Results as at 31 Dec 2010 (links broken)
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 Vunani Limited
SALIENT FEATURES
(Incorporated in the Republic of South Africa) (Registration number: 1997/020641/06)
Revenue increased by R70.8m | Operating profit increased by R64.6m Loss for the year decreased by R110.1m | Substantial increase in NAV
(JSE code: VUN
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2010
As at 31 December 2010 Notes
Figures in R'000s Revenue Other income Cost of property developments sold Operating expenses Operating profit Investment income Fair value adjustments and impairments
2
Income from associates
Restated Audited 31 Dec 2009
195 801
125 046
14 937
6 183
Non current assets
-
(177)
Investment properties
(144 382)
(129 294)
66 356
1 758
12 747
16 876
(29 654)
1 069
54 094
21 076
Net finance cost
(158 344)
(193 355)
Net loss before taxation
(54 801)
(152 576)
Taxation Loss for the year and total comprehensive loss for the year
Notes
Reviewed 31 Dec 2010
724
(11 581)
(54 077)
(164 157)
Figures in R'000s
(104 926)
Non-controlling interest Loss for the year and total comprehensive loss for the year
(172 880)
50 849
8 723
(54 077)
(164 157)
Restated Audited 31 Dec 2008
817 132
918 818
800 398
29 319
25 963
5 540
Goodwill
47 523
39 436
75 596
Investments in associates Other investments
1
Deferred tax asset
94 957
246 469
206 077
385 373
572 757
488 828 24 517
62 475
90 056
Other non current assets
3 656
2 395
1 891
Other intangible assets
2 443
1 250
10 284
1 544 564
1 778 724
1 629 865 180 531
Current assets 1
Inventory Loan to holding company Taxation prepaid Trade and other receivables
Earnings per share
Restated Audited 31 Dec 2009
Property, plant and equipment
Non-current asset held for sale
Equity holders of Vunani Limited
Reviewed 31 Dec 2010
ASSETS
Other investments Total comprehensive loss attributable to :
ISIN: ZAE0000110359)
(“Vunani” or “the company” or "the group")
Accounts receivable from trading activities
Basic loss per share (cents)
(2.5)
(13.6)
Trading securities
Diluted loss per share (cents)
(2.5)
(13.6)
Cash and cash equivalents
Headline loss per share (cents)
(3.0)
(11.4)
Diluted headline loss per share (cents)
(3.0)
(11.4)
-
-
Total assets
175 435
44 207
146 085
-
-
3 335
4 254
6 406 -
-
29
389
1 261
-
19 323
20 583
4 890
124 939
34 166
94 959
19
249
456
22 073
10 299
37 588
491 598
115 048
324 830
2 036 162
1 893 772
1 954 695
Dividends Dividends per share
EQUITY Share capital and share premium
CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2010 Reviewed 31 Dec 2010 Figures in R'000s
Restated Audited 31 Dec 2009
602 008
278 019
250 263
Revaluation reserve
-
4 824
180 524
Share based payment reserve
-
3 825
-
(361 251)
(264 975)
(267 795)
Accumulated loss Equity attributable to equity holders of Vunani
240 757
21 693
162 992
Non-controlling interest
174 088
117 960
109 237
414 845
139 653
272 229
935 049
1 525 371
1 003 335
72 188
99 096
25 084
1 007 237
1 624 467
1 028 419
307 888
43 746
486 659
111 871
-
-
3 538
2 657
3 258
Total equity Net cash inflows from operating activities
44 657
Net cash inflows from investing activities
56 872 LIABILITIES
33 269
29 965
(76 456)
(120 652)
Non current liabilities
Increase / (decrease) in cash and cash equivalents
1 470
(33 815)
Other financial liabilities
Cash and cash equivalents at beginning of the year
3 773
37 588
Cash and cash equivalents at end of the year
5 243
3 773
Net cash outflows from financing activities
Current liabilities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Other financial liabilities
For the year ended 31 December 2010
Figures in R'000s
Prior year adjustment Balance as at 31 December 2008 as restated Issue of shares
Total attributable to equity holders of Vunani
Taxation payable Noncontrolling interest
Total equity
153 655
94 728
248 383
9 337
14 509
23 846
162 992
109 237
272 229
-
(167 720)
8 939
(158 781)
(5 160)
(216)
(5 376)
Total comprehensive loss as restated
(172 880)
8 723
(164 157)
Total changes
Prior year adjustment
(141 299)
8 723
(132 576)
21 693
117 960
139 653
Issue of shares
323 990
-
323 990
Total comprehensive loss for the year Total changes Balance as at 31 December 2010 SEGMENTAL REPORTING For the year ended 31 December 2010
Reviewed 31 Dec 2010
Restated Audited 31 Dec 2009
21 419
12 629
Investment Banking and Advisory
20 125
6 646
Properties Investments and Developments
2 573
(34 276)
26 271
27 950
125 413
112 096
195 801
125 046
129 652
654 047
1 621 317
1 754 119
1 682 466
2 036 162
1 893 772
1 954 695
4 763 502
1 340 562
1 176 444
4 282 465
1 274 135
1 166 516
6.6
Reviewed 31 Dec 2010
Restated Audited 31 Dec 2009
SEGMENTAL REPORTING (continued)
Attributable loss for the year Asset Management
(16 160)
10 150
Investment Banking and Advisory
(20 525)
(55 910)
(108 015)
(80 068)
Investment Holdings Securities Broking
4 023
(10 587)
86 600
(27 742)
(54 077)
(164 157)
Asset Management
202 475
231 721
Investment Banking and Advisory
139 693
200 857
Investment Holdings
505 663
559 757
Total assets
Securities Broking Properties Investments and Developments
PAGE 1
-
614 080
13.9
Properties Investments and Developments
Asset Management
6 526
1.6
Figures in R'000s
275 192
-
16 829
(1.4)
For the year ended
414 845
133
5.1
5 279
56 128
84 331
-
4.0
(54 077)
174 088
79 799
Net asset value per share (cents)
5 279
219 064
42 979 33 611
Net tangible asset value per share (cents)
50 849
240 757
51 286 122 668
There are no dilutionary instruments in issue.
-
Revenue
Investment Holdings
Weighted average number of shares in issue (000's)
(104 926)
Figures in R'000s
Securities Broking
Total liabilities Total equity and liabilities
27 756 Shares in issue (adjusted for treasury shares 3 825 held by the company) (000's)
Balance as at 31 December 2009 Acquisition of subsidiary
Accounts payable from trading activities Bank overdraft
3 825
Total comprehensive loss as previously presented
Trade and other payables Trading securities
27 756
Equity settled share based payments
1
Non-current liabilities held for sale
Balance as at 31 December 2008 As previously presented
1
Deferred tax liabilities
Visit our website: www.vunanilimited.com
155 147
48 596
1 033 184
852 842
2 036 162
1 893 772
VUNΛNI RESULTS 2010
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 NOTES TO THE REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS
OVERVIEW AND PROSPECTS
1. Vunani uses an independent valuer to determine the fair values of listed investments and their
Vunani began the year with a recapitalising of the balance sheet, raising R 313 million in the process. Following this, significant progress has been made during the year under review towards achieving the objectives of the restructuring.
related liabilities. The values of the listed investments and related liabilities are determined with reference to the share price at the end of the year. Both listed and unlisted investments are designated at fair value through profit or loss ("FVTPL"). During the year, investment properties were revalued by external independent valuers. Revaluations are performed annually and independent valuers are used in alternate years. 2. Fair value adjustments and impairments Reviewed 31 Dec 2010
Restated Audited 31 Dec 2009
116 580
(8 878)
Figures in R'000s Investment properties Financial assets and liabilities designated at FVTPL Goodwill impairment
(126 189)
42 867
(20 045)
(32 920)
(29 654)
1 069
3. Business acquisitions On 22 June 2010, Vunani increased its holding in Peregrine iQ (Proprietary) Limited (subsequently renamed Vunani Fund Managers) from 11% to 51% for R20.6m. This purchase price was settled partly through the issue of 137 million Vunani Limited shares at a value of 10c each, with the balance payable in cash. The fair value of Vunani’s previous 11% investment in Peregrine iQ (Proprietary) Limited of R12.3m was added to the cost of the investment in the subsidiary at acquisition date, resulting in the total cost of Vunani’s 51% investment in the subsidiary being R32.9m. The acquisition resulted in goodwill of R27.4m, intangible assets of R2.9m and related deferred taxation of R0.8m. R5.2m of the acquisition date net asset value of Peregrine iQ (Proprietary) Limited was allocated to the non-controlling interests. Since acquisition, an after tax loss of R0.6m has been included in Vunani’s profit or loss. R0.3m of this loss is attributable to noncontrolling shareholders’ interests. If the acquisition had taken place at the beginning of the year, after tax loss of R0.5 would have been included in Vunani’s profit or loss. R0.3m of this loss would be attributable to non-controlling shareholders’ interests. Peregrine iQ (Proprietary) Limited’s name was subsequently changed to Vunani Fund Managers (Proprietary) Limited (“VFM”). On 1 December 2010, Vunani acquired 100% of the shares in Kagiso Securities Limited (“KSL”) at nominal value. The purchase price was settled in cash. The acquisition resulted in a bargain purchase of R11.1 million, which has been included in profit or loss. No post acquisition profits or losses have been recognised in Vunani’s results. If the acquisition had taken place at the beginning of the year, after tax loss of R7.7m would have been included in Vunani’s profit or loss. The table below indicates the net assets acquired on the business combinations above. Figures in R'000s
VFM
KSL
Net assets acquired Property, plant and equipment Available for sale financial assets
235
1 634
-
19 780
Intangible assets
2 932
-
Deferred taxation on intangible asset
(821)
-
Goodwill (Bargain purchase)
27 433
(11 096)
Trade and other receivables
7 360
87 311
Cash and cash equivalents
3 223
5 245
Deferred taxation on intangible asset Trade and other payables
142
247
(2 298)
(103 121)
Outside shareholders' interest
(5 279)
-
Cost of investment
32 927
-
Reviewed 31 Dec 2010
Restated Audited 31 Dec 2009
(104 926)
(172 880)
4. Headline loss Total comprehensive loss attributable to Equity holders of Vunani: Adjust for: Revaluation of investment properties - subsidiaries - Gross revaluation
(116 580)
8 878
- Deferred tax
16 321
(1 339)
- Non-controlling shareholders interest
58 730
5 444
Revaluation of investment properties - associates - Gross revaluation
(20 859)
(12 874)
- Deferred tax
4 045
2 756
- Non-controlling shareholders interest
3 699
2 226
- Profit on disposal
-
(1 213)
- Capital gains tax
-
145
- Non-controlling shareholders interest
-
(298)
20 045
32 920
-
(341)
Disposals of investment properties
Goodwill - Impaired - Non-controlling shareholders interest Profit on disposal of associates -
- Tax
-
- Non-controlling shareholders interest
-
43
(2 573)
(9 181)
360
1 285
Profit on disposal of other investments - Tax Loss on disposal group - Impairment
30 700
-
- Tax
(4 298)
-
Business acquisitions - Bargain purchase Headline loss
PAGE 2
Our asset management business was enhanced through the acquisition of the Peregrine iQ business (renamed Vunani Fund Managers) and Vunani now has management and operating control of its asset management businesses, with a strong institutional and private wealth product and service offering. Revenue in 2010 was R 21 million, up R 8,8 million on 2009. The division incurred an attributable loss of R 16,1 million after adjusting for R 30,7 million impairments on our minority interests in Edge Holding Company (Proprietary) Limited and Vunani Private Equity Partners (Proprietary) Limited. Following the conclusion of negotiations to dispose of Vunani’s interest in these entities, the investments in these companies have been disclosed as “assets held for sale” in the balance sheet. The upshot is that Vunani will no longer have any debt associated with these investments. The investment banking and corporate advisory businesses did very well in tough market conditions, contributing over R20 million to the revenue line, up R13,4 million on the previous year; the bulk of which was earned in the second half of 2010. But for R20 million of goodwill impairments associated with the rationalisation of the corporate finance and treasury operations, and bad debts written off, the business would have been profitable. The platform is sound and the team has been consistently ranked in the top 10 of the deal makers rating for sponsor activities and was ranked the 6th most active M&A Advisor in the market in 2010. The securities broking business had a relatively good trading year despite a slow period during the months in which the 2010 FIFA Soccer World Cup was hosted. There was also a fair amount of volatility as the equity markets grappled with sovereign debt challenges in Greece and other European Union countries. Management is pleased that in spite of these challenges the securities broking division generated total income of R 38,7 million (2009: R 29 million) and attributable profit of R 4 million (2009: R 10,5 million loss). The highlight for the securities division was the acquisition of Kagiso Securities which bolstered our equity research offering and equity, bonds and money market dealing capability and enabled Vunani to create R 11,1 million from arbitrage in the deal. The properties business was the biggest contributor to the group, contributing revenues of R 125,4 million (2009: R 112,1 million) and attributable profits of R 86,6 million, (2009: R 27,7 million loss). The business is spilt into development and property investments divisions. The developments business was relatively quiet with only two significant projects taking place, undertaken in partnership with other developers, both of which are at an advanced stage. Development activities contributed R 15,6 million (2009: R 3,4 million) of the attributable profit whilst property investments delivered revenue of R 121,1 million and R 71,1 million (2009: R 30,6 million loss) of the profits, net of finance costs of R 98,3 million (2009: R 84,2 million). In addition to the profits there was a fair value adjustment of R 116,6 million associated with the investment properties increasing the fair value of the investment property portfolio to R 918,8 million as at 31 December 2010. Debt associated with the investment portfolio is R 641,2 million. Cash flows from the portfolio are more than adequate to service the debt. The investments business comprises investments in both publicly listed and unlisted companies. These investments have historically been highly geared; the expectation being that gearing will be serviced from dividends and redeemed from capital profits. This has not gone according to plan and management have been reviewing existing investments; taking advantage to dispose of those investments which are not meeting the designated criteria and to redeem associated debt in the process. This will continue in the foreseeable future whilst management looks to restructure the investment portfolio. Management believes the bulk of the investment write-down has taken place with R 23,9 million of the fair value write-down in 2010 being attributable to the investment portfolio. Investment income associated with the portfolio amounted to R 11,9 million (2009: R11,7 million) whilst attributable finance costs were R 64,4 million (2009: R 107,4 million). The restructuring of the group debt necessitated some renegotiation of funding arrangements with its major bankers. The principal arrangement was the provision of secured guarantees to these funders in return for the restructuring of the debt. In terms of IAS 39 it is a requirement that these guarantees be fair valued and as a result a fair value charge of R 65 million was made to the income statement to reflect the fair valuing of these guarantees, with the corresponding amount being reflected in liabilities. These charges will reverse as the assets are disposed of and the debt is repaid. The group generated R 1,5 million of positive cash flow during the year (2009: R 33,8 million negative).
Management’s focus is on building the core businesses whilst reducing the legacy interest burden on the balance sheet. The current year’s results reflect management’s determination to achieve (228) this goal. In order to accomplish this, certain facilities with lenders will need to be renegotiated 32 before their October 2011 moratorium date.
- Profit on disposal
- Profit on disposal
The board is proud to report that Vunani’s commitment has paid off with revenue increasing by R 70,78 million on the corresponding figure in 2009; operating profits of R66,3 million compared to R 1,7 million last year and income from investments and associate companies of R 66,8 million (2009: R 38 million). Notwithstanding the R 35 million reduction in finance costs compared to 2009, these costs remain uncomfortably high. Accordingly, management has engaged in further restructuring of the balance sheet and operations which has resulted in the disposal of investments such as Vunani’s interest in JHI, and the rationalisation of some operating divisions. Whilst the restructuring has resulted in impairments of goodwill and fair value adjustments of R 29,7 million in the 2010 financial year, management believes this was necessary to eliminate loss making activities and non-performing investments and will benefit the group going forward. Vunani believes that the existing business platform is now positioned correctly to start fulfilling its ambitions.
(11 096)
-
(126 432)
(144 624)
FINANCIAL RESULTS Revenue increased by 57% to R 195.8 million (2009: R 125 million), on the back of increased asset management fees and fee income from new advisory mandates. Despite operating expenses having increased by 12% compared to 2009, operating businesses succeeded in generating an operating profit of R 66.4 million (2009: R 1.8 million). This increase reflects management’s focus on the operational businesses within the group and the drive to increase profitability. At R12.7 million (2009: R 16.8 million), investment income was 24% lower than the comparable 2009 figure, reflecting lower dividend income, partly as a result of disposals. However this was more than compensated by increased performance by associate companies. Income from associates of R54.1 million (2009: R21.1 million) was 157% higher than the corresponding period in 2009.
Visit our website: www.vunanilimited.com
VUNΛNI RESULTS 2010
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 FINANCIAL RESULTS (continued)
CORPORATE INFORMATION
The fair value adjustments and impairment charge of R 29,7 million (2009: income of R1.1 million) arose out of the impairment of goodwill and investments held for sale totalling R57.4 million and other favourable fair value adjustments totalling R27.8 million. The decision to dispose of the group’s investment in Edge Holdings (Proprietary) Limited and Vunani Private Equity Partners (Proprietary) Limited resulted in an impairment of the carrying value of the investments. The remaining goodwill relating to the acquisition of the Vunani Corporate Finance and Vunani Treasury Resources businesses in 2008 was also impaired. Other favourble fair value adjustments totalling R27,8 million was the net result of favourable fair value adjustments relating to property investments and negative fair value adjustments relating to investment holdings and the related guarantees provided to lenders.
EXECUTIVE DIRECTORS
A significant area of benefit has been in the reduction of net finance costs, where the repayment of debt and lower interest rates have reduced finance charges from R193,4 million to R158,3 million, an 18% reduction. Changes in IAS 12 Income Taxes relating to the rate at which deferred taxation assets on the revaluation of buildings forming part of investment properties is recognised, resulted in a retrospective restatement of prior years amounting to a favourable cumulative restatement of R18,5 million.
NON-EXECUTIVE DIRECTORS
E Dube
WC Ross (Chairman) (Independent)
A Judin
BA Khumalo (Independent)
BM Khoza
NS Mazwi (Independent)
NM Anderson
G Nzalo (Independent)
CE Chimombe-Munyoro
JR Macey (Independent)
Registration number: 1997/020641/06 | Registered address: Vunani House, Athol Ridge Office Park, 151 Katherine Street, Sandown, Sandton, 2196 | Postal address: PO Box 652419, Benmore, 2010 | Company secretary: A Judin CA(SA) | Telephone: + 27 11 263 9500 | Facsimile: +27 11 784 3095 | Transfer secretaries: Computershare Investor Services (Proprietary) Limited | Lead Designated Adviser: Grindrod Bank Limited | Joint Designated Adviser: Vunani Corporate Finance
BASIS OF PRESENTATION These consolidated results have been prepared in accordance with the listing requirements of the JSE Limited, the recognition and measurement requirements of International Financial Reporting Standards (IFRS), the presentation and disclosure requirements of IAS 34 Interim Financial Reporting, the AC 500 series issued by the Accounting Practices Board and the Companies Act (Act 61 of 1973), as amended. The accounting policies as set out in the audited financial statements for the year ended 31 December 2009 have been consistently applied except for the early adoption of IAS 12 amendments. These consolidated financial statements 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. REVIEW RESULTS The Group's auditors KPMG Inc. have reviewed the financial information for the year ended 31 December 2010. Their unmodified review report is available for inspection at the registered office of the company. STATEMENT ON 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 business will not be a going concern in the year ahead.
AUTHORISED AND ISSUED SHARE CAPITAL The authorised share capital was increased from 2,000,000,000 ordinary shares of R 0.0001 each, to 10,000,000,000 ordinary shares of R 0.0001 each on 22 July 2009. The following issues of shares took place to 31 December 2010: Date issued
Number of sharesPurpose issued of issue
15 February 2010
3,136,000,000
Claw back offer
16 February 2010
145,380,000
Issue for services rendered
22 June 2010
137,000,000
Acquisition of Vunani Fund Managers
22 June 2010
4,560,000
Issue for services rendered
At 31 December 2010 there were 4,763,502,216 (2009: 1,176,444,291) ordinary shares in issue.
DIVIDENDS No dividends were declared or paid to shareholders during the year under review (2009: R nil). SUBSEQUENT EVENTS AND CAPITAL COMMITMENTS Post year-end Vunani has disposed of its entire shareholding in BSI Steel (Proprietary) Limited for R35 million. The proceeds were applied to reducing debt. There were no significant capital commitments within the Group. CHANGES TO THE BOARD OF DIRECTORS On the 16 March 2010 BM Khoza was appointed Managing Director and A Judin was appointed as Financial Director on 19 August 2010. WG Frawley tendered his resignation as director with effect from 18 August 2010.
EG Dube (Chief Executive Officer) 31 March 2011
PAGE 3
A Judin (Financial Director)
Visit our website: www.vunanilimited.com
VUNΛNI RESULTS 2010
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 Vunani Limited
SALIENT FEATURES
(Incorporated in the Republic of South Africa) (Registration number: 1997/020641/06)
Revenue increased by R70.8m | Operating profit increased by R64.6m Loss for the year decreased by R110.1m | Substantial increase in NAV
(JSE code: VUN
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 31 December 2010
As at 31 December 2010 Notes
Figures in R'000s Revenue Other income Cost of property developments sold Operating expenses Operating profit Investment income Fair value adjustments and impairments
2
Income from associates
Restated Audited 31 Dec 2009
195 801
125 046
14 937
6 183
Non current assets
-
(177)
Investment properties
(144 382)
(129 294)
66 356
1 758
12 747
16 876
(29 654)
1 069
54 094
21 076
Net finance cost
(158 344)
(193 355)
Net loss before taxation
(54 801)
(152 576)
Taxation Loss for the year and total comprehensive loss for the year
Notes
Reviewed 31 Dec 2010
724
(11 581)
(54 077)
(164 157)
Figures in R'000s
(104 926)
Non-controlling interest Loss for the year and total comprehensive loss for the year
(172 880)
50 849
8 723
(54 077)
(164 157)
Restated Audited 31 Dec 2008
817 132
918 818
800 398
29 319
25 963
5 540
Goodwill
47 523
39 436
75 596
Investments in associates Other investments
1
Deferred tax asset
94 957
246 469
206 077
385 373
572 757
488 828 24 517
62 475
90 056
Other non current assets
3 656
2 395
1 891
Other intangible assets
2 443
1 250
10 284
1 544 564
1 778 724
1 629 865 180 531
Current assets 1
Inventory Loan to holding company Taxation prepaid Trade and other receivables
Earnings per share
Restated Audited 31 Dec 2009
Property, plant and equipment
Non-current asset held for sale
Equity holders of Vunani Limited
Reviewed 31 Dec 2010
ASSETS
Other investments Total comprehensive loss attributable to :
ISIN: ZAE0000110359)
(“Vunani” or “the company” or "the group")
Accounts receivable from trading activities
Basic loss per share (cents)
(2.5)
(13.6)
Trading securities
Diluted loss per share (cents)
(2.5)
(13.6)
Cash and cash equivalents
Headline loss per share (cents)
(3.0)
(11.4)
Diluted headline loss per share (cents)
(3.0)
(11.4)
-
-
Total assets
175 435
44 207
146 085
-
-
3 335
4 254
6 406 -
-
29
389
1 261
-
19 323
20 583
4 890
124 939
34 166
94 959
19
249
456
22 073
10 299
37 588
491 598
115 048
324 830
2 036 162
1 893 772
1 954 695
Dividends Dividends per share
EQUITY Share capital and share premium
CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31 December 2010 Reviewed 31 Dec 2010 Figures in R'000s
Restated Audited 31 Dec 2009
602 008
278 019
250 263
Revaluation reserve
-
4 824
180 524
Share based payment reserve
-
3 825
-
(361 251)
(264 975)
(267 795)
Accumulated loss Equity attributable to equity holders of Vunani
240 757
21 693
162 992
Non-controlling interest
174 088
117 960
109 237
414 845
139 653
272 229
935 049
1 525 371
1 003 335
72 188
99 096
25 084
1 007 237
1 624 467
1 028 419
307 888
43 746
486 659
111 871
-
-
3 538
2 657
3 258
Total equity Net cash inflows from operating activities
44 657
Net cash inflows from investing activities
56 872 LIABILITIES
33 269
29 965
(76 456)
(120 652)
Non current liabilities
Increase / (decrease) in cash and cash equivalents
1 470
(33 815)
Other financial liabilities
Cash and cash equivalents at beginning of the year
3 773
37 588
Cash and cash equivalents at end of the year
5 243
3 773
Net cash outflows from financing activities
Current liabilities
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Other financial liabilities
For the year ended 31 December 2010
Figures in R'000s
Prior year adjustment Balance as at 31 December 2008 as restated Issue of shares
Total attributable to equity holders of Vunani
Taxation payable Noncontrolling interest
Total equity
153 655
94 728
248 383
9 337
14 509
23 846
162 992
109 237
272 229
-
(167 720)
8 939
(158 781)
(5 160)
(216)
(5 376)
Total comprehensive loss as restated
(172 880)
8 723
(164 157)
Total changes
Prior year adjustment
(141 299)
8 723
(132 576)
21 693
117 960
139 653
Issue of shares
323 990
-
323 990
Total comprehensive loss for the year Total changes Balance as at 31 December 2010 SEGMENTAL REPORTING For the year ended 31 December 2010
Reviewed 31 Dec 2010
Restated Audited 31 Dec 2009
21 419
12 629
Investment Banking and Advisory
20 125
6 646
Properties Investments and Developments
2 573
(34 276)
26 271
27 950
125 413
112 096
195 801
125 046
129 652
654 047
1 621 317
1 754 119
1 682 466
2 036 162
1 893 772
1 954 695
4 763 502
1 340 562
1 176 444
4 282 465
1 274 135
1 166 516
6.6
Reviewed 31 Dec 2010
Restated Audited 31 Dec 2009
SEGMENTAL REPORTING (continued)
Attributable loss for the year Asset Management
(16 160)
10 150
Investment Banking and Advisory
(20 525)
(55 910)
(108 015)
(80 068)
Investment Holdings Securities Broking
4 023
(10 587)
86 600
(27 742)
(54 077)
(164 157)
Asset Management
202 475
231 721
Investment Banking and Advisory
139 693
200 857
Investment Holdings
505 663
559 757
Total assets
Securities Broking Properties Investments and Developments
PAGE 1
-
614 080
13.9
Properties Investments and Developments
Asset Management
6 526
1.6
Figures in R'000s
275 192
-
16 829
(1.4)
For the year ended
414 845
133
5.1
5 279
56 128
84 331
-
4.0
(54 077)
174 088
79 799
Net asset value per share (cents)
5 279
219 064
42 979 33 611
Net tangible asset value per share (cents)
50 849
240 757
51 286 122 668
There are no dilutionary instruments in issue.
-
Revenue
Investment Holdings
Weighted average number of shares in issue (000's)
(104 926)
Figures in R'000s
Securities Broking
Total liabilities Total equity and liabilities
27 756 Shares in issue (adjusted for treasury shares 3 825 held by the company) (000's)
Balance as at 31 December 2009 Acquisition of subsidiary
Accounts payable from trading activities Bank overdraft
3 825
Total comprehensive loss as previously presented
Trade and other payables Trading securities
27 756
Equity settled share based payments
1
Non-current liabilities held for sale
Balance as at 31 December 2008 As previously presented
1
Deferred tax liabilities
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155 147
48 596
1 033 184
852 842
2 036 162
1 893 772
VUNΛNI RESULTS 2010
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 NOTES TO THE REVIEWED CONDENSED CONSOLIDATED FINANCIAL RESULTS
OVERVIEW AND PROSPECTS
1. Vunani uses an independent valuer to determine the fair values of listed investments and their
Vunani began the year with a recapitalising of the balance sheet, raising R 313 million in the process. Following this, significant progress has been made during the year under review towards achieving the objectives of the restructuring.
related liabilities. The values of the listed investments and related liabilities are determined with reference to the share price at the end of the year. Both listed and unlisted investments are designated at fair value through profit or loss ("FVTPL"). During the year, investment properties were revalued by external independent valuers. Revaluations are performed annually and independent valuers are used in alternate years. 2. Fair value adjustments and impairments Reviewed 31 Dec 2010
Restated Audited 31 Dec 2009
116 580
(8 878)
Figures in R'000s Investment properties Financial assets and liabilities designated at FVTPL Goodwill impairment
(126 189)
42 867
(20 045)
(32 920)
(29 654)
1 069
3. Business acquisitions On 22 June 2010, Vunani increased its holding in Peregrine iQ (Proprietary) Limited (subsequently renamed Vunani Fund Managers) from 11% to 51% for R20.6m. This purchase price was settled partly through the issue of 137 million Vunani Limited shares at a value of 10c each, with the balance payable in cash. The fair value of Vunani’s previous 11% investment in Peregrine iQ (Proprietary) Limited of R12.3m was added to the cost of the investment in the subsidiary at acquisition date, resulting in the total cost of Vunani’s 51% investment in the subsidiary being R32.9m. The acquisition resulted in goodwill of R27.4m, intangible assets of R2.9m and related deferred taxation of R0.8m. R5.2m of the acquisition date net asset value of Peregrine iQ (Proprietary) Limited was allocated to the non-controlling interests. Since acquisition, an after tax loss of R0.6m has been included in Vunani’s profit or loss. R0.3m of this loss is attributable to noncontrolling shareholders’ interests. If the acquisition had taken place at the beginning of the year, after tax loss of R0.5 would have been included in Vunani’s profit or loss. R0.3m of this loss would be attributable to non-controlling shareholders’ interests. Peregrine iQ (Proprietary) Limited’s name was subsequently changed to Vunani Fund Managers (Proprietary) Limited (“VFM”). On 1 December 2010, Vunani acquired 100% of the shares in Kagiso Securities Limited (“KSL”) at nominal value. The purchase price was settled in cash. The acquisition resulted in a bargain purchase of R11.1 million, which has been included in profit or loss. No post acquisition profits or losses have been recognised in Vunani’s results. If the acquisition had taken place at the beginning of the year, after tax loss of R7.7m would have been included in Vunani’s profit or loss. The table below indicates the net assets acquired on the business combinations above. Figures in R'000s
VFM
KSL
Net assets acquired Property, plant and equipment Available for sale financial assets
235
1 634
-
19 780
Intangible assets
2 932
-
Deferred taxation on intangible asset
(821)
-
Goodwill (Bargain purchase)
27 433
(11 096)
Trade and other receivables
7 360
87 311
Cash and cash equivalents
3 223
5 245
Deferred taxation on intangible asset Trade and other payables
142
247
(2 298)
(103 121)
Outside shareholders' interest
(5 279)
-
Cost of investment
32 927
-
Reviewed 31 Dec 2010
Restated Audited 31 Dec 2009
(104 926)
(172 880)
4. Headline loss Total comprehensive loss attributable to Equity holders of Vunani: Adjust for: Revaluation of investment properties - subsidiaries - Gross revaluation
(116 580)
8 878
- Deferred tax
16 321
(1 339)
- Non-controlling shareholders interest
58 730
5 444
Revaluation of investment properties - associates - Gross revaluation
(20 859)
(12 874)
- Deferred tax
4 045
2 756
- Non-controlling shareholders interest
3 699
2 226
- Profit on disposal
-
(1 213)
- Capital gains tax
-
145
- Non-controlling shareholders interest
-
(298)
20 045
32 920
-
(341)
Disposals of investment properties
Goodwill - Impaired - Non-controlling shareholders interest Profit on disposal of associates -
- Tax
-
- Non-controlling shareholders interest
-
43
(2 573)
(9 181)
360
1 285
Profit on disposal of other investments - Tax Loss on disposal group - Impairment
30 700
-
- Tax
(4 298)
-
Business acquisitions - Bargain purchase Headline loss
PAGE 2
Our asset management business was enhanced through the acquisition of the Peregrine iQ business (renamed Vunani Fund Managers) and Vunani now has management and operating control of its asset management businesses, with a strong institutional and private wealth product and service offering. Revenue in 2010 was R 21 million, up R 8,8 million on 2009. The division incurred an attributable loss of R 16,1 million after adjusting for R 30,7 million impairments on our minority interests in Edge Holding Company (Proprietary) Limited and Vunani Private Equity Partners (Proprietary) Limited. Following the conclusion of negotiations to dispose of Vunani’s interest in these entities, the investments in these companies have been disclosed as “assets held for sale” in the balance sheet. The upshot is that Vunani will no longer have any debt associated with these investments. The investment banking and corporate advisory businesses did very well in tough market conditions, contributing over R20 million to the revenue line, up R13,4 million on the previous year; the bulk of which was earned in the second half of 2010. But for R20 million of goodwill impairments associated with the rationalisation of the corporate finance and treasury operations, and bad debts written off, the business would have been profitable. The platform is sound and the team has been consistently ranked in the top 10 of the deal makers rating for sponsor activities and was ranked the 6th most active M&A Advisor in the market in 2010. The securities broking business had a relatively good trading year despite a slow period during the months in which the 2010 FIFA Soccer World Cup was hosted. There was also a fair amount of volatility as the equity markets grappled with sovereign debt challenges in Greece and other European Union countries. Management is pleased that in spite of these challenges the securities broking division generated total income of R 38,7 million (2009: R 29 million) and attributable profit of R 4 million (2009: R 10,5 million loss). The highlight for the securities division was the acquisition of Kagiso Securities which bolstered our equity research offering and equity, bonds and money market dealing capability and enabled Vunani to create R 11,1 million from arbitrage in the deal. The properties business was the biggest contributor to the group, contributing revenues of R 125,4 million (2009: R 112,1 million) and attributable profits of R 86,6 million, (2009: R 27,7 million loss). The business is spilt into development and property investments divisions. The developments business was relatively quiet with only two significant projects taking place, undertaken in partnership with other developers, both of which are at an advanced stage. Development activities contributed R 15,6 million (2009: R 3,4 million) of the attributable profit whilst property investments delivered revenue of R 121,1 million and R 71,1 million (2009: R 30,6 million loss) of the profits, net of finance costs of R 98,3 million (2009: R 84,2 million). In addition to the profits there was a fair value adjustment of R 116,6 million associated with the investment properties increasing the fair value of the investment property portfolio to R 918,8 million as at 31 December 2010. Debt associated with the investment portfolio is R 641,2 million. Cash flows from the portfolio are more than adequate to service the debt. The investments business comprises investments in both publicly listed and unlisted companies. These investments have historically been highly geared; the expectation being that gearing will be serviced from dividends and redeemed from capital profits. This has not gone according to plan and management have been reviewing existing investments; taking advantage to dispose of those investments which are not meeting the designated criteria and to redeem associated debt in the process. This will continue in the foreseeable future whilst management looks to restructure the investment portfolio. Management believes the bulk of the investment write-down has taken place with R 23,9 million of the fair value write-down in 2010 being attributable to the investment portfolio. Investment income associated with the portfolio amounted to R 11,9 million (2009: R11,7 million) whilst attributable finance costs were R 64,4 million (2009: R 107,4 million). The restructuring of the group debt necessitated some renegotiation of funding arrangements with its major bankers. The principal arrangement was the provision of secured guarantees to these funders in return for the restructuring of the debt. In terms of IAS 39 it is a requirement that these guarantees be fair valued and as a result a fair value charge of R 65 million was made to the income statement to reflect the fair valuing of these guarantees, with the corresponding amount being reflected in liabilities. These charges will reverse as the assets are disposed of and the debt is repaid. The group generated R 1,5 million of positive cash flow during the year (2009: R 33,8 million negative).
Management’s focus is on building the core businesses whilst reducing the legacy interest burden on the balance sheet. The current year’s results reflect management’s determination to achieve (228) this goal. In order to accomplish this, certain facilities with lenders will need to be renegotiated 32 before their October 2011 moratorium date.
- Profit on disposal
- Profit on disposal
The board is proud to report that Vunani’s commitment has paid off with revenue increasing by R 70,78 million on the corresponding figure in 2009; operating profits of R66,3 million compared to R 1,7 million last year and income from investments and associate companies of R 66,8 million (2009: R 38 million). Notwithstanding the R 35 million reduction in finance costs compared to 2009, these costs remain uncomfortably high. Accordingly, management has engaged in further restructuring of the balance sheet and operations which has resulted in the disposal of investments such as Vunani’s interest in JHI, and the rationalisation of some operating divisions. Whilst the restructuring has resulted in impairments of goodwill and fair value adjustments of R 29,7 million in the 2010 financial year, management believes this was necessary to eliminate loss making activities and non-performing investments and will benefit the group going forward. Vunani believes that the existing business platform is now positioned correctly to start fulfilling its ambitions.
(11 096)
-
(126 432)
(144 624)
FINANCIAL RESULTS Revenue increased by 57% to R 195.8 million (2009: R 125 million), on the back of increased asset management fees and fee income from new advisory mandates. Despite operating expenses having increased by 12% compared to 2009, operating businesses succeeded in generating an operating profit of R 66.4 million (2009: R 1.8 million). This increase reflects management’s focus on the operational businesses within the group and the drive to increase profitability. At R12.7 million (2009: R 16.8 million), investment income was 24% lower than the comparable 2009 figure, reflecting lower dividend income, partly as a result of disposals. However this was more than compensated by increased performance by associate companies. Income from associates of R54.1 million (2009: R21.1 million) was 157% higher than the corresponding period in 2009.
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VUNΛNI RESULTS 2010
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 FINANCIAL RESULTS (continued)
CORPORATE INFORMATION
The fair value adjustments and impairment charge of R 29,7 million (2009: income of R1.1 million) arose out of the impairment of goodwill and investments held for sale totalling R57.4 million and other favourable fair value adjustments totalling R27.8 million. The decision to dispose of the group’s investment in Edge Holdings (Proprietary) Limited and Vunani Private Equity Partners (Proprietary) Limited resulted in an impairment of the carrying value of the investments. The remaining goodwill relating to the acquisition of the Vunani Corporate Finance and Vunani Treasury Resources businesses in 2008 was also impaired. Other favourble fair value adjustments totalling R27,8 million was the net result of favourable fair value adjustments relating to property investments and negative fair value adjustments relating to investment holdings and the related guarantees provided to lenders.
EXECUTIVE DIRECTORS
A significant area of benefit has been in the reduction of net finance costs, where the repayment of debt and lower interest rates have reduced finance charges from R193,4 million to R158,3 million, an 18% reduction. Changes in IAS 12 Income Taxes relating to the rate at which deferred taxation assets on the revaluation of buildings forming part of investment properties is recognised, resulted in a retrospective restatement of prior years amounting to a favourable cumulative restatement of R18,5 million.
NON-EXECUTIVE DIRECTORS
E Dube
WC Ross (Chairman) (Independent)
A Judin
BA Khumalo (Independent)
BM Khoza
NS Mazwi (Independent)
NM Anderson
G Nzalo (Independent)
CE Chimombe-Munyoro
JR Macey (Independent)
Registration number: 1997/020641/06 | Registered address: Vunani House, Athol Ridge Office Park, 151 Katherine Street, Sandown, Sandton, 2196 | Postal address: PO Box 652419, Benmore, 2010 | Company secretary: A Judin CA(SA) | Telephone: + 27 11 263 9500 | Facsimile: +27 11 784 3095 | Transfer secretaries: Computershare Investor Services (Proprietary) Limited | Lead Designated Adviser: Grindrod Bank Limited | Joint Designated Adviser: Vunani Corporate Finance
BASIS OF PRESENTATION These consolidated results have been prepared in accordance with the listing requirements of the JSE Limited, the recognition and measurement requirements of International Financial Reporting Standards (IFRS), the presentation and disclosure requirements of IAS 34 Interim Financial Reporting, the AC 500 series issued by the Accounting Practices Board and the Companies Act (Act 61 of 1973), as amended. The accounting policies as set out in the audited financial statements for the year ended 31 December 2009 have been consistently applied except for the early adoption of IAS 12 amendments. These consolidated financial statements 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. REVIEW RESULTS The Group's auditors KPMG Inc. have reviewed the financial information for the year ended 31 December 2010. Their unmodified review report is available for inspection at the registered office of the company. STATEMENT ON 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 business will not be a going concern in the year ahead.
AUTHORISED AND ISSUED SHARE CAPITAL The authorised share capital was increased from 2,000,000,000 ordinary shares of R 0.0001 each, to 10,000,000,000 ordinary shares of R 0.0001 each on 22 July 2009. The following issues of shares took place to 31 December 2010: Date issued
Number of sharesPurpose issued of issue
15 February 2010
3,136,000,000
Claw back offer
16 February 2010
145,380,000
Issue for services rendered
22 June 2010
137,000,000
Acquisition of Vunani Fund Managers
22 June 2010
4,560,000
Issue for services rendered
At 31 December 2010 there were 4,763,502,216 (2009: 1,176,444,291) ordinary shares in issue.
DIVIDENDS No dividends were declared or paid to shareholders during the year under review (2009: R nil). SUBSEQUENT EVENTS AND CAPITAL COMMITMENTS Post year-end Vunani has disposed of its entire shareholding in BSI Steel (Proprietary) Limited for R35 million. The proceeds were applied to reducing debt. There were no significant capital commitments within the Group. CHANGES TO THE BOARD OF DIRECTORS On the 16 March 2010 BM Khoza was appointed Managing Director and A Judin was appointed as Financial Director on 19 August 2010. WG Frawley tendered his resignation as director with effect from 18 August 2010.
EG Dube (Chief Executive Officer) 31 March 2011
PAGE 3
A Judin (Financial Director)
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VUNΛNI RESULTS 2010
