Wrap Text
Unaudited Interim Condensed Consolidated Results for the Six Months Ended 31 August 2016
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
UNAUDITED INTERIM CONDENSED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED
31 AUGUST 2016
Condensed Statement of Comprehensive Income
31 August 31 August 28 February
2016 2015 2016
Unaudited Unaudited Audited
R R R
Revenue 567 648 2 151 759 2 793 247
Cost of sales (161 964) (587 285) (282 761)
Gross profit 405 684 1 564 474 2 510 486
Other income 121 944 133 835 335 703
Operating expenses (6 258 659) (4 687 911) (11 271 608)
Operating loss (5 731 031) (2 989 602) (8 425 419)
Investment revenue 1 516 916 1 423 698 3 003 052
Fair value adjustments (17 675) - (1 931 972)
Loss from equity accounted investments - (457 133) (347 614)
Finance costs (3 232 613) (2 766 760) (6 279 746)
Loss before taxation (7 325 917) (4 789 797) (13 981 699)
Taxation 34 908 776 311 2 137 029
Loss for the period (7 291 009) (4 013 486) (11 844 670)
Other comprehensive income - - -
Total comprehensive loss for the period (7 291 009) (4 013 486) (11 844 670)
Loss attributable to:
owners of the parent (7 103 696) (3 887 638) (11 734 046)
Non-controlling interest (187 313) (125 848) (110 624)
(7 291 009) (4 013 486) (11 844 670)
Shares in issue at period end 223 000 126 215 383 400 215 383 400
Weighted average number of shares 222 834 545 215 383 400 215 383 400
Loss per share (cents) (3.19) (1.80) (5.45)
Diluted loss per share (cents) (3.19) (1.80) (5.45)
Headline loss reconciliation
Net loss for the period (7 103 696) (3 887 638) (11 734 046)
Adjustments:
Fair value adjustment on investment
properties 17 675 - 1 931 972
Tax effects on fair value adjustment - - (432 762)
Headline loss for the period (7 273 334) (3 887 638) (10 234 836)
Headline loss per share (cents) (3.26) (1.80) (4.75)
Condensed Statement of Financial Position
31 August 28 February 31 August
2016 2016 2015
Unaudited Audited Unaudited
R R R
Assets
Non-Current Assets
Investment property 16 523 820 17 248 820 41 073 820
Property, plant and equipment 662 936 682 359 809 104
Long term portion of installment sale
receivable 5 196 981 - -
Intangible assets - 70 675 91 766
Investment in joint ventures 524 835 524 835 895 317
Loans to shareholders 45 538 872 43 770 831 40 962 048
Other financial assets 84 000 74 787 426 782
68 531 443 62 372 307 84 258 837
Current Assets
Inventories 30 246 180 30 246 180 40 246 180
Current portion of installment sale
receivable 1 013 192 - -
Loan to joint venture - - 753 529
Current tax receivable - 6 660 -
Trade and other receivables 685 778 600 071 1 377 682
Cash and cash equivalents 155 106 4 468 508
32 100 257 30 857 379 42 377 899
Non-current assets held for sale and
assets of disposal groups 22 025 000 32 025 000 -
Total Assets 122 656 700 125 254 686 126 636 736
Equity and Liabilities
Equity
Share capital 69 365 080 68 365 080 68 365 080
(Accumulated loss)/Retained income (13 477 875) (6 374 179) 1 408 977
Equity Attributable to Equity Holders of
Parent 55 887 205 61 990 901 69 774 057
Non-controlling interest (754 155) (566 842) (582 066)
55 133 050 61 424 059 69 191 991
Liabilities
Non-Current Liabilities
Loans from shareholders 17 299 755 16 715 967 15 714 310
Other financial liabilities 4 861 705 7 417 534 12 504 443
Operating lease liability - - 19 091
Deferred tax 3 494 205 3 724 333 7 794 036
25 655 665 27 857 834 36 031 880
Current Liabilities
Loans from group companies 626 752 553 960 -
Loans from shareholders - - 4 478 848
Other financial liabilities 25 857 157 12 338 091 12 369 541
Current tax payable 188 560 - 400 001
Trade and other payables 8 816 378 5 547 436 3 051 993
Bank overdraft 968 077 1 133 405 1 112 482
36 456 925 19 572 892 21 412 865
Liabilities of disposal groups 5 411 060 16 399 901 -
Total Liabilities 67 523 649 63 830 627 57 444 745
Total Equity and Liabilities 122 656 700 125 254 686 126 636 736
Net asset value per share (cents) 24.74 28.78 32.40
Net tangible asset value per share 24.74 28.75 32.40
Condensed Statement of Changes in Equity
Total
attributable
Total to equity Non-
stated Retained holders of controlling
capital income the group interest Total equity
R R R R R
Group
Balance at
1 March 2015 68 365 080 5 359 867 73 724 947 (456 218) 73 268 729
Loss for the year - (11 734 046) (11 734 046) (110 624) (11 844 670)
Other comprehensive
income - - - - -
Total comprehensive
loss for the year - (11 734 046) (11 734 046) (110 624) (11 844 670)
Balance at
1 March 2016 68 365 080 (6 374 179) 61 990 901 (566 842) 61 424 059
Loss for the period (7 103 696) (7 103 696) (187 313) (7 291 009)
Other comprehensive
income
Other transfers 1 000 000 1 000 000 1 000 000
Total comprehensive
Loss for the year 1 000 000 (7 103 696) (6 103 696) (187 313) (6 291 009)
Balance at
31 August 2016 69 365 080 (13 477 875) 55 562 955 (754 155) 55 133 050
Condensed Abridged Statement of Cash Flows
31 August 31 August 28 February
2016 2015 2016
Unaudited Reviewed Audited
R R R
Net cash from operating activities (4 806 337) (3 643 761) (6 202 790)
Net cash from investing activities 763 522 (110 863) 245 797
Net cash from financing activities 4 358 781 2 528 834 4 935 966
Total cash movement for the year 315 966 (1 004 064) (1 021 027)
Cash at the beginning of the year (1 128 937) (107 910) (107 910)
Total cash at end of the period (812 971) (1 111 974) (1 128 937)
BASIS OF PREPARATION
The board of directors presents the unaudited condensed consolidated interim results for the
six months ended 31 August 2016. The results have been prepared in accordance with the
requirements of the Johannesburg Stock Exchange (“JSE”) Listings Requirements and the
framework concepts and the recognition and measurement requirements of International
Financial Reporting Standards (“IFRS”) and IAS 34 Interim Financial Reporting. The accounting
policies used in preparation of the interim results 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 2016.
The responsibility for the preparation of the unaudited interim results is that of the financial
director Mr G Noble (B.Comm), which results have 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.
BACKGROUND AND NATURE OF BUSINESS
Visual 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 developed nearly 500 homes within Stellendale,
comprising stand-alone homes and two and three storey walk-up apartments.
Visual focuses on the development of entire suburbs which comprises houses, apartments,
lifestyle and retirement accommodation, retail facilities, schools, offices and recreation as
well as other related facilities. With this focus Visual is able to ensure the overall quality and
integrity of the suburb. It enables Visual to supply quality residences and other facilities at
affordable prices. Furthermore, providing these combinations in a single suburb leads to job
creation – which is important to the owners and occupants.
To date, close to 500 homes and apartments have been developed by Visual International
at Stellendale.
FINANCIAL RESULTS COMMENTARY
Visual reports that the performance of the Group deteriorated compared to the prior period,
due to the reduction in rental following the sale of 20 units in terms of an instalment sale
agreement and a reduction in consulting fees. The Company sold 20 rental units for R10
million. No profit or loss was realised on the disposal of the 20 rental units, which were
previously held under investment property.
An undeveloped stand was also sold on auction for R725 000. No profit or loss was realised on
this disposal. The net proceeds of the sales were applied to reduce long term debts as well as
creditors of the Group.
Operating expenses for the six months ended 31 August 2016 increased by 33% compared to
the prior period due to higher audit fees, facility fees and legal costs.
Finance charges were higher due to higher levels of borrowings associated with the funding
of the Group some of which were at bridging finance rates.
On the Statement of Financial Position, the instalment sale receivable arose from the sale of
20 rental units for R10 million during the period, previously recognised under assets held for
sale, which receivable is matched by a similar financial obligation, each repayable in
monthly instalments.
The loan to shareholder increased by the interest accrued on the loan, which loan will be
primarily settled through the transfer of land once it has been rezoned and independently
valued as stated in the Company’s prospectus on listing. This is expected during 2017. Any
difference will be settled in cash.
Stated capital increased by R1 million following the placement of shares under the
Company’s general authority during the year.
Other long term financial liabilities decreased with the reallocation of bond facilities to
current liabilities, where these may be settled within 12 months and current financial liabilities
similarly increased. Current financial liabilities also increased due to the securing of interim
bridging funding from one of the controlling shareholders and third parties.
Current liabilities increased due to continued cash flow constraints during the period.
Shareholders are also referred to events post the balance sheet noting the substantial
reduction of certain liabilities.
SEGMENTAL REPORTING
The segmental information is set out below. The basis of segmentation and the measurement
of segment profit/loss is consistent with the prior period audited annual financial statements.
The Group currently has three reportable segments, as described below, which are the
group's strategic business units. The strategic business units offer different services and are
reviewed by management. For each of the strategic business units, the Group's CEO reviews
internal management reports on at least a monthly basis. The following summary describes
the operations of each of the Group's reportable segments for the period ended
31 August 2016 and 31 August 2015:
- Property Services segment - Rendering of management, administration and consulting
services on development projects
- Property Investment segment - Letting of residential properties held by the Group
- Property Development segment - Development of residential properties held by the
Group or sold to third parties.
No consulting fees were generated in the reporting period. Revenue from rentals amounted
to R567 678 (Aug 2015 1 007 836), arising from services rendered by the Property Investment
segment.
Primary segment report Property Property Property
August 2016 Services Investment Development Total
SEGMENT RESULTS
Total revenue - 567 648 - 567 648
Total external revenue - 567 648 - 567 648
Other income - 121 944 - 121 944
Cost of sales - (161 964) - (161 964)
Finance costs - (551 821) (1 578 021) (2 089 842)
Employee costs - (2 301 352) (669 562) (3 082 848)
Depreciation - (53 123) (53 123)
Other operating expenses - (2 470 799) (651 919) (3 122 668)
Fair value adjustments - (17 675) - (17 675)
Segment results before taxation
Interest income on shareholder loans - - - 1 516 833
Interest income on instalment sale - 138 486 - 138 486
Finance costs accrued on shareholder - - -
loans (1 084 090)
Taxation - - - 34 908
Interest income on cash and cash - - -
equivalents 83
Finance costs on bank overdraft - - - (58 681)
Net loss per statement of
comprehensive income (7 291 009)
SEGMENT ASSETS AND LIABILITIES
Investment in joint venture 524 835 524 835
Other reportable segment assets 53 319 421 22 896 180 76 353 887
Total reportable segment assets
Loans to shareholders 45 538 872
Other financial assets 84 000
Cash and cash equivalents 155 106
Total assets per statement of financial
position 53 844 256 22 896 180 122 656 700
Total reportable segment liabilities 27 538 824 18 034 228 45 573 052
Current tax 188 560
Deferred tax 3 494 205
Loans from shareholders 17 299 755
Bank overdraft 968 077
Total liabilities per statement of 67 523 649
financial position
Primary segment report Property Property Property
August 2015 Services Investment Development Total
SEGMENT RESULTS
Total revenue 1 229 307 922 452 - 2 151 759
Total external revenue 1 229 307 922 452 - 2 151 759
Other income 32 150 101 685 - 133 835
Income from equity accounted
investments - (457 133) - (457 133)
Finance income - 96 - 96
Cost of sales (587 285) - - (587 285)
Finance costs - (1 660 175) (162 385) (1 822 560)
(1 046 15
Employee costs 2) (844 299) (971 056) (2 861 507)
Depreciation (13 476) (119 940) - (133 416)
Other operating expenses (873 528) (683 867) (135 593) (1 692 988)
Segment results before taxation (845 863) (3 154 303) (1 269 034) (5 269 200)
Interest income on shareholder loans 1 423 280
Finance costs accrued on shareholder
loans (894 017)
Taxation 776 311
Interest income on cash and cash
equivalents 322
Finance costs on bank overdraft (50 182)
Net loss per statement of
comprehensive income (4 013 486)
SEGMENT ASSETS AND LIABILITIES
Investment in joint venture - 895 317 - 895 317
Other reportable segment assets 1 345 581 42 760 320 40 246 180 84 452 081
Total reportable segment assets 1 345 581 43 655 637 40 246 180 85 247 398
Loans to shareholders 40 962 048
Other financial assets 426 782
Cash and cash equivalents 508
Total assets per statement of financial 126 636
position 736
Total reportable segment liabilities 610 108 27 023 189 7 035 963 34 669 260
Current tax 400 001
Deferred tax 7 794 036
Loans from shareholders 13 468 967
Bank overdraft 1 112 481
Total liabilities per statement of
financial position 57 444 745
Geographic information:
The Group's revenue is derived from operations and property holdings in South Africa.
Segment revenue and expenses:
Revenue and expenses that are directly attributable to segments are allocated to those
segments. Those that are not directly attributable to segments are allocated on a
reasonable basis.
Segment assets and liabilities:
Segment assets and liabilities comprise those operating assets and liabilities that are directly
attributable to the segment or can be allocated to the segment on a reasonable basis.
Segment assets exclude investments, tax assets, bank balances, deposits and cash. Segment
liabilities exclude loans, bank overdraft and tax liabilities. Capital expenditure represents the
local costs incurred during the period to acquire segment assets that are expected to be
used during more than one period, namely, property, plant and equipment, investment
property and intangible assets other than goodwill.
SHARE CAPITAL AND ISSUE/ REPURCHASE OF SHARES
During the period under review, the Company issued 7 616 726 shares at 0.13129 cents per
share for cash. Shares were issued for cash subsequent to period end as follows:
- An issue of 7 033 652 shares at 0.143 cents per share.
- A signed subscription agreement for the issue of 33 333 334 shares at 15 cents per share
amounting to a subscription of R5 000 000.
The Company did not repurchase any shares.
DIVIDENDS
The Company has not declared a dividend for period ended 31 August 2016.
(31 August 2015: Nil).
LITIGATION
There is no legal or arbitration proceedings, including any proceedings that are pending or
threatened, of which the Company and Group is aware that may have or have had during
the period, have a material effect on the Company’s or Group’s financial position.
CONTINGENT LIABILITIES
At the reporting date the Group does not have any contingent liabilities (2015: RNil).
RELATED PARTIES
Related parties are the same as reported in the previous period.
Related party transactions up until 31 August 2016 R
Interest paid to/(received from) related parties
Shareholders 1 084 090
Shareholder (1 516 824)
Company controlled by director 183 053
Close family member of director -
Shareholders of subsidiaries -
Salary paid to related party
Close family member of director 33 000
Management fees received from related parties
Joint venture (Dream Weaver Trading) -
Companies controlled by directors (Clidet) -
Legal fees paid to related parties
Companies controlled by close family member of director 200 044
GOING CONCERN
The directors have considered the operational budget and cash flow forecasts for the
ensuing 12 months which are based on the current expected economic and market
conditions and the happening of certain of the following events or subsequent events:
a) The Company signed a subscription agreement dated 22 November 2016 for
33 333 334 shares at 15 cents per share, amounting to a subscription of R5 000 000 of
which R250 000 has been received and the balance of which is payable within 10
business days from the lifting of the suspension of the Company.
b) Visual International has sold Erf 18358 and the remainder of Farm 1286 (known as
“Stellendale 3”) to an established property developer for development for R15 000 000.
The proceeds of the transaction will be used to repay creditors and as part funding of
the operational activities for the Group for the following 12 months.
c) Stellendale Village Proprietary Limited (a subsidiary of Visual International) sold Erf 24258
for R11 000 000, which was used to reduce expensive secured creditors, to pay
creditors and fund operational activities up to the end of October 2016.
d) The Company is now at an advanced stage in relation to the finalisation of a
development agreement on the property in c) above.
e) Visual International has signed a 10-year corporate head lease with Spar and Spar Tops
for the anchor tenancies in Stellendale Junction. Keen interest exists for the line shops
that are available. Visual International is currently in discussions with various parties to
either develop the property on a joint venture basis or to sell the property.
The directors believe that due to the conclusion of the agreements in a) to c) above and the
expectation that the plans mentioned in d) and e) above will materialise, the Company will
have adequate financial resources to continue as a going concern.
It is noted that the Group has more than R55 million in tangible net asset value, which has
been supported by the independent property valuations.
EVENTS AFTER THE REPORTING PERIOD AND PROSPECTS
Disposal of land known as Northbank 1 and Northbank 2
Visual concluded the sale of land to Mergence Africa Property Fund Proprietary Limited
(“Mergence”) for R11 million, exclusive of VAT during the period under review. The transfer of
the land sold took place after the reporting period. The proceeds were received subsequent
to the period end and applied to the reduction of expensive secured creditors, to pay
creditors and fund operational activities to the end of October 2016. A net profit before tax
of R3.65 million was realised on the disposal.
The conclusion of this agreement will serve to fast track the achievement by Visual of its
strategic objective to develop Stellendale Lifestyle Estate. It is also the first step in developing
a long-term relationship with a strategic partner, which envisages Visual providing a pipeline
of quality residential units thereby enabling its partner to diversify into another property asset
class.
Disposal of land known as Stellendale 3
Visual has concluded an agreement for the sale of Stellendale 3 to UVest Housing Portfolio 2
(RF) Proprietary Limited (“Uvest”) for R15 million, exclusive of VAT, in cash. The effective date
will be the date of transfer of the property. The proceeds will be applied towards repayment
of the R4.5 million bond, reduction of the balance of most of the secured debt in the Visual
group, for the settlement of creditors and working capital. A net loss before tax of R2 million
was realised on this disposal.
The conclusion of this agreement ensures that Visual is mostly debt free, enabling it to focus
on its main business as a property developer and serve to fast track the achievement by
Visual of its strategic objective to develop the remainder of the Stellendale township.
Disposal of non-core assets
The Company sold 7 rental units for R4 million. A net loss before tax of R1 025 million was
realised on the disposal of the 7 rental units. The net proceeds of the sale was applied to
reduce creditors of the Group.
Signing of 10 year lease agreement
The Company signed a 10 year corporate lease agreement with Spar, with a renewal option
for two times 5 years, for its retail site known as Stellendale Junction, within the Stellendale
Village development.
Going forward, Visual eliminated the majority of its debt and creditors and has a positive net
tangible asset value in excess of R55 million and the board will be considering the size and
nature of properties held in order to start its key development initiatives and ensure that it has
sufficient cash and funding resources to grow the resources.
By order of the board
Johannesburg
12 December 2016
Designated Advisor
Arbor Capital Sponsors Proprietary Limited
Date: 12/12/2016 11:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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