Wrap Text
Status Update on Negotiations, Going Concern & Cautionary Announcement
VISUAL INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 2006/030975/06)
(“the Company” or “Visual”)
ISIN Code: ZAE000187407 Share code: VIS
STATUS UPDATE ON NEGOTIATIONS, GOING CONCERN AND CAUTIONARY ANNOUNCEMENT
INTRODUCTION
Shareholders are referred to previous announcements on SENS whereby investors were advised of
the following:
- On 29 May 2015, the company published details of going concern issues, whereby the Group
had experienced cash flow complications during the year ended 28 February 2015, partly
due to the nature of the business, which it addressed by borrowing from a lending institution
at higher interest rates. The cash flow complications resulted from a number of events as
detailed in the audited results announcement published on SENS, including inter alia, the
following:
a) A full share subscription was not received upon listing in 2014 and subsequent
placements of shares have taken longer than expected.
b) Delays in being able to generate revenue from property development sales were also
experienced due to a nine month delay in approval of zonings and plan approvals
from the local authorities, substantially delaying the start of construction on
Northbank 1.
- On 6 November 2015, the company again published details of the continuing going concern
issues in its interim results for the period ended 31 August 2015, providing details thereof, and
also noted the following:
a) The Company was in discussions with certain entities that had expressed in interest in
subscribing for a strategic shareholding in Visual or its projects, which discussions were
progressing well.
b) In addition to the above discussions, management's funding plans included:
i. Securing funding from normal banking sources for property development, which
has been the normal source of development funding of the group historically.
ii. The sale of undeveloped serviced land for an estimated consideration of
R36 million.
iii. Returning to its original business model of “plot and plan” should the negotiations
with the various funders be further delayed.
c) It was also noted that the Company may consider disposing of some of its smaller
properties during 2016.
- On 1 March 2016, the company announced a specific issue of shares to related parties,
including directors, noting the following rationale:
a) That the related parties to the Company had supported the Company in order to
enable the Company to prioritise payments to SARS, certain suppliers and funding for
working capital as opposed to allocating cash flow to the related parties.
b) The liabilities due to the related parties have been accrued in Visual’s books and the
Company has proposed that these liabilities be settled via a specific issue of shares for
cash to those parties who wish to accept same. The related parties have elected to
accept such shares in the Company in elimination of a portion of the amounts owed to
them (the “Capitalisation issue”). The proposed extinguishing of the respective liabilities
is not part of a share incentive scheme.
c) The Capitalisation Issue and resultant extinguishing of the liabilities will strengthen the
financial position of the Company and demonstrates the commitment of the related
parties, including the board, to the turnaround of the Visual group.
- On 22 April 2016, the company announced the signing of an agreement for the disposal of 20
units in Stellendale, which agreement was conditional on the advance of R2.3 million on or
before 26 April 2016.
STATUS UPDATE
The majority of the previous discussions as detailed in the previous results announcements have not
materialised for a variety of reasons, including industry related matters or country concerns.
However, a number of discussions have progressed as detailed below:
Disposal of 20 units in Stellendale
Following an extension of time by way of addenda for this payment to 10 May 2016, the payment
was not received on 10 May 2016 and the agreement lapsed. However, the agreement was
revived later on 10 May 2016 based on advice that the approval of the funding facility is in process,
with payment now expected no later than close of business on Friday, 20 May 2016.
In the event that the sale lapses again, the company has other parties that have expressed serious
interest to acquire the 20 units. These units are thus recorded as available for sale assets.
Disposal of other non-core assets
The company is disposing of other non-core assets, being smaller properties held outside of
Stellendale of by way of an auction during May 2016. Significant interest has been received on
these properties.
Disposal of undeveloped serviced land
The Company has recently received an offer from a reputable institution, which provides for the
disposal of three phases in Stellendale 3, which disposal includes a profit share arrangement. The
Stellendale 3 project was redesigned to enable a faster roll-out of approximately 250 single
residential houses on a plot and plan basis.
The board has agreed to proceed to heads of agreement, which will be subject to certain
conditions precedent. The terms of this proposed disposal will be announced in due course once
negotiations are finalised. The offer approximates the carrying value of the land in Visual’s books.
Issue of shares for cash
The Company has been in various discussions as previously announced and has received
conditional offer, including a due diligence, to subscribe for approximately 69 200 000 new shares
in Visual for a consideration of £500 000 under the Company’s general authority to issue shares for
cash, with an option to subscribe for the same number of shares at the same price over a two year
period. This option will require, inter alia, approval by Visual shareholders in General Meeting should
the issue of shares for cash proceed.
The company also has other parties interested in subscribing for shares in Visual but these
discussions are at an earlier stage and may not come to fruition.
Development properties
The Company has received board approval from a major retailer as an anchor tenant for the
Company’s retail site known as Stellendale Junction and a lease agreement is in the process of
being drawn up. The Company is now in the process of securing other tenants for Stellendale
Junction and will be seeking development funding and/or joint venture partners for this
development.
Cash flow constraints and going concern
The Company is still experiencing severe cash flow constraints, with payments due to directors and
SARS as recently announced, as well as its auditors, lenders and other service providers.
Accordingly the board has implemented a plan of action that is geared towards preserving the
asset base of the company as the tangible net assets of the company far exceed its liabilities and
with a view to optimise the balance sheet for its key development initiatives and ensure that it has
sufficient cash and funding resources to grow the group. The board of directors has also taken
legal and other advice in this regard and is actively monitoring the development of the various
initiatives as detailed above.
Results for the year ended 29 February 2016
Due to amounts due to the auditors of the Company, the audit of the results has not yet
commenced. Subject to the inflow of funds in relation to the disposal of the 20 units in Stellendale
or the successful disposal of other non-core assets during May 2016, the audit is expected to
commence on or about 1 June 2016. Accordingly, the publication of the results of the Company
will not be made within the three month period as set out in the JSE Listings Requirements. The
Company has advised the JSE of the expected delay and circumstances surrounding the audit
and publication of results.
CAUTIONARY ANNOUNCEMENT
As a result of the current cash flow constraints as well as the various negotiations, some of which
are at an advanced stage, shareholders are advised to exercise caution in dealing in their
securities until a further announcement is made.
Johannesburg
18 May 2016
Sponsor
Arbor Capital Sponsors Proprietary Limited
Date: 18/05/2016 03:56:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
