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VUNANI LIMITED (“Vunani” or “the company” or “the group Incorporated in the Republic of South Africa
Registration number 1997/020641/06
JSE code: VUN ISIN: ZAE000163382 Listed on Alt-X on the JSE Limited (“JSE”) These results are available on our website www.vunanilimited.co.za
The unaudited condensed consolidated results have not been reviewed.
The unaudited condensed consolidated results were published on 31 August 2012.
The unaudited condensed consolidated results have been prepared under the supervision of the chief
financial officer, Aphrodite Judin CA (SA).
Unaudited condensed
consolidated results for the
6 month period ended
30 June 2012
Unaudited condensed consolidated results
for the 6 month period ended 30 June 2012
VUNANI LIMITED (“Vunani” or “the company” or “the group”) Incorporated in the Republic of South Africa
Registration number 1997/020641/06
JSE code: VUN ISIN: ZAE000163382 Listed on Alt-X on the JSE Limited (“JSE”) These results are available on our website www.vunanilimited.co.za 2
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
Note
Unaudited
30 June 2012
Unaudited
30 June 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
Profi t on disposal of assets 1 475 7 725
Fa ir va lue adjustments and impairments 1 27 591 18 991
Operati ng 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 associ ates (net of income tax) 2 368 (1 156)
Net profit/(loss) before taxation 9 997 (20 045)
Income ta x income/(expense) 7 819 (5 272)
Profit/(loss)from continuing operations 17 816 (25 317)
DISCONTINUED OPERATIONS
Profi t from discontinued opera tions (net of taxa tion) 3 - 9 341
Profit/(loss) for the period 17 816 (15 976)
Profit/(loss) and total comprehensive income/(loss) for
the period17 816 (15 976)
Profit/(loss) from continuing operations and total
comprehensive income/(loss) attributable to :
Equity hol ders of Vunani Limited 15 019 (24 209)
Non-control l ing interest 2 797 (1 108)
17 816 (25 317)
Profit/(loss) for the period and total comprehensive
income/(loss) attributable to :
Equity hol ders of Vunani Limited 15 019 (14 868)
Non-control l ing interest 2 797 (1 108)
17 816 (15 976)
Earnings/(loss) per share (cents)
Bas ic and di luted bas ic earnings/(loss ) per share* 14.2 (15.8)
19.3 (25.4) Hea dl ine and di l uted headl i ne earnings/(loss ) per s ha re*
*- 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 CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2012
Figures in R'000s
Total
attributable
to equity
holders of
Vunani
Non-
controlling
interest Total equity
Balance as at 31 Dec 2010 250 131 174 088 424 219
Transactions with owners, recorded directly in equity
Cancel la tion of s hares (27 751) - (27 751)
Comprehensive income
Loss and total comprehens ive los s for the period (14 868) (1 108) (15 976)
Balance as at 30 June 2011 207 512 172 980 380 492
Transactions with owners, recorded directly in equity
Is sue of shares 35 832 - 35 832
Treasury s hares (14 277) - (14 277)
Share based payment res erve 2 524 - 2 524
Disposal of subs idiaries - (149 014) (149 014)
Comprehensive income
Loss and total comprehens ive los s for the period (32 735) (10 124) (42 859)
Balance as at 31 December 2011 198 856 13 842 212 698
Transactions with owners, recorded directly in equity
Increase in investment in subs idiaries - (193) (193)
Share based payment res erve 1 134 - 1 134
Comprehensive income
Profi t and tota l comprehens ive income for the period 15 020 2 797 17 817
Balance as at 30 June 2012 215 010 16 446 231 456
CONDENSED STATEMENT OF FINANCIAL POSITION
AT 30 JUNE 2012
Figures in R'000s Note
Unaudited
30 June
2012
Audited
31 December
2011
ASSETS
Inves tment property 4 000 4 000
Property, plant and equipment 3 676 4 191
Goodwi l l 33 853 34 123
Inves tment in and loans to associates 93 245 98 093
Other investments 2 263 888 237 981
Deferred tax ass et 101 492 93 886
Other non-current ass ets 6 539 4 709
Other intangible as sets 977 1 466
Total non-current assets 507 670 478 449
Other investments 2 128 354 181 687
Inventory - 3 287
Taxation prepa id 154 154
Trade and other receivables 20 640 21 289
Accounts receivable from trading activi ties 394 069 95 638
Trading securi ties 131 1 030
Cash and cash equiva lents 12 117 17 169
Total current assets 555 465 320 254
Total assets 1 063 135 798 703
EQUITY
Share capi tal and s hare premium 595 812 595 812
Share based payment res erve 3 658 2 524
Accumulated los s (384 460) (399 480)
Equi ty attributable to equity holders of Vunani Limited 215 010 198 856
Non-control l ing interest 16 446 13 842
Total equity 231 456 212 698
LIABILITIES
Other financia l l iabi l i ties 2 94 170 103 140
Deferred tax l iabi l i ties 47 224 46 784
Total non-current liabilities 141 394 149 924
Other financia l l iabi l i ties 2 268 199 298 585
Current tax payable 4 548 445
Trade and other payables 30 585 47 225
Accounts payable from trading activi ties 386 678 89 407
Trading securi ties 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 i ss ue (000s) 105 415 105 415
Net ass et value per share (cents)** 204.0 188.6
Net tangible ass et 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 CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2012
Figures in R'000s
Unaudited
30 June
2012
Audited
31 December
2011
Unaudited
30 June
2011
Net cash (outflows )/inflows from operating activi ties (1 628) 16 385 32 430
Net cash inflows from inves ting activi ties 27 471 270 600 231 323
Net cash outflows from financing activi ties (30 757) (277 686) (244 724)
Net (decreas e)/increas e in cas h and cas h
equiva lents
(4 914) 9 299 19 029
Cas h and cas h equiva lents at beginning of the year 17 009 7 710 7 710
Tota l cas h and cash equiva lents at end of the period 12 095 17 009 26 739
Unaudited condensed consolidated results
for the 6 month period ended 30 June 2012
VUNANI LIMITED (“Vunani” or “the company” or “the group”) Incorporated in the Republic of South Africa
Registration number 1997/020641/06
JSE code: VUN ISIN: ZAE000163382 Listed on Alt-X on the JSE Limited (“JSE”) These results are available on our website www.vunanilimited.co.za 3
SEGMENTAL REPORTING
FOR THE PERIOD ENDED 30 JUNE 2012
Figures in R'000s Revenue
Reportable
segment
profit/ (loss)
for the period Total assets
Unaudited
30 June 2012
Unaudited
30 June 2012
Unaudited
30 June 2012
Continuing operations
As set management 10 746 532 49 752
Inves tment banking and advisory 7 564 (1 854) 8 407
Inves tment holdings - 21 152 524 092
Securi ties broking 24 576 (841) 407 734
Properties - developments - (2 328) 38 600
Properties - inves tments 1 115 1 162 27 578
Properties - as set 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
30 June 2011
Unaudited
30 June 2011
Audited
31 December
2011
Continuing operations*
As set management 12 846 6 315 34 895
Inves tment banking and advisory 9 589 3 492 12 991
Inves tment holdings - (20 613) 536 972
Securi ties broking 21 908 (2 171) 129 273
Properties - developments 721 (1 098) 45 567
Properties - inves tments - 2 384 38 607
Properties - as set 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 PROS
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.
Unaudited condensed consolidated results
for the 6 month period ended 30 June 2012
VUNANI LIMITED (“Vunani” or “the company” or “the group”) Incorporated in the Republic of South Africa
Registration number 1997/020641/06
JSE code: VUN ISIN: ZAE000163382 Listed on Alt-X on the JSE Limited (“JSE”) These results are available on our website www.vunanilimited.co.za 4
NOTES TO THE CONDENSED CONSOLIDATED RESULTS CONTINUED (all figures in R’000)
1. Fair value adjustments and (impairments) for continuing operations
Unaudited
30 June
2012
Unaudited
30 June
2011
R'000 R'000
Financia l as sets and l iabi l i ties des ignated as fa i r va lue
through profi t and loss 34 324 19 192
Impa irment of non-current as sets held for sa le - (201)
Goodwi l l impa irment (271) -
Impa irment of investments and loans to as sociates (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.
Figures in R'000s
Unaudited
30 June 2012
Unaudited
30 June 2011
Results of discontinued operation
Revenue - 64 180
Other income - -
Operating expenses - (30 569)
Operating profit - 33 611
Fa i r va lue adjustments and impairments - 6 430
Net finance cost - (29 800)
Results from operating activities - 10 241
Taxation - (900)
Results from operating activities after taxation - 9 341
Los s on sa le of discontinued operation - -
Profit for the year - 9 341
Effect on bas ic (los s)/earnings per s hare (cents )* - 9.9
Effect on di luted earnings per s hare (cents)* - 9.9
Cash flows from discontinued operation
Net cash inflows from operating activi ties - 1 251
Net cash outflows from inves ting activi ties - (3 862)
Net cash inflows/(outflows) from financing activi ties - 5 677
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.
Weighted average number of
ordinary shares (000s)
Unaudited
30 June
2012
Unaudited
30 June
2011
Audited
31 December
2011
Is sued ordinary shares at the beginning of
the period 5 270 732 4 763 502 4 763 502
Effect of s hare cons ol idation (5 165 317) - -
Les s cancel led s hares - (114 368) (114 368)
Effect of i ss ued s hares - - 621 599
Is sued ordinary shares at the end of the
period 105 415 4 649 134 5 270 733
Weighted average number of shares in
is sue 105 415 4 715 480 4 886 954
5. Headline profit/(loss)
Unaudited
30 June 2012
Unaudited
30 June 2011
Total comprehens ive profi t/(los s) attributable to
equity holders of Vunani
15 019 (14 868)
Adjus ted for
Reva luation of inves tment property - subs idiaries
Gros s reva luation - (6 430)
Deferred taxation - 900
Non-control l ing s hareholders ' interes t - 3 465
Goodwi l l impairment 271 -
Impairment of investment and loans to ass ociates 3 459 -
Other impairments 2 825 -
Taxation (527) -
Loss on disposa l of ass ets
Loss on dis posa l of ass ets (1 475) (7 725)
Taxation 413 1 082
Non-control l ing s hareholders ' interes t 234
20 219 (23 576)
Headline earnings/(loss) per share (cents)
Bas ic and di luted headl ine earnings/(loss ) per share 19.3 (25.4)
SUBSEQUENT EVENTS
There have been no material subsequent events between the period end to the date of signing of
the results.
DIVIDENDS
No dividends were declared or paid to shareholders during the period 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
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