Vunani Limited HY 2012 results

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Vunani Limited HY 2012 results

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Vunani Limited HY 2012 results

  1. 1. 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
  2. 2. 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 Profit on disposal of assets 1 475 7 725 Fair value adjustments and impairments 1 27 591 18 991 Operating 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 associates (net of income tax) 2 368 (1 156) Net profit/(loss) before taxation 9 997 (20 045) Income tax income/(expense) 7 819 (5 272) Profit/(loss)from continuing operations 17 816 (25 317) DISCONTINUED OPERATIONS Profit from discontinued operations (net of taxation) 3 - 9 341 Profit/(loss) for the period 17 816 (15 976) Profit/(loss) and total comprehensive income/(loss) for the period 17 816 (15 976) Profit/(loss) from continuing operations and total comprehensive income/(loss) attributable to : Equity holders of Vunani Limited 15 019 (24 209) Non-controlling interest 2 797 (1 108) 17 816 (25 317) Profit/(loss) for the period and total comprehensive income/(loss) attributable to : Equity holders of Vunani Limited 15 019 (14 868) Non-controlling interest 2 797 (1 108) 17 816 (15 976) Earnings/(loss) per share (cents) Basic and diluted basic earnings/(loss) per share* 14.2 (15.8) 19.3 (25.4)Headline and diluted headline earnings/(loss) per share* *- 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 Cancellation of shares (27 751) - (27 751) Comprehensive income Loss and total comprehensive loss 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 Issue of shares 35 832 - 35 832 Treasury shares (14 277) - (14 277) Share based payment reserve 2 524 - 2 524 Disposal of subsidiaries - (149 014) (149 014) Comprehensive income Loss and total comprehensive loss 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 subsidiaries - (193) (193) Share based payment reserve 1 134 - 1 134 Comprehensive income Profit and total comprehensive 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 Investment property 4 000 4 000 Property, plant and equipment 3 676 4 191 Goodwill 33 853 34 123 Investment in and loans to associates 93 245 98 093 Other investments 2 263 888 237 981 Deferred tax asset 101 492 93 886 Other non-current assets 6 539 4 709 Other intangible assets 977 1 466 Total non-current assets 507 670 478 449 Other investments 2 128 354 181 687 Inventory - 3 287 Taxation prepaid 154 154 Trade and other receivables 20 640 21 289 Accounts receivable from trading activities 394 069 95 638 Trading securities 131 1 030 Cash and cash equivalents 12 117 17 169 Total current assets 555 465 320 254 Total assets 1 063 135 798 703 EQUITY Share capital and share premium 595 812 595 812 Share based payment reserve 3 658 2 524 Accumulated loss (384 460) (399 480) Equity attributable to equity holders of Vunani Limited 215 010 198 856 Non-controlling interest 16 446 13 842 Total equity 231 456 212 698 LIABILITIES Other financial liabilities 2 94 170 103 140 Deferred tax liabilities 47 224 46 784 Total non-current liabilities 141 394 149 924 Other financial liabilities 2 268 199 298 585 Current tax payable 4 548 445 Trade and other payables 30 585 47 225 Accounts payable from trading activities 386 678 89 407 Trading securities 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 issue (000s) 105 415 105 415 Net asset value per share (cents)** 204.0 188.6 Net tangible asset 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 activities (1 628) 16 385 32 430 Net cash inflows from investing activities 27 471 270 600 231 323 Net cash outflows from financing activities (30 757) (277 686) (244 724) Net (decrease)/increase in cash and cash equivalents (4 914) 9 299 19 029 Cash and cash equivalents at beginning of the year 17 009 7 710 7 710 Total cash and cash equivalents at end of the period 12 095 17 009 26 739
  3. 3. 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 Asset management 10 746 532 49 752 Investment banking and advisory 7 564 (1 854) 8 407 Investment holdings - 21 152 524 092 Securities broking 24 576 (841) 407 734 Properties - developments - (2 328) 38 600 Properties - investments 1 115 1 162 27 578 Properties - asset 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* Asset management 12 846 6 315 34 895 Investment banking and advisory 9 589 3 492 12 991 Investment holdings - (20 613) 536 972 Securities broking 21 908 (2 171) 129 273 Properties - developments 721 (1 098) 45 567 Properties - investments - 2 384 38 607 Properties - asset 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.
  4. 4. 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 Financial assets and liabilities designated as fair value through profit and loss 34 324 19 192 Impairment of non-current assets held for sale - (201) Goodwill impairment (271) - Impairment of investments and loans to associates (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 Fair value 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 Loss on sale of discontinued operation - - Profit for the year - 9 341 Effect on basic (loss)/earnings per share (cents)* - 9.9 Effect on diluted earnings per share (cents)* - 9.9 Cash flows from discontinued operation Net cash inflows from operating activities - 1 251 Net cash outflows from investing activities - (3 862) Net cash inflows/(outflows) from financing activities - 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 Issued ordinary shares at the beginning of the period 5 270 732 4 763 502 4 763 502 Effect of share consolidation (5 165 317) - - Less cancelled shares - (114 368) (114 368) Effect of issued shares - - 621 599 Issued ordinary shares at the end of the period 105 415 4 649 134 5 270 733 Weighted average number of shares in issue 105 415 4 715 480 4 886 954 5. Headline profit/(loss) Unaudited 30 June 2012 Unaudited 30 June 2011 Total comprehensive profit/(loss) attributable to equity holders of Vunani 15 019 (14 868) Adjusted for Revaluation of investment property - subsidiaries Gross revaluation - (6 430) Deferred taxation - 900 Non-controlling shareholders' interest - 3 465 Goodwill impairment 271 - Impairment of investment and loans to associates 3 459 - Other impairments 2 825 - Taxation (527) - Loss on disposal of assets Loss on disposal of assets (1 475) (7 725) Taxation 413 1 082 Non-controlling shareholders' interest 234 20 219 (23 576) Headline earnings/(loss) per share (cents) Basic and diluted headline 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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