2014
VISUAL INTERNATIONAL HOLDINGS LIMITED
(Formerly Presto Financing Proprietary Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2006/030975/06)
(“the Company” or “Visual”)
ISIN Code: ZAE000187407 JSE code: VIS
REVIEWED PROVISIONAL ANNUAL FINANCIAL STATEMENTS (PROVISIONAL REPORT) FOR THE YEAR
ENDED 28 FEBRUARY 2014
Condensed Consolidated Statement of Financial Position
Reviewed Audited
28 February 2014 28 February 2013
R R
ASSETS
Non-Current Assets
Investment property 41 368 820 22 930 000
Property, plant and equipment 1 054 426 8 772
Joint arrangements 711 251 1 257 150
Loans to joint venture 958 291 840 183
Loans to shareholders 44 266 991 6 056 081
Other financial assets 479 282 762 563
88 839 061 31 854 749
Current Assets
Inventories 40 246 180 -
Loans to shareholders 1 330 000 -
Other financial assets - 22 500 000
Trade and other receivables 294 730 227 258
Cash and cash equivalents 257 864 36 752
42 128 774 22 764 010
Total Assets 130 967 835 54 618 759
EQUITY AND LIABILITIES
Equity
Share capital 56 264 571 31 796 581
Retained Income/(Accumulated loss) 13 181 385 (7 192 405)
Equity Attributable to Equity Holders of Parent 69 445 956 24 604 176
Non-controlling interest (426 222) (282 690)
69 019 734 24 321 486
Non-Current Liabilities
Loans from shareholders 17 168 364 10 522 029
Other financial liabilities 11 986 853 11 193 789
Operating lease liability 25 476 22 940
Deferred tax 10 469 896 491 105
39 650 589 22 229 863
Current Liabilities
Loans from shareholders 5 822 724 -
Other financial liabilities 8 638 590 3 387 970
Current tax payable 4 018 862 3 956 886
Trade and other payables 2 380 462 1
Provisions 977 731 720 725
Bank overdraft 459 143 1 828
22 297 512 8 067 410
Total Liabilities 61 948 101 30 297 273
Total Equity and Liabilities 130 967 835 54 618 759
Condensed Consolidated Statement of Comprehensive Income
Reviewed Audited
28 February 2014 28 February 2013
R R
Revenue 2 768 340 4 851 923
Cost of sales (351 756) (365 765)
Gross profit 2 416 584 4 486 158
Other income 32 497 005 6 910 806
Operating expenses (9 894 324) (5 598 806)
Operating profit 25 019 265 5 798 158
Investment revenue 1 629 366 247 437
Fair value adjustments 335 000 550 031
(Loss)/income from equity accounted investment (545 959) 60 391
Finance costs (2 994 849) (1 428 448)
Profit before taxation 23 442 823 5 227 569
Taxation (9 978 791) (28 287)
Profit for the year 13 464 032 5 199 282
Other comprehensive income - -
Total comprehensive income for the year 13 464 032 5 199 282
Profit/(loss) attributable to:
Owners of parent 13 607 564 5 186 454
Non-controlling interest (143 532) (12 828)
13 464 032 5 199 282
Headline loss reconciliation:
Total comprehensive income for the year 13 464 032 5 199 282
Adjusted for:
Fair value adjustment on investment properties (335 000) (550 031)
Tax effects thereon 62 310 102 306
Capital distribution received from trust (27 000 000) (5 280 000)
Headline loss for the year (13 665 126) (541 271)
Per share information:
Earnings per share 10.90 5.72
Headline loss per share (10.95) (0.60)
Weighted average shares in issue 124 816 627 90 704 949
Condensed Consolidated Statement of Changes in Equity
Total
Retained attributable
Share Total income/ to equity Non-
capital Share share (Accumulated holders of controlling Total
Rands premium capital Loss) the group Interest equity
Balance at 1 March
2012 120 - - - 120 - 120
Profit for the year - - - 5 186 454 5 186 454 12 828 5 199 282
Other
comprehensive
income - - - - - - -
Total
comprehensive
income for the
year - - - 5 186 454 5 186 454 12 828 5 199 282
Issue of shares 525 31 795 936 31 796 461 - 31 796 461 - 31 796 461
Business
combinations - - - - - (295 518) (295 518)
Gain on dilution of
majority shareholder
interest - - - 5 940 000 5 940 000 660 000 6 600 000
Not fully paid up
share reserve - - - (5 940 000) (5 940 000) (660 000) (6 600 000)
Dividends - - - (12 378 859) (12 378 859) - (12 378 859)
Total contributions
by and
distributions to
owners of
company
recognised directly
in equity 525 31 795 936 31 796 461 (12 378 859) 19 417 602 (295 518) 19 122 084
Balance at 1 March
2013 645 31 795 936 31 796 581 (7 192 405) 24 604 176 (282 690) 24 321 486
Profit for the year - - - 13 607 564 13 607 564 (143 532) 13 464 032
Other
comprehensive
income - - - - - - -
Total
comprehensive
income for the
year - - - 13 607 564 13 607 564 (143 532) 13 464 032
Issue of shares 25 609 908 - 25 609 908 - 25 609 908
Conversion to no
par value shares (645) (31 795 936) 31 796 581 31 796 581 31 796 581
Capitalised costs on
equity raising - (1 141 918) - (1 141 918) - (1 141 918)
Gain on dilution of
majority shareholder
interest - - - 6 743 219 6 743 219 - 6 743 219
Other movements - - - 23 007 23 007 - 23 007
Balance at 28
February 2014 - 56 264 571 13 181 385 69 445 956 (426 222) 69 019 734
Condensed Consolidated Statement of Cash Flow
Reviewed Audited
28 February 28 February
Rands 2014 2013
Net cash used in operating activities (4 959 099) (4 580 749)
Net cash from investing activities 1 084 927 6 948 351
Net cash from financing activities 3 637 969 (2 332 678)
Total cash movement for the year (236 203) 34 924
Cash at the beginning of the year 34 924 -
Total cash at end of the year (201 279) 34 924
BASIS OF PREPARATION
The board of directors is pleased to present condensed consolidated provisional annual financial statements
(“provisional report”) for the year ended 28 February 2014. The provisional report has been prepared in
accordance the requirements of the JSE Limited Listings Requirements for provisional reports and the
requirements of the Companies Act of South Africa. The Listings Requirements require provisional reports to be
prepared in accordance with the framework concepts and the recognition and measurement requirements of
International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards
Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The
accounting policies used in preparation of the provisional report are in terms of IFRS and are consistent with
those applied in the preparation of the annual financial statements of the Group for the year ended 28 February
2013 as detailed in the prospectus dated 3 March 2014.
The provisional report has been reviewed by Baker Tilly Greenwoods and its unmodified review conclusion is
available for inspection at the Company’s registered office.
The provisional report has been prepared on the basis of accounting policies applicable to a going concern. This
basis presumes that funds will be available to finance future operations and that the realisation of assets and
settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.
The directors have considered the operational budget and cash flow forecasts for the ensuring year which are
based on the current expected economic and market conditions and include the following assumptions:
a. The company has concluded an agreement with Phab Properties Proprietary Limited (“Phab”) for the
placement of 32 million shares at 50 cents per ordinary share or a 10% discount to the 30 day volume
weighted average price, being a minimum aggregate amount of R16 million, which subscription is
dependent on Phab obtaining finance for the majority of the subscription amount. R200 000 has already
been paid in terms of the subscription agreement.
b. In the absence of the full subscription being received from Phab, management’s funding plans include:
1. Securing of funding from normal banking sources for property development, which has been the
normal source of development funding of the group historically.
2. The placement of additional shares in the market or with strategic partners, as funding for expansion
becomes necessary.
3. The sale of undeveloped serviced land in December 2014 and February 2015 for an estimated
consideration of R36 million.
In addition to the above, the Company has the support from a related party who has supplied a confirmation to
provide additional funding, limited to R6,8 million, should the need arise to cover any short term obligations as
they become due, by way of loan account.
The directors believe that Visual and its subsidiaries have adequate financial resources to continue as a going
concern during the ensuing year. Accordingly, the directors have adopted the going concern basis in the
preparation of these results.
The condensed consolidated provisional report has been prepared by the financial director, Mr G Noble
(B.Comm).
BACKGROUND, INCORPORATION AND NATURE OF BUSINESS
Visual was incorporated as a private company on 5 October 2006 under the name Presto Financing Proprietary
Limited. The company’s name was changed, and it was converted to a public company, by way of special
resolutions on 3 October 2013, which special resolutions were registered by CIPC on 23 December 2013.
Presto Financing Proprietary Limited was a dormant subsidiary of Visual International until it was decided to use
this group company as the new holding company for the purposes of the listing. Visual then acquired the
controlling interest in Visual International from CKR Investment Trust with effect from 1 March 2012 and became
the holding company of the various Subsidiaries of Visual.
Thus Visual, with its wholly owned subsidiary Visual International, has operated as a group for the full year
ended 28 February 2013.
Visual, through the group, is essentially a property developer that acquires land, rezones the land, installs the
relevant services and then constructs houses and apartments on the land for sale to homeowners or investors.
Visual has recently started to hold some of the homes developed (27 units) which it rents out to families and
intends to grow this area going forward with the initial intention to acquire further units during 2014.
Visual International, the main subsidiary and previously held 100% directly by the CKR Investment Trust, was
established more than 20 years ago and has been involved in a number of premier property development
projects in South Africa over the past 14 years. In addition, a number of property developments were
undertaken by entities associated with CK Robertson and Visual International, namely RAL Trust and My Place
Trust, which properties have been acquired by the Visual Group during the year ended 28 February 2014 by way
of a restructure in accordance with Section 42 of the Income Tax Act ahead of the listing, termed inter-related
acquisitions.
The additional properties and assets acquired subsequent to the prior year end of 28 February 2013 are
summarised as follows:
- The acquisition of Erf 18363, Kuils River dated 18 October 2013 from RAL Trust, for a net purchase
consideration of R21 500 000 which was settled through the issue of 83 169 544 Shares in Visual;
- The acquisition of Erf 18358 and the remainder of farm 1286, Kuils River from RAL Trust dated 18 October
2013, for a net purchase consideration of R2 362 387 which was settled through the issue of 7 706 987
Shares in Visual;
- The cancellation agreement dated 29 November 2013 with RAL Trust pursuant to the above acquisitions
from RAL Trust terminating the former development agreement and beneficiary agreement with Visual
International, resulting in a capital receipt of R32 million;
- An agreement was entered into on 15 February 2013 to purchase Erf 22887 with a fair value of R2 155 774
from the My Place Trust in exchange for the issue of shares by Stellendale Village to the amount of
R6 600 000. The excess paid over the fair value of the asset acquired was recognised as goodwill in terms
of IFRS 3. The carrying amount of the asset to which goodwill relates exceeded the recoverable amount,
resulting in an impairment of goodwill. On 20 January 2014 the agreement was cancelled and the
aforementioned transaction reversed. The property was substituted for Erf 24258, with a fair value of R7
350 000, with a commensurate issue of shares by Stellendale Village;
- The agreement with My Place Trust for the acquisition of the remaining minority shareholding of 10 shares
in Stellendale Village dated 31 October 2013, for a net purchase consideration of R215 587 which was
settled through the issue of 703 325 Shares in Visual.
The underlying properties acquired by Visual were transferred through the Deeds Office after year end, ahead of
the listing of the Company on 23 May 2014.
The two trusts, namely CKR Investment Trust and the RAL Trust, now represent the controlling shareholders of
the Visual Group, both being associated with the founder and Chief Executive Officer of the Visual Group,
Mr CK Robertson.
The Visual Group, through Visual International and through the CKR Investment Trust, the RAL Trust and
My Place Trust prior to the Section 42 restructure, has a long profit history and together has built up a property
portfolio with a gross asset value of over R120 million and a net asset value of R70.7 million as at 28 February
2014. Visual International used to be a beneficiary of RAL Trust and My Place Trust and used to receive a
distribution of profits from these trusts, which was recognised in “Other Income”.
The revenue and cost of sales were recognised within the trusts. Due to the complex nature of the previous
inter-related parties, all of which were managed by CK Robertson and the Visual International management
team, a decision was taken to simplify the structure and bring the relevant properties under Visual International,
as the main operating subsidiary and previous beneficiary of the RAL Trust and My Place Trust.
It should be noted that the executive directors that managed Visual International and also assisted with the
property development of the properties held by the RAL Trust and My Place Trust as a team over the past seven
years, remain in place and will continue to manage the Visual Group going forward. The executive directors
have many years’ experience in property development and property management.
Other than the acquisition of properties and assets in anticipation of the listing as described above (in which
Mr CK Robertson had an indirect interest as a beneficiary of the RAL Trust and My Place Trust), as well as the
dividend declared as detailed in the annual financial statements for the year ended 28 February 2013, there has
been no material change in the business or the trading objects over the past five years.
Visual is the holding company of a number of Subsidiaries, focusing mainly on property development and to a
much lesser extent, property investment and property services. It is the intention to establish a new area
focussing on property sales to investors.
The majority of the revenue and profits of the group arose from rental income, management fees and a capital
distribution received. Going forward, with the transfer of the properties into the Visual group, revenue, costs of
sales and gross profit will now flow through the Visual Group’s income statement.
To date, approximately 440 homes have been developed by Visual International at Stellendale for the various
Trusts and Clidet (a sister joint venture), with a further 63 units under construction in Clidet, some of which units
will be acquired and held for rental income by Visual during the year ending 28 February 2015, subject to finance
availability. The original intention was to also acquire the 50% shareholding in Clidet from My Place Trust.
However, shareholder approval from the other 50% shareholder in Clidet could not be secured. Visual
International will continue to manage this development for Clidet in terms of the management agreement that is
in place.
FINANCIAL RESULTS COMMENTARY
Visual is pleased to report that the profit performance of the Group was materially in line with expectations as set
out in the profit forecast contained in the Company’s prospectus, other than a provision for deferred taxation as
detailed below.
Shareholders are reminded that the Group was effectively brought together during the year under review through
various inter-related transactions as disclosed in the prospectus and that the results to 28 February 2014 will not
be comparable to the results of the group going forward.
Operating expenses were slightly higher than expected due to higher salary costs for management and higher
costs associated with the listing. These higher listing costs are once off costs and not expected to recur.
Taxation increased during the financial year due to a provision for deferred taxation based in the difference
between the original cost of properties and the valuation of the properties acquired during the year under review
following the section 42 restructure. Deferred taxation has been provided at the capital gains tax rate for
investment properties acquired and at the normal tax rate for properties classified as inventories. The deferred
taxation charge was not included in the profit estimate as the tax rate was assumed at 28% of the projected
profit and deferred taxation computations on balance sheet movements were not included in the profit forecast.
The deferred taxation charge was included in the reviewed results for the 9 months ended 30 November 2013,
details of which were included in the prospectus.
On the balance sheet, property, plant and equipment and inventories increased by 80% and 100% respectively,
primarily as a result of the acquisition of properties ahead of the listing, which were transferred through the
Deeds Office after year end. This also resulted in a similar increase in Stated Capital by 77% compared to the
prior year. Other financial liabilities and tax payable increased directly as a result of the above acquisition of
properties. The large increase in shareholder loans resulted from the various agreements and adequate security
is in place for loans receivable.
SEGMENTAL REPORTING
The segmental information is set out below:
Property Property Development Total
services investment
Total Revenue 1 035 496 1 732 844 - 2 768 340
Inter-segmental sales - - -
External sales 1 035 496 1 732 844 - 2 768 340
Segment Results (2 279 170) (4 773 180) - (7 052 350)
Other income 5 395 000 27 102 005 - 32 497 005
Income from equity account
investment - (545 859) - (545 859)
Fair value adjustments - 335 000 - 335 000
Finance income 609 463 1 019 903 - 1 629 366
Finance costs - (2 994 849) - (2 994 849)
Impairment goodwill (4 444 226) (4 444 226)
Reversal of impairment of goodwill 4 444 226 4 444 226
Taxation (3 732 561) (6 246 230) - (9 978 791)
Bad debts - - - -
Depreciation (63 021) (105 462) - (168 483)
Provision for penalties and interest (96 133) (160 874) - (257 007)
Net profit after tax for the year (166 422) 13 630 454 - 13 464 032
Segment operating assets 17 739 455 72 013 085 40 246 180 129 998 720
Segment operating liabilities 9 490 214 36 532,103 - 46 022 469
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The following financial assets "and liabilities" carrying amount approximates the fair value thereof:
Measured at amortised cost (Recurring, Level 2 inputs):
Cash and cash equivalents
Bank overdraft
Other financial liabilities
Trade and other payables
Loans from shareholders
Available for sale financial assets measured at fair value (Recurring, Level 2 inputs):
Trade and other receivables
Loans to joint ventures
Other financial assets
There were no transfers between the different levels of the fair value hierarchy during this period.
The Group used the following techniques to determine the fair value measurements categorized in level 2:
The carrying value of the available-for-sale financial assets and the financial assets and liabilities measured at
amortised cost approximates the fair values thereof as they are either classified as current or in the event that
they are classified as non-current, the instruments bear interest at market related interest rates.
PROSPECTS
Going forward, most of the property development projects take place in Visual International, whilst Stellendale
Village houses the Stellendale Lifestyle Retirement development, which project has commenced with 88 units
sold of the planned approximately 840 units and the contractors having been appointed to install the services for
construction of the units at Northbank 1 and Northbank 2 within the Stellendale Lifestyle Retirement
development.
Hoeksteen Projects and Richland respectively hold land for future development at Machadadorp and Richwood,
although no development is planned or forecast on these two properties for the two years ending 28 February
2014 and 28 February 2015. Mystic Pearl similarly holds two pieces of land for future development in Hagley,
with its joint venture partner, Oupossie Trust.
Visual International holds a 50% interest in Dream Weaver which owns under cover and open parking bays at
three buildings from which income is generated through leasing of parking bays, with its joint venture partner
Ruby and Martha Trust.
Due to the delay in one of the property transfers and the consequent delay in listing and receipt of the proceeds
raised, lodging of plans and commencement of construction of top structures has been delayed, which in turn
may cause some of the sales and cost of sales to move into the following year. On the converse side, the listing
process has led to huge interest in Visual and certain of its larger projects, which could lead to strategic
partnerships being formed. The board is thus excited about the potential going forward and will keep the market
informed of any developments.
COMPARISON WITH PROFIT FORECAST
In accordance with the JSE Listings Requirements, Visual has set out a comparison between the profit forecast
as contained in the Company’s prospectus dated 3 March 2014 and the reviewed provisional report for the year
ended 28 February 2014 below:
Reviewed Forecast
28 February 2014 28 February 2014
R R
Revenue 2 768 340 2 760 390
Cost of sales (351 756) (270 381)
Gross profit 2 416 584 2 490 009
Other income 32 497 005 32 689 978
Expenses (9 894 324) (7 839 753)
Operating profit 25 019 265 27 340 234
Investment revenue 1 629 366 -
Fair value adjustments 335 000 -
Finance costs (2 994 849) (3 084 045)
Profit before taxation 23 442 823 24 256 189
Taxation (9 978 791) (2 863 053)
Profit for the year 13 464 032 21 393 136
Profit/(loss) attributable to: 13 607 564 21 508 700
Owners of parent (143 532) (115 564)
Non-controlling interest 13 464 032 21 393 136
Earnings per share 10.90 8.42
Headline loss per share (10.95) (2.15)
Weighted average shares in issue (assumed fully diluted in the
prospectus) 124 816 627 255 458 775
DIRECTORS OF VISUAL
The full name, ages, addresses and occupations of the directors of Visual are set out below:
Name Date of appointment Occupation
CK Robertson 01 March 2010 Chief Executive Officer
P Grobbelaar 23 January 2009 Projects Director (executive)
G Noble 01 March 2010 Financial Director (executive)
E Links 23 October 2013 Independent Non-executive Director
G Lundy 23 October 2013 Independent Non-executive Director
R Kadalie 23 October 2013 Independent Non-executive Director
R Richards 21 January 2014 Independent Non-executive Chairman
CT Vorster 21 January 2014 Independent Non-executive Director
PR Ranchod 21 January 2014 Independent Non-Executive Director
SHARE CAPITAL AND ISSUE/ REPURCHASE OF SHARES
On 23 December 2013 CIPC approved the following changes:
- Change from a private company to a public company;
- Change of name of the company from Presto Financing Proprietary Limited to Visual International
Holdings Limited;
- Conversion of par value shares into no par value shares;
- Adoption of a new Memorandum of Incorporation;
- Increase in authorised share capital; and
- Transfer of share capital to stated capital.
During the year, Visual converted its share capital to shares of no par value and sub-divided its issued share
capital to 90 704 949 shares of no par value. In addition, Visual increased its authorised share capital to
1 000 000 000 ordinary shares of no par value.
The following share issues were made from 01 March 2013 to 28 February 2014
- On 18 October 2013 the issue of 83 169 544 Shares at a total value of R21 500 000 in Visual and the
payment of a deposit of R12 500 000 for the acquisition of Erf 18363, Kuils River.
- On 18 October 2014 issue of 7 706 987 shares at a total value of R2 362 387 in Visual, the payment of a
deposit of R 8 000 000 and taking over a bond of R6 637 387 for the acquisition of Erf 18358 and the
remainder of farm 1286, Kuils River.
- On 31 October 2013 issue of 703 325 shares in Visual post the sub-division of shares in preparation for
the listing of Visual for the acquisition of 10 shares in Stellendale Village.
- On 20 January 2014 the agreement entered into on 15 February 2013 to purchase Erf 22887 with a fair
value of R2 155 774 was cancelled and substituted for Erf 24258, with a fair value of R7 350 000 with a
commensurate issue of shares. The agreement with My Place Trust and addenda for the acquisition of
Erf 22887 and subsequent substitution for Erf 24258.
- On 21 January 2014, 4 673 970 shares were issued to service providers at fair value as part of the listing
process.
- On 21 January 2014, 2 500 000 shares were issued to the Highbury Foundation at fair value ahead of the
listing as part of the Visual group’s empowerment and community marketing initiatives as well as to
achieve spread of shareholders.
During the year under review, the Company did not repurchase any shares.
Subsequent to the issue of additional shares above, the Company had 189 458 775 shares in issue at year end
and prior to the offer and listing of Visual post year end.
Upon the listing of Visual on 23 May 2014 the company issued a further 22 301 021 shares at R0.50 per share
raising R11 150 510.50 for the offer.
DIVIDEND
The Company has not declared a dividend for the year ended 28 February 2014 (2013: R12 378 859) in line with
its stated intention in the prospectus. The Company will not be considering a dividend payment for the
forthcoming year.
LITIGATION
There is no litigation pending against the Company or its Subsidiaries, which is expected to have a material
impact on the results of the Group.
CONTINGENT LIABILITIES
At the reporting date the Group does not have any contingent liabilities (2013: RNil).
ANNUAL GENERAL MEETING
Audited results are expected to be finalised during June 2014 and the annual report will be posted to
shareholders in due course. The date of the Annual General Meeting will be announced on posting of the
Annual Report.
EVENTS AFTER THE REPORTING PERIOD
Visual listed on the Alternative Exchange of the Johannesburg Stock Exchange on 23 May 2014. The Company
issued an additional 22 301 021 shares at R0.50 per share raising R11 150 510.50. In addition, the Company
has entered into a subscription agreement with Phab Properties Proprietary Limited for the subscription of
32 000 000 shares at the higher of 50 cents per share or at a 10% discount to the 30 day Volume-Weighted-
Average Price, of which 400 000 have already been subscribed for at 50 cents and are in the process of being
issued and listed.
By order of the board
Johannesburg
30 May 2014
Designated Advisor Auditor and Reporting Accountants
Arcay Moela Sponsors (Pty) Ltd Baker Tilly Greenwoods Chartered Accountants
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