unaudited condensed consolidated results for the 6 …unaudited condensed consolidated results for...

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


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


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


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)


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


Increase in investment in subs idiaries - (193) (193)

Share based payment res erve 1 134 - 1 134


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


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






SEGMENTAL REPORTING


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.






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

unaudited condensed consolidated results for the 6 …unaudited condensed consolidated results for...

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