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Audited Condensed Consolidated Results for the Year Ended 28 February 2018
VISUAL INTERNATIONAL HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2006/030975/06)
ISIN Code: ZAE000187407 Share code: VIS
(“Visual” or “the Company” or “the Group”)
AUDITED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2018
CONDENSED STATEMENT OF FINANCIAL POSITION
28 February 28 February
2018 2017
Audited Restated
R R
Assets
Non-Current Assets
Investment property 1 920 000 13 023 820
Property, plant and equipment 336 056 520 394
Investment in joint ventures 60 110
Loans to shareholders 37 000 000 44 898 129
Other financial assets 201 201
Finance lease receivables 3 052 879 4 896 075
Deferred tax 1 952 344 5 515 876
44 261 540 68 854 605
Current Assets
Inventories - 22 896 180
Current tax receivable 1 686 1 686
Trade and other receivables 54 412 25 302
Finance lease receivable 1 165 658 925 565
Cash and cash equivalents 246 187 355 100
1,467,943 24 203 833
Non-current assets held for sale and assets of disposal groups 10,000,000 2 964 000
Total Assets 55 729 483 96 022 438
Equity and Liabilities
Equity
Share capital 73 809 025 70 614 960
Accumulated loss (46 660 330) (14 678 935)
Equity Attributable to Equity Holders of Parent 51 121 341 55 936 025
Non-controlling interest (1 581 596) (1 275 531)
25 567 099 54 660 494
Liabilities
Non-Current Liabilities
Loans from shareholders 6 723 018 16 161 571
Other financial liabilities 8 718 226 8 867 812
Deferred tax 1 952 344 6 572 797
17 393 588 31 602 180
CONDENSED STATEMENT OF FINANCIAL POSITION (Continued)
28 February 28 February
2018 2017
Audited Restated
R R
Current Liabilities
Loans from group companies 40 105 66 310
Other financial liabilities 1 135 677 2 916 453
Trade and other payables 10 999 522 4 996 112
Deferred income - 100 000
Bank overdraft 593 492 833 501
12 768 796 8 912 386
Liabilities of disposal groups - 847 378
Total Liabilities 30 162 384 41 361 944
Total Equity and Liabilities 55 729 483 96 022 438
Net asset value per share (cents) 10.56 25.97
Net tangible asset value per share (cents) 10.56 25.97
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
28 February 28 February
2018 2017
Audited Restated
R R
Revenue 39 713 11 552 742
Cost of sales (22 896 180) (7 350 000)
Gross profit (22 856 467) 4 202 742
Other income 231 969 797 906
Other operating loss (364 000) (17 675)
Operating expenses (10 789 050) (13 557 810)
Operating loss (33 777 548) (8 574 837)
Investment revenue 4 090 577 4 055 393
Other non-operating gains (losses) - (3 025 000)
Finance costs (3 657 411) (6 556 925)
Loss before taxation (33 344 382) (14 101 369)
Taxation 1 056 922 5 152 928
Loss for the year from continuing operations (32 287 460) (8 948 441)
Other comprehensive income - -
Total comprehensive loss for the period (32 287 460) (8 948 441)
Total comprehensive loss attributable to:
Owners of the parent (31 981 395) (8 239752)
Non-controlling interest (306 065) (708 689)
(32 287 460) (8 948 441)
Share information
Shares in issue at year end 348 139 840 231 700 445
Weighted average number of shares 234 994 052 226 665 525
Loss per share (cents) (13.61) (3.64)
Diluted loss per share (cents) (12.51) (2.05)
CONDENSED STATEMENT OF CHANGES IN EQUITY
Total
attributable
Retained to equity Non-
Stated income/ holders of controlling Total
capital (loss) the group interest equity
R R R R R
Group
Restated balance at 1 March 2016 68 365 080 (6 439 183) 61 925 897 (566 842) 61 359 055
Loss for the year - (8 239 752) (8 239 752) (708 689) (8 948 441)
Total comprehensive loss for the year
ended 29 February 2016 - (8 239 752) (8 239 752) (708 689) (8 948 441)
Issue of shares 2 249 880 - 2 249 880 - 2 249 880
Total contributions by and distributions to owners of the
company recognized directly in equity 2 249 880 - 2 249 880 - 2 249 880
Balance at 1 March 2017 (restated) 70 614 960 (14 678 935) 55 936 025 (1 275 531) 54 660 494
Loss for the year - (31 981 395) (31 981 395) (306 065) (32 287 460)
Total comprehensive loss for the year
ended 28 February 2017 - (31 981 395) (31 981 395) (306 065) (32 287 460)
Issue of shares 3 194 065 - 3 194 065 - 3 194 065
Total contributions by and distributions to owners of the
company recognized directly in equity 3 194 065 - 3 194 065 - 3 194 065
Balance at 28 February 2018 73 809 025 (46 660 330) 27 148 695 (1 581 596) 25 567 099
CONDENSED STATEMENT OF CASH FLOWS
28 February 28 February
2018 2017
Audited Restated
R R
Cash flows from operating activities
Loss before taxation (33 344 382) (14 101 369)
Adjustments for:
Depreciation and amortisation 251 320 286 521
Losses on disposals, scrapings and settlements of assets
and liabilities 364 000 3 025 000
Interest received (4 090 577) (4 055 393)
Finance costs 3 657 411 6 556 925
Fair value losses - 17 675
Impairment losses and reversals 1 325 227 572 000
Changes in working capital:
Inventories 22 896 180 7 350 000
Trade and other receivables (29 110) 1 150 374
Trade and other payables 6 003 400 (551 322)
Deferred income (100 000) 100 000
Cash (used in) generated from operations (3 066 531) 350 411
Interest income 4 090 577 4 055 393
Finance costs (3 657 411) (6 556 925)
Tax received (paid) - 4 974
Net cash from operating activities (2 633 365) (2 146 147)
Cash flows from investing activities
Purchase of property, plant and equipment (69 899) (53 881)
Sale of property, plant and equipment 2 917 -
Sale of investment property 364 000 725 000
Finance lease receipts 1 603 103 (5 821 640)
Loans to group companies repaid (26 204) (480 679)
Impairment of finance lease receivable (52 015) -
Impairment of loans (3 500) (36 000)
Proceeds of disposal of investment in joint venture 50 -
Proceeds of sale of investment property 2 964 000 -
Net cash flows of discontinued operations - 29 061 000
Net cash from investing activities 4 054 452 23 393 800
Cash flows from financing activities
Proceeds on share issue 3 194 065 2 249 880
Repayment of other financial liabilities (2 777 740) (5 612 780)
Movement in loans to directors, managers and
employees (165 892) -
Repayment of shareholders loan (1 540 424) (1 681 694)
Net cash flows of discontinued operations - (15 552 523)
Net cash from financing activities (1 289 991) (20 597 117)
Total cash movement for the year 131 096 650 536
Cash at the beginning of the year (478 401) (1 128 937)
Total cash at end of the year (347 305) (478 401)
BASIS OF PREPARATION
The board of directors of Visual (“the Board”) presents the audited condensed consolidated
results of the Group for the year ended 28 February 2018. The results have been prepared in
accordance with the requirements of the South African Companies Act, No. 71 of 2008, as
amended, the JSE Listings Requirements, as well as the framework concepts and the
recognition and measurement requirements of International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board, including IAS 34 Interim
Financial Reporting.
The accounting policies used in the preparation of the year end results are in terms of IFRS and
are consistent with those applied in the preparation of the annual financial statements of the
Group for the year ended 28 February 2017. During the year under review, the Group adopted
all the standards and interpretations that were effective and deemed applicable to the
Group. The adoption of these standards did not have an effect on the current or prior year
results. Full details of the new standards and interpretations and the related disclosures will be
included in the consolidated audited annual financial statements of the Group.
The audited results have been prepared by Mr E Marais (CA (SA)) on the basis of accounting
policies applicable to a going concern. This basis presumes that funds will be available to
finance future operations and that the realisation of assets and settlement of liabilities,
contingent obligations and commitments will occur in the ordinary course of business. Any
reference to future financial performance included in this announcement, has not been
reviewed or reported on by the Company’s auditors.
These abridged consolidated financial statements have been extracted from the audited
consolidated annual financial statements. The results have been audited by the Group’s
external auditors, BDO Cape Incorporated. A copy of the audited financial statements and
the auditor’s unqualified, modified audit report is available for inspection at the Company’s
registered office. The audit report contained a paragraph on material uncertainty related to
going concern as detailed below:
“We draw attention to Note 39 in the financial statements, which indicates the Group incurred
significant cash flow pressures due to the negative cash flows during the year ended
28 February 2018. As stated in Note 39, these events or conditions indicate that a material
uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going
concern. Our opinion is not modified in respect of this matter.”
The directors take full responsibility for the preparation of the abridged financial statements
and confirm that the financial information has been correctly extracted from the underlying
consolidated annual financial statements. The auditors’ report does not necessarily cover all
of the information contained in this financial report. Shareholders are therefore advised that,
in order to obtain a full understanding of the nature of the auditors’ work, they should obtain
a copy of that report together with the accompanying financial information from the
Company’s registered office.
BACKGROUND, INCORPORATION AND NATURE OF BUSINESS
Visual was incorporated as a private company on 5 October 2006 under the name Presto
Financing Proprietary Limited (“Presto Financing”). The Company’s name was changed, and
it was converted to a public company by way of special resolutions on 3 October 2013, which
special resolutions were registered by the Companies and Intellectual Property Commission on
23 December 2013. Visual then acquired the controlling interest in Visual International
Proprietary Limited (“Visual International”) from CKR Investment Trust with effect from 1 March
2012 and became the holding company of the various subsidiaries of Visual. Thus Visual, with
its wholly owned subsidiary Visual International, commenced operating as a group for the year
ended 28 February 2013. Visual listed on the JSE on 23 May 2014.
Visual is essentially a property developer that acquires land, rezones the land, installs the
relevant services and then constructs houses and apartments on the land for sale to
homeowners or investors. Visual focuses on the development of entire suburbs which comprise
houses, apartments, lifestyle and retirement accommodation, retail facilities, schools, offices,
and recreation as well as other related facilities. With this focus, Visual is able to ensure the
overall quality and integrity of the suburb. It enables Visual to supply quality residences and
other facilities at affordable prices. Furthermore, providing these combinations in a single
suburb leads to job creation, which is important to the owners and occupants. To date, close
to 500 homes and apartments have been developed by Visual at Stellendale.
FINANCIAL RESULTS COMMENTARY
During 2015 and 2016 the Company had been negatively impacted by the impact of the
delay in the commencement of the further development of Stellendale due to a number of
constraints, including the delay in listing, the Company raising less capital than desired on
listing and also the banking sector contracting its lending to property developers and
potential home owners in the middle-income segment. Furthermore, the Company had
incurred very expensive debt, which was causing additional difficulties for the Group. This led
to the Company adopting a strategy during the year ended 28 February 2017 to reduce
gearing and developing strategic initiatives in order to ensure the protection of Visual’s assets
base. Many of these objectives have been achieved during the year ended 28 February
2017 and 28 February 2018.
While almost no turnover was reported for the year ended 28 February 2018, due to no units
being developed or properties sold, the Group’s primary focus was to decrease operating
costs, position itself for future growth and to secure a strategic funding partner.
Revenue and cost of sales declined from the prior year as no further land sales were
concluded.
Operating expenses were substantially reduced during the year under review, resulting in a
reduction of almost R500 000 per month at 28 February 2018 compared to 28 February 2017.
The cost savings were achieved over the year and the benefit will only be fully realised during
the year ending 28 February 2019.
Other income increased substantially due to dividends received from joint ventures.
Interest expense reduced substantially due to lower levels of gearing, other than loans from
related parties.
Investment properties and property held as inventories remained constant with the prior year.
Shareholders are referred to events after the reporting period below.
SEGMENTAL REPORTING
Segment revenue and expenses
Revenue and expenses that are directly attributable to segments are allocated to those
segments. Those that are not directly attributable to segments are allocated on a reasonable
basis. Interest income on loans to shareholders are included in the property development
segment as the recoverability of the loans to shareholders are based on the fair value of the
shareholders’ underlying assets which included property held for development. Interest
expenses on loans from shareholders and other related party loans are not directly or indirectly
related to specific segments and income tax is not included in the results of the segments when
reviewed by the CEO.
Segment assets and liabilities
Segment assets and liabilities comprise those operating assets and liabilities that are directly
attributable to the segment or can be allocated to the segment on a reasonable basis.
Segment assets include loans to shareholders these are allocated to property development
segment as the recoverability of the loans to shareholders are based on the fair value of the
shareholders underlying assets which included property held for development. Segment assets
exclude other financial assets, deferred tax assets, tax assets, bank balances, deposits and
cash.
Segment liabilities exclude certain loans from shareholders, bank overdraft and current and
deferred tax liabilities.
Capital expenditure represents the local costs incurred during the period to acquire segment
assets that are expected to be used during more than one period, namely, property, plant and
equipment, investment property. During the financial year under review the capital
expenditure amounted to R69 899 (2017: R53 881) and was attributable to the property, plant
and equipment in the property services segment.
The Group currently has three reportable segments, as described below, which are the Group's
strategic business units. The strategic business units offer different services and are reviewed by
management. The following summary describes the operations of each of the Group's
reportable segments for the years ended 28 February 2018 and 28 February 2017:
- Property Services segment – Rendering of management, administration and consulting
services on development projects.
- Property Investment segment – Letting of residential properties held by the Group.
- Property Development segment – Development of residential properties held by the Group
or sold to third parties.
The classification of revenue, expenses, assets and liabilities in each segment is based on the
main activity of each segment.
No consulting fees were generated in the reporting period. Revenue from rentals amounted
to R39 713 (2017: R644 176), arising from services rendered by the Property Investment segment.
In the prior year the revenue primarily arose from the sale of land held as inventory
(R10 908 566).
Property Property Property
Primary segment report - 2018 Services Investment Development Total
Total revenue - 39 713 - 39 713
Total external revenue - 39 719 - 39 713
Cost of sales - - (22 896 180) (22 896 180)
Other income - 165 021 66 948 231 696
Other operating losses - - (364 000) (364 000)
Depreciation (92 010) (144 743) (14 556) (251 319)
Finance costs (788 170) (437 227) (13 931) (1 239 328)
Employee costs (943 446) - (3 285 445) (4 228 891)
Other operating expenses (4 327 085) (251 100) (405 377) (4 983 562)
Investment income 74 437 227 3 653 276 4 090 577
Segment results before taxation (6 150 637) (395 843) (23 259 276) (29 601 022)
Impairment losses - - - (1 325 277)
Finance costs accrued on
shareholder loans - - - (2 112 851)
Finance costs on related parties (305 232)
Loss before taxation (33 344 382)
Total segment assets 151 294 5 250 44 48 127 323 53 529 065
Total segment liabilities (9 650 298) (4 673 101 (1 257 694) (15 581 093)
Property Property Property
Primary segment report - 2017 Services Investment Development Total
Total revenue - 644 176 10 908 566 11 552 742
External revenue - 644 176 10 908 566 11 552 742
Cost of sales - - (7 350 000) (7 350 000)
Other income 62,506 113 478 - 175 984
Dividend revenue - 621 922 - 621 922
Depreciation (101 767) (184 754) - (286 521)
Employee costs (3 351 932) (2 744 660) (6 096 592)
Finance costs (1 407 636) (388 397) (2 389 448) (4 185 481)
Impairments - - (536 000) (536 000)
Other operating expenses (2 061 710) (4 540 987) - (6 602 697)
Other non-operating gains
(losses) - - (3 025 000) (3 025 000)
Segment results before taxation (6 860 539) (6 038 810) (1 221 662) (11 676 250)
Fair value loss - - - (17 675)
Impairment losses - - - (36 000)
Finance costs accrued to
shareholder loans - - - (1 889 802)
Finance costs on loans from
related parties - - - (481 642)
Loss before taxation (14 104 369)
Total segment assets 152 348 6 998 343 82 998 884 90 149 575
Total segment liabilities (4 654 406) (5 526 582) (1 261 646) (11 442 634)
Revenue from rentals amounted to R39 713 (2017: R644 176), arising from services rendered by
the Property Investment segment. In the prior year the revenue primarily arose from the sale of
land held as inventory (R10 908 566).
Geographic information
The Group's revenue is derived from operations and property holdings in South Africa.
Segment revenue and expenses
Revenue and expenses that are directly attributable to segments are allocated to those
segments. Those that are not directly attributable to segments are allocated on a reasonable
basis.
Segment assets and liabilities
Segment assets and liabilities comprise those operating assets and liabilities that are directly
attributable to the segment or can be allocated to the segment on a reasonable basis.
Segment assets exclude investments, tax assets, bank balances, deposits and cash. Segment
liabilities exclude loans, bank overdraft and tax liabilities. Capital expenditure represents the
local costs incurred during the period to acquire segment assets that are expected to be used
during more than one period, namely, property, plant and equipment, investment property
and intangible assets other than goodwill.
Segment assets and liabilities comprise those operating assets and liabilities that are directly
attributable to the segment or can be allocated to the segment on a reasonable basis.
Segment assets exclude investments, tax assets, bank balances, deposits and cash. Segment
liabilities exclude certain loans, bank overdraft and tax liabilities. Capital expenditure
represents the local costs incurred during the period to acquire segment assets that are
expected to be used during more than one period, namely, property, plant and equipment,
investment property and intangible assets other than goodwill.
HEADLINE EARNINGS
The headline earnings reconsolidation and per share is set out below:
28 February 28 February
2018 2017
Audited Restated
R R
Headline loss reconciliation
Loss attributable to equity holders of Visual International (31 981 395) (8 239 752)
Adjustments:
Impairment losses 1 325 227 572 000
Loss/(gain) on disposal of assets 364 000 3 025 000
Headline loss for the period (30 292 168) (4 121 027)
Headline loss per share (cents) (12.51) (2.05)
RESTATEMENT OF PRIOR YEAR RESULTS
Group
Dividends received and other income:
Dividends received are recognised, in profit or loss, when the Company’s right to receive
payment has been established. Dividends received from an associate, amounting to
R621 922, was not recorded in the 2017 financial year. The misstatement resulted in an
understatement of other income of R621 922 and an overstatement of loans from group
companies of R621 922. The factual misstatement in the prior year's financial statements was
corrected in the comparative figures of these financial statements.
Consulting fees received was incorrectly recorded during the 2017 financial year. The
misstatement resulted in an overstatement of other income of R83 054 and an overstatement
of retained earnings. The factual misstatement and corresponding tax effect the in prior year's
financial statements was corrected in the comparative figures of these financial statements.
Interest and penalties incorrectly classified as revenue:
Interest and penalties payable to the South African Revenue Service was incorrectly allocated
to revenue in the 2017 financial statements. The incorrect classification resulted in an
understatement of revenue of R471 020 and understatement of interest and penalties. The
factual misstatement and corresponding tax effect in the prior year's financial statements was
corrected in the comparative figures of these financial statements.
Discounting of loans:
The loans included in other financial liabilities was incorrectly discounted in the previous year
financial year. The discounting led to an understatement of loans from group companies of
R763 502 and an overstatement of other operating income of R763 502. The misstatement and
corresponding tax effect in the prior year's financial statements were corrected in the
comparative figures of these financial statements.
Certain comparative figures have been reclassified.
The effects of the reclassification are included in the table below.
The correction of the error(s) results in adjustments as follows:
28 February
2017
Restated
R
Statement of Financial Position
Decrease/(Increase) in loans from group companies 621 922
Decrease in deferred tax liability 24 918
(Increase) in other financial liabilities - long term (378 179)
(Increase) in other financial liabilities - short term (385 323)
Increase in non-controlling interest 368 365
Opening retained earnings (303 368)
(51 665)
Statement of Profit or Loss and Other Comprehensive Income
Increase in revenue 471 020
Increase in other operating income 17 143
Decrease in other operating gains (losses) (3 025 000)
(Increase)/Decrease in operating expenses (385 323)
Increase in investment revenue 388 397
Increase in finance cos (859 417)
Decrease in impairment in joint venture 521 725
Increase other non-operating gains (losses) 3 025 000
Decrease in taxation expense (205 210)
(51 665)
GOING CONCERN
The Group annual financial statements have been prepared on the basis of accounting
policies applicable to a going concern. This basis presumes that funds will be available to
finance future operations and that the realisation of assets and the settlement of liabilities,
contingent obligations and commitments will occur in the ordinary course of business.
The Group’s cash flow constraints as previously reported remain due to delays in being able
to generate revenue from property development and sales, and also partly due to the nature
of the business, which it previously addressed by borrowing from a lending institution at higher
interest rates. This led to the Board taking action during 2016 and 2017 to actively reduce the
gearing of the business and the repayment of the lending institution, as well as other funders,
during the prior year under review. Accordingly, the situation has improved substantially from
the prior year.
The directors have considered the operational budget and cash flow forecasts for the ensuing
year which are based on the current expected economic and market conditions and the
following events or subsequent events taking place:
a) As announced on SENS on 31 July 2018, the Company entered into a loan agreement
with Chynge Finance Proprietary Limited (“Chynge Finance”) in terms of which Chynge
Finance has extended a loan to the Company in the amount of R3 million, which loan
agreement incorporated an option to subscribe for shares in the future. This loan will be
repayable on 6 January 2020. It is anticipated that the parties will agree by way of an
addendum that the option will be cancelled, failing which shareholder approval may be
required to approve the option.
b) On 7 September 2018 the Company published an announcement regarding the specific
issue of 151 515 152 shares for cash to each of Robco Holdings Proprietary Limited
(“Robco”) and TLP Investments One Five Four Proprietary Limited (“TLP Investments”), or
their nominees, at an issue price of 3.3 cents per share for a total aggregate
consideration of R10 million. As announced on 28 November 2018, the subscription
agreements, which had still been subject to a number of suspensive conditions, between
the Company and these parties have lapsed. However, the Board continues to evaluate
the various scenarios with regards to the negotiations with a number of parties regarding
an equity investment into Visual (“Potential Equity Investment”).
(c) As announced on SENS on 28 December 2018, Visual International has agreed terms for
the disposal of land with Makoro Property Developers Proprietary Limited (“Makoro”) in
terms of which Visual International will dispose of the property described as Erf 25312 Kuils
River, situated in the registration division of Stellenbosch in extent of 277 179 hectares
(“Stellendale Junction”) for a consideration of R10 million, plus VAT (if applicable)
(“Stellendale Junction Disposal Agreement”). Zoning rights are in place for this property.
It is also intended that a property development management agreement in respect of
Stellendale Junction be concluded with Makoro (“Property Development Management
Agreement”).
In the interim, Makoro has concluded a loan agreement with the Company, Visual
International and My Place Trust in terms of which it has lent the Company an amount of
R2 million, which amount will incur interest at 3% above the prime rate charged by ABSA
Bank and is repayable on or before 31 January 2020.
The development potential in respect of the Stellendale Junction land is approximately
500 apartments on the site. The sale and development of these apartment buildings will
bring revenue and additional cash flow to the Group. Makoro will be responsible for
securing the development funding for Stellendale Junction.
d) With the restructuring and de-gearing exercise essentially complete, Visual has been
actively seeking development funding or partners in order to continue with the
development of the rest of Stellendale Junction.
As the Potential Equity Investment, the Stellendale Junction Disposal Agreement and the
Property Development Management Agreement still remain subject to final agreement
and/or certain conditions precedent at the date of issue of this Integrated Annual Report,
these events and the underlying assumptions relating thereto still represent material
uncertainties that may cast doubt on the Group’s ability to continue as a going concern.
The directors believe that due to the conclusion of the agreements or agreement of
terms referred to in a) and c) above, the Company will have adequate financial
resources to continue as a going concern. Accordingly, the directors have adopted the
going concern basis in the preparation of the annual financial statements.
It is noted that the Group has more than R22 million in tangible net asset value, which has been
supported by the independent property valuations in the prior year.
SPECIAL RESOLUTIONS, SHARE CAPITAL AND ISSUE/ REPURCHASE OF SHARES
Shares were issued during the year under review as follows:
- 106 000 000 shares at 13 cents per share for the acquisition of 31.2% of Mosegedi. Pursuant
to the intended cancellation of Phase 1 of the Mosegedi Acquisition, as detailed in the
events subsequent to year end section below, these shares will be cancelled.
- 666 667 shares at 15 cents per share were issued for cash to Arbitrage Investment Holdings
Proprietary Limited pursuant to a subscription agreement dated 22 November 2017;
- 9 090 909 shares at 9.9 cents per share were issued for cash to Milost Global Incorporated
(“Milost”) pursuant to a funding agreement (“the Milost Funding Agreement”), the details
of which were first announced on SENS on 15 September 2017; and
- 681 819 shares at 11 cents per share were issued for cash to Milost pursuant to the Milost
Funding Agreement.
The above share issues were effected under the Company’s general authority to issue shares
for cash.
Subsequent to year end, a further 20 065 101 shares at 11.46 cents per share, and 6 060 606
shares at 9.9 cents per share, were issued for cash to Milost under the Company’s general
authority.
During the year under review, the Company did not repurchase any shares.
RELATED PARTIES
Related parties are the same as reported in the previous period. Transactions with related
parties up until 28 February 2018 are detailed below:
Related party transactions up until 28 February 2018 R
Loan accounts - Owing (to) by related parties 25 170 138
Investment in joint venture 60
Related party balances included in trade receivables/(trade and other
payables) (2 318 518)
Impairments provisions of loans to related parties (169 392)
Interest paid to (received from) related parties (1 235 193)
Rent paid to (received from) related parties 222 895
Salary paid to related parties 67 230
Legal fees paid to related parties 213 456
Related party transactions up until 28 February 2017 2017
Loan accounts – Owing (to)/by related parties 26 131 154
Investment in Joint Ventures 110
Related party balances included in trade receivables/(trade and other
payables) (750 554)
Interest paid to/(received from) related parties 3 098 511
Rent paid to related parties 124 888
Salary paid to related party 66 000
Legal fees paid to related party 356 374
Management fees paid to/(received from) related parties 26 316
DIRECTORS
During the year under review the board of directors was constituted as follows:
Name Designation Appointment Date Resignation Date
R Richards Independent non-executive
Chairman 21 January 2014
CK Robertson Chief Executive Officer 1 May 1992
PE Grobbelaar Chief Operating Officer 1 July 2006 1 February 2018
G Noble Executive director 1 February 2007 3 October 2017
R Kadalie Independent non-executive
director 23 October 2013
CT Vorster Independent non-executive
director 21 January 2014
L Schutte Chief Financial Officer 1 March 2017 10 April 2017
L Matlholwa Non-executive director 1 March 2017
T Mokgatlha Non-executive director 1 March 2017 30 November 2017
L Rauch Financial director 1 October 2017 31 May 2018
D Genu Non-executive director 23 November 2017
Subsequent to year-end, Mr Enoch Godongwana was appointed as a non-executive director
with effect from 5 March 2018.
The Company will be announcing the appointment of a new financial director in due course.
AUDITORS
The auditor was previously Grant Thornton Cape. During February 2018, Grant Thornton Cape
changed its name to BDO Cape Incorporated and company joined the BDO network.
BDO Cape Incorporated, with Craig Killian as designated audit partner, are the appointed
auditors and the appointments will be confirmed at the upcoming Annual General Meeting in
accordance with Section 90 of the Companies Act No. 71 of 2008.
DIVIDEND
The Company has not declared a dividend for the year ended 28 February 2018 (2017: Nil).
LITIGATION
There are no legal or arbitration proceedings, including any proceedings that are pending or
threatened, of which the Company and the Group are aware that may have or have had in
the last 12 months, a material effect on the Company’s or the Group’s financial position.
CONTINGENT LIABILITIES
At the reporting date the Group does not have any contingent liabilities (2017: RNil).
COMMITMENTS
The Group has entered into an agreement in terms of which it is required to purchase a
property, consisting of Erf 18362 from the RAL Trust, subject to the successful rezoning of
Erf 18362 from agricultural to general. The purchase price will be equal to the fair value of
Erf 18362 on the date that it is rezoned and will be used to settle all or part of the loan
receivable from the RAL Trust, to the extent of the fair value after rezoning.
The Group has also entered into an agreement in terms of which it may purchase a property,
consisting of the Remaining portion of Portion 4 of Farm 438, for a total consideration of
R3 831 100. It is anticipated that the fair value of the said property will exceed the amount of
the consideration payable. If this property is acquired, it is currently the Group’s intention that
the property will be used in the property development business of the Group.
SUBSEQUENT EVENTS
Milost and the Milost Claw Back Offer
As announced on 15 September 2017, Visual signed a funding agreement with Milost for
R500 million draw down facility. Funds in respect of the first two drawdown notices for
R1.5 million and R2 million, respectively, had been received and were applied to working
capital. On 19 February 2018, Visual announced the signing of a Claw Back Offer with Milost
relating to a subscription for 252 673 771 new shares in Visual at a subscription price of
11.81 cents per share in order to raise R29 840 772, against which Milost did not perform, citing
concerns around the drop in Visual’s share price. On 8 May 2018 the Company announced
new terms agreed to between the Company and Milost relating to a subscription for
310 000 000 new shares in Visual at a subscription price of 3.3 cents in order to raise R10 230 000
(“the Claw Back Subscription”) by way of a Claw Back Offer. The proceeds would have
supported the recapitalisation of Visual and provide working and development capital for the
business. However, Milost again failed to pay the Claw Back Subscription by the due date and
subsequently advised the Company that it had taken a decision to no longer invest in public
companies. It was discovered that the cited drop in share price was actually partly as a result
of Milost selling the previously acquired shares in the market.
Cancellation of Phase 1 of the Mosegedi Acquisition
As announced on SENS on 24 October 2017, Visual and the major shareholders of Mosegedi
had agreed not to proceed with Phase 2 of the acquisition of 18.9% of Mosegedi due to the
audit of the Mosegedi financial statements still being incomplete at the time as a result of
difficulties with the year ended 29 February 2016 (which had a knock-on effect into the year
ended 28 February 2017).
The parties had subsequently also entered into an agreement to unwind the acquisition of
31.2% of Mosegedi ab initio, although this was subject to the payment by Milost by the end of
May 2018 in terms of the Milost Claw B ack Offer. It is still the intention of the parties to effect
the cancellation of Phase 1 of the Mosegedi Acquisition. This will result in the parties being put
back into the same position as had they not entered into the agreement. A further
announcement in respect of the confirmation of the implementation of the Mosegedi
cancellation agreement will be announced as soon as is practicable. The Group annual
financial statements have been prepared on the basis that Phase 1 of the Mosegedi
Acquisition will be unwound.
Chynge Finance funding and investment agreement
As detailed under the Going Concern paragraph above, the Company entered into a loan
agreement with Chynge Finance in terms of which Chynge Finance has extended a loan to
the Company in the amount of R3 million.
Subscription agreements with Robco and TLP Investments
As detailed under the Going Concern paragraph above, on 7 September 2018 the Company
issued an announcement regarding the specific issue of 151 515 152 shares for cash to each of
Robco and TLP Investments, or their nominees, at an issue price of 3.3 cents per share for a total
aggregate consideration of R10 million. As announced on 28 November 2018, the subscription
agreements, which had still been subject to a number of suspensive conditions, between the
Company and these parties have lapsed. However, the Board continues to evaluate the
various scenarios with regards to the negotiations with a number of parties regarding an equity
investment into Visual.
Disposal of Stellendale Junction
As detailed under the Going Concern paragraph above, Visual International has agreed terms
for the disposal of land with Makoro in terms of which Visual International will dispose of the
Stellendale Junction property for a consideration of R10 million, plus VAT (if applicable).
There are no other material events that require reporting after the year end, other than in the
normal course of business.
Changes in the roles of Independent Non-executive Directors
As announced on SENS on 20 February 2019, the role of Mr Reuben Kadalie from independent
non-executive director and member of the Audit and Risk Committee has changed to that of
Interim Financial Director. Additionally, Dr Ruben Richards has been appointed as a member
of the Audit and Risk Committee.
OTHER MATTERS
There are no other material events that require reporting after the year end, other than in the
normal course of business.
FUTURE PROSPECTS
Going forward, Visual has eliminated the majority of its debt and creditors and has a positive
net tangible asset value in excess of R25 million and the Board will be considering the size and
nature of properties held in order to start its key development initiatives and ensure that it has
sufficient cash and funding resources to grow the Group’s property assets.
BY ORDER OF THE BOARD
Cape Town
20 February 2019
Designated Advisor
Arbor Capital Sponsors Proprietary Limited
Date: 20/02/2019 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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