Wrap Text
Unaudited Condensed Consolidated Interim Results
for the 6 months period ended 31 August 2018
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 AltX on the JSE Limited ("JSE")
UNAUDITED CONDENSED CONSOLIDATED INTERIM RESULTS
for the 6 months period ended 31 August 2018
The Unaudited Condensed Consolidated Interim Results have been prepared under the supervision of the Chief Financial
Officer, Tafadzwa Mika CA(SA).
SALIENT FEATURES
REVENUE FROM CONTINUING OPERATIONS OF
R233.7 million
compared to R160.1 million at 31 August 2017
RESULTS FROM OPERATING ACTIVITIES OF
R40.0 million
compared to R22.3 million at 31 August 2017
BASIC EARNINGS PER SHARE OF
15.7c
compared to 8.5c at 31 August 2017
Condensed consolidated statement of comprehensive income
for the 6 months period ended 31 August 2018
Unaudited Unaudited
31 August 31 August
Figures in R'000 Note 2018 2017
Continuing operations
Revenue 1 233 677 160 115
Other income 501 1 780
Investment revenue 8 317 811
Interest received from investments 79 38
Fair value adjustments and impairments 2 (3 648) 6 590
Equity-accounted earnings (net of income tax) (127) 620
Operating expenses (198 750) (147 644)
Results from operating activities 40 049 22 310
Finance income 2 155 1 906
Finance costs (4 415) (5 940)
Net finance costs (2 260) (4 034)
Profit before income tax 37 789 18 276
Income tax expense (8 594) (2 611)
Profit from continuing operations 29 195 15 665
Discontinued operations
Profit from discontinued operations (net of income tax) - 516
Profit for the period 29 195 16 181
Other comprehensive income
Items that are or may be reclassified to profit or loss
Exchange differences on translating foreign operations 2 236 (339)
Total comprehensive income for the period 31 431 15 842
Profit from continuing operations attributable to:
Equity holders of Vunani Limited 25 179 12 775
Non-controlling interest 4 016 2 890
29 195 15 665
Profit for the period attributable to:
Equity holders of Vunani Limited 25 179 13 291
Non-controlling interest 4 016 2 890
29 195 16 181
Total comprehensive income for the period attributable to:
Equity holders of Vunani Limited 26 576 13 084
Non-controlling interest 4 855 2 758
31 431 15 842
Basic and diluted earnings per share (cents) 15.7 8.5
Basic and diluted earnings per share from continuing operations (cents) 15.7 8.2
Basic and diluted earnings per share from discontinued operations (cents) - 0.3
Basic and diluted headline earnings per share (cents) 3 15.7 7.8
Basic and diluted headline earnings per share from continuing operations (cents) 15.7 8.2
Basic and diluted headline loss per share from discontinued operations (cents) - (0.4)
Condensed consolidated statement of financial position
at 31 August 2018
6 months 12 months
Unaudited Audited
31 August 28 February
Figures in R'000 Note 2018 2018
Assets
Property, plant and equipment 11 618 10 404
Goodwill 139 766 139 766
Intangible assets 81 776 87 388
Investments in and loans to associates 77 281 75 495
Other investments 4 36 835 50 720
Deferred tax asset 44 649 47 010
Other non-current assets 54 127 54 127
Total non-current assets 446 052 464 910
Other investments 4 1 071 575
Taxation prepaid 2 303 1 462
Trade and other receivables 76 582 73 680
Accounts receivable from trading activities 117 518 689 510
Trading securities 205 435
Cash and cash equivalents 55 705 51 584
Total current assets 253 384 817 246
Total assets 699 436 1 282 156
Equity
Stated capital 5 706 572 706 572
Treasury shares (23 519) (14 842)
Share-based payments reserve 22 937 21 646
Foreign currency translation reserve (1 708) (3 105)
Accumulated loss (292 313) (310 368)
Equity attributable to equity holders of Vunani Limited 411 969 399 903
Non-controlling interest 3 450 (566)
Total equity 415 419 399 337
Liabilities
Other financial liabilities 4 58 184 64 062
Deferred tax liabilities 23 507 25 955
Total non-current liabilities 81 691 90 017
Other financial liabilities 4 31 687 34 667
Taxation payable 7 081 8 006
Trade and other payables 44 588 60 022
Accounts payable from trading activities 117 384 687 659
Trading securities 118 86
Bank overdraft 1 468 2 362
Current liabilities 202 326 792 802
Total liabilities 284 017 882 819
Total equity and liabilities 699 436 1 282 156
Shares in issue (000s) 5 164 897 164 897
Net asset value per share (cents) 249.8 242.5
Net tangible asset value per share (cents) 115.5 104.8
Net asset value per share (cents)
Equity attributable to equity holders of Vunani Limited, divided by the total shares in issue, including treasury shares.
Net tangible asset value per share (cents)
Equity attributable to equity holders of Vunani Limited, excluding goodwill and intangible assets divided by the total shares
in issue, including treasury shares.
Condensed consolidated statement of changes in equity
for the 6 months period ended 31 August 2018
Total
Share- Foreign attribu-
based currency table Non-
Stated Treasury payment translation Accumulated to equity controlling Total
Figures in R'000 capital shares reserve reserve loss holders interest equity
Balance as at 28 700 022 (15 915) 16 100 (2 521) (340 886) 356 800 (4 021) 352 779
February 2017 - Audited
Total comprehensive
income for the period
Profit for the period - - - - 13 291 13 291 2 890 16 181
Other comprehensive - - - (207) - (207) (132) (339)
income for the period
Total comprehensive - - - (207) 13 291 13 084 2 758 15 842
income for the period
Transactions with
owners, recorded
directly in equity
Share-based payments - - 2 469 - - 2 469 - 2 469
Dividends paid - - - - (8 241) (8 241) (524) (8 765)
Transactions with equity - - - - (218) (218) - (218)
holders
Acquisition of - - - - (106) (106) 106 -
non-controlling
interests
Issue of shares 4 416 - - - - 4 416 - 4 416
Transfer between - 435 (435) - 435 435 - 435
reserves
Total transactions with 4 416 435 2 034 - (8 130) (1 245) (418) (1 663)
owners
Balance as at 31 August 704 438 (15 480) 18 134 (2 728) (335 725) 368 639 (1 681) 366 958
2017 - Unaudited
Total comprehensive
income for the period
Profit for the period - - - - 27 770 27 770 1 605 29 375
Other comprehensive - - - (377) - (377) (476) (853)
income for the period
Total comprehensive - - - (377) 27 770 27 393 1 129 28 522
income for the period
Transactions with
owners, recorded
directly in equity
Share-based payments - - 3 512 - - 3 512 - 3 512
Issue of shares 2 772 - - - - 2 772 - 2 772
Acquisition of - - - - (2 413) (2 413) - (2 413)
non-controlling
interests
Dividends paid - - - - - - (14) (14)
Delisted shares (638) 638 - - - - - -
Total transactions with 2 134 638 3 512 - (2 413) 3 871 (14) 3 857
owners, recorded
directly in equity
Balance as at 28 706 572 (14 842) 21 646 (3 105) (310 368) 399 903 (566) 399 337
February 2018 - Audited
Total comprehensive
income for the period
Profit for the period - - - - 25 179 25 179 4 016 29 195
Other comprehensive - - - 1 397 - 1 397 839 2 236
income for the period
Total comprehensive - - - 1 397 25 179 26 576 4 855 31 431
income for the period
Transactions with
owners, recorded
directly in equity
Share-based payments - - 3 844 - - 3 844 - 3 844
Transfer of shares to - 2 118 (2 118) - 2 118 2 118 - 2 118
employees
Repurchase of own - (10 075) - - - (10 075) - (10 075)
shares in lieu of
share swap
Dividends paid - - - - (9 677) (9 677) (839) (10 516)
Transfer between - - (435) - 435 - - -
reserves
Acquisition of treasury - (720) - - - (720) - (720)
shares
Total transactions with - (8 677) 1 291 - (7 124) (14 510) (839) (15 349)
owners, recorded
directly in equity
Balance as at 31 August 706 572 (23 519) 22 937 (1 708) (292 313) 411 969 3 450 415 419
2018 - Unaudited
DIVIDENDS
Unaudited Unaudited
31 August 31 August
Figures in R'000 2018 2017
Ordinary dividend paid
Ordinary dividend number 4 of 6.2 cents per share (net of treasury shares held) paid
to shareholders on 30 July 2018 (2017: 5.2 cents) 9 677 8 241
9 677 8 241
Condensed consolidated statement of cash flows
for the 6 months period ended 31 August 2018
6 months 12 months 6 months
Unaudited Audited Unaudited
31 August 28 February 31 August
Figures in R'000 Note 2018 2018 2017
Cash flows from operating activities
Net cash generated/(utilised) by operating activities 6 30 180 28 488 (4 944)
Investment revenue received 8 317 5 421 811
Finance income received 2 155 3 592 1 906
Finance costs paid (3 246) (9 627) (3 904)
Dividends paid to shareholders (9 677) (8 241) (8 241)
Dividends paid to non-controlling interest (839) (538) (524)
Income tax paid (8 338) (12 214) (3 859)
Net cash generated/(utilised) by operating activities 18 552 6 881 (18 755)
Cash flows from investing activities
Proceeds on disposal of discontinued operations - 1 500 1 050
Acquisition of property, plant and equipment (1 524) (4 245) (1 212)
Dividends received from associates - 741 -
Proceeds from repayment of loans to associates - 1 186 936
Increase in investment and loans to associates (1 152) (7 592) (213)
Proceeds from repayment of loans in other non-current assets - 1 712 1 712
Acquisition of other investments (185) (2 590) (2 000)
Proceeds on disposal of other investments - 10 292 8 510
Acquisition of treasury shares (720) - -
Net cash (outflow)/inflow from investing activities (3 581) 1 004 8 783
Cash flows from financing activities
Proceeds on issues of shares - 2 772 -
Increase in other financial liabilities - 30 305 1 024
Repayments of other financial liabilities (9 956) (73 814) (38 398)
Net cash outflow from financing activities (9 956) (40 737) (37 374)
Net increase/(decrease) in cash and cash equivalents 5 015 (32 852) (47 346)
Cash and cash equivalents at the beginning of the period 49 222 82 074 82 074
Total cash and cash equivalents at end of the period 54 237 49 222 34 728
Segmental reporting
for the 6 months period ended 31 August 2018
The fund management and other investments segments are geographically located in South Africa and, on a smaller scale,
in Zimbabwe and Malawi. The institutional securities broking, advisory services and asset administration segments are
geographically located in South Africa.
Reportable
segment
profit/(loss) Total Total
Revenue after tax assets liabilities
Unaudited Unaudited Unaudited Unaudited
31 August 31 August 31 August 31 August
Figures in R'000 2018 2018 2018 2018
Continuing operations
Fund management 37 880 2 208 72 328 (17 134)
Asset administration 62 484 5 795 233 208 (98 140)
- Advisory services 11 730 7 772 7 388 (1 886)
Investment banking
- Institutional securities broking 22 690 (4 406) 140 729 (131 321)
- Mining 93 757 13 658 71 071 (14 648)
Private equity
- Other investments 5 136 4 168 174 712 (20 888)
233 677 29 195 699 436 (284 017)
Discontinued operations
Private wealth and - - - -
investments
Total 233 677 29 195 699 436 (284 017)
Reportable
segment
profit/(loss) Total Total
Revenue after tax assets liabilities
Unaudited Unaudited Unaudited Unaudited
31 August 31 August 31 August 31 August
Figures in R'000 2017 2017 2017 2017
Continuing operations
Fund management 31 964 1 469 64 012 (15 920)
Asset administration 60 892 4 651 234 713 (115 215)
- Advisory services 2 396 (141) 2 644 (794)
Investment banking
- Institutional securities broking 26 263 (1 478) 300 416 (298 003)
- Mining 35 064 6 172 85 399 (9 002)
Private equity*
- Other investments 3 536 4 992 140 990 (22 451)
160 115 15 665 828 174 (461 385)
Discontinued operations
Private wealth and
investments 1 296 516 1 271 (1 102)
Total 161 411 16 181 829 445 (462 487)
* In the prior year, the Private equity segment was refined into two segments namely Mining and Other investments as a
result of the increased mining processing activities. Comparative figures have been re-presented to effect the impact of
the change.
Notes to the condensed consolidated interim financial statements
(all figures in R'000)
BASIS OF PREPARATION
The condensed consolidated interim financial statements are prepared in accordance with International Financial
Reporting Standard, IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council, the Listings
Requirements of the JSE Limited and the requirements of the Companies Act of South Africa. The accounting policies
applied in the preparation of these interim financial statements are in terms of International Financial Reporting
Standards and are consistent with those applied in the previous annual financial statements.
The unaudited condensed consolidated interim financial statements have been presented on the historical cost basis,
except for other investments and certain other financial liabilities, which are fair valued. These unaudited condensed
consolidated interim financial statements are presented in South African Rand, rounded to the nearest thousand, which is
the group's presentation currency.
The unaudited condensed consolidated interim financial statements of the group at and for the period ended 31 August
2018 comprise the company and its subsidiaries (the 'group') and the group's interests 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
1. Revenue
Revenue includes trading revenue and fees earned from advisory services, brokerage, fund management, asset administration
and mining revenue.
2. Fair value adjustments and impairments
Unaudited Unaudited
31 August 31 August
Figures in R'000 2018 2017
Fair value adjustments on financial assets and liabilities designated
at fair value through profit or loss (3 648) 6 590
(3 648) 6 590
3. Reconciliation of headline earnings for the period
Unaudited Unaudited
31 August 31 August
Figures in R'000 2018 2017
Profit for the period attributable to equity holders of Vunani 25 179 13 291
Adjusted for:
Discontinued operations
Profit on disposal of discontinued operations - (1 500)
Taxation - 336
25 179 12 127
Headline earnings per share (cents) 15.7 7.8
Basic and diluted headline earnings per share from continuing
operations 15.7 8.2
Basic and diluted headline loss per share from discontinued
operations - (0.4)
4. 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 at fair value through profit or loss. Financial liabilities are
either accounted for at amortised cost or designated at fair value through profit or loss. The group designates certain
financial liabilities at fair value through profit or loss upon initial recognition.
Ring-fenced special purpose entities have historically been used to house the group's geared equity investments and any
financial liabilities that relate to such investments. Financial assets and liabilities that arise in terms of these
ring-fenced structures are both fair valued through profit or loss in terms of IAS 39 Financial instruments: Recognition
and measurement.
For additional information on the fair values of other investments and other financial liabilities, please refer to note
7 of these financial results.
5. Authorised and issued stated capital
The authorised stated capital at 31 August 2018 was 500 million ordinary shares of no par value (2017: 500 million
ordinary shares of no par value). 164 896 942 shares were in issue at 31 August 2018 (2017: 164 055 728).
Unaudited Audited Unaudited
31 August 28 February 31 August
Weighted average number of ordinary shares (000s) 2018 2018 2017
Issued ordinary shares at the beginning of the period 164 897 161 296 161 296
Effect of share issue - 1 899 318
Effect of own shares held (4 605) (5 219) (5 567)
Weighted average number of shares in issue during the period 160 292 157 976 156 047
Number of shares in issue at the end of the period (000s) 164 897 164 897 164 056
Dilutive weighted average number of ordinary shares (000s)
Issued ordinary shares at the beginning of the period 164 897 161 296 161 296
Effect of share issue - 1 899 318
Effect of own shares held (4 605) (5 219) (5 567)
Effect of dilutive shares 3 281 2 061 1 080
Diluted weighted average number of shares in issue during the period 163 573 160 037 157 127
Number of shares in issue at the end of the period (000s) 164 897 164 897 164 056
The shares issued as part of the employee share incentive scheme could potentially dilute basic earnings in the future.
In the current period, the employee shares have a dilutive effect. The impact of the potential dilutive shares is
immaterial.
6. Net cash utilised by operating activities
6 months 12 months 6 months
Unaudited Audited Unaudited
31 August 28 February 31 August
Figures in R'000 2018 2018 2017
Profit before income tax expense from continuing operations 37 789 53 964 18 276
(Loss)/profit before income tax expense from discontinued - (1 269) 516
operations
Adjusted for:
Depreciation of property, plant and equipment 1 650 3 722 1 603
Profit on disposal of discountinued - (1 500) (1 500)
operations
Equity-accounted earnings (net of income tax) 127 10 823 (620)
Fair value adjustments and impairments 3 648 (41 242) (6 590)
Movement in impairment allowance - 369 -
Amortisation of intangible assets 5 612 11 224 5 612
Share-based payments expense 4 279 5 981 2 034
Foreign currency translation loss (225) 362 30
Lease straight-line adjustment (21) (432) (124)
Interest received from investments and finance income (2 234) (3 729) (1 944)
Investment revenue (8 317) (5 421) (811)
Finance costs 4 415 11 055 5 940
Changes in working capital:
Decrease/(increase) in trading securities 262 (2 100) (2 107)
Increase in trade and other receivables (2 902) (22 080) (11 830)
(Decrease)/increase in trade and other payables (16 892) 5 523 (18 878)
Decrease in accounts receivable and payable from trading activities 2 989 3 238 5 449
Cash generated/(utilised) by operating activities 30 180 28 488 (4 944)
7. Financial instruments carried at fair value
The fair value of a financial instrument is the price that would be received for the sale of an asset or paid for the
transfer of a liability in an orderly transaction between market participants at the measurement date. Underlying the
definition of fair value is a presumption that an entity is a going concern without any intention or need to liquidate,
to curtail materially the scale of its operations or to undertake a transaction on adverse terms. Fair value is not,
therefore, the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distressed
sale.
The existence of published price quotations in an active market is the best evidence of fair value and, where they
exist, they are used to measure the financial asset or financial liability. A market is considered to be active if
transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis. Financial
instruments fair valued using quoted prices would generally be classified as level 1 in terms of the fair value
hierarchy.
Where a quoted price does not represent fair value at the measurement date or where the market for a financial
instrument is not active, the group establishes fair value by using valuation techniques. These valuation techniques
include reference to the value of the assets of the underlying business, earnings multiples (e.g. unlisted investments),
discounted cash flow analysis (e.g. unlisted investments, loans and advances) and various option pricing models.
Inputs typically used in valuation techniques for loans and advances, other investments, investments in associates and
other financial liabilities include discount rates, expected future cash flows, dividend yields, earnings multiples,
volatility, equity prices and commodity prices.
Valuation methodologies and techniques applied for level 3 financial instruments include a combination of discounted
cash flow analysis, application of earnings multiples on sustainable after tax earnings and current and projected net
asset values to determine overall reasonability. The valuation technique applied to specific financial instruments
depends on the nature of the financial instrument and the most appropriate valuation technique is determined on that
basis.
After the valuations of the unlisted financial assets and liabilities are performed, these are presented to the group's
investment committee for independent review. All significant valuations are approved by the investment committee.
The valuation methodologies, techniques and inputs applied to the fair value measurement of the financial instruments
have been applied in a manner consistent with that of the previous financial period.
Unaudited Audited
31 August 28 February
2018 2018
Fair values Carrying Carrying
Figures in R'000 amount Fair value amount Fair value
Financial assets measured at fair value
Designated at fair value through profit or
loss on initial recognition 88 351 88 351 101 739 101 739
Trading securities 205 205 435 435
Financial assets not measured at fair value
Loans to associates 29 289 23 339 27 387 21 949
Loans in other non-current assets 3 682 3 928 3 683 3 909
121 527 115 823 133 244 128 032
Financial liabilities measured at fair value
Designated at fair value through profit or
loss on initial recognition (5 084) (5 084) (5 084) (5 084)
Trading securities (118) (118) (86) (86)
Financial liabilities not measured at fair value
Other financial liabilities (84 787) (82 634) (93 645) (94 016)
(89 989) (87 836) (98 815) (99 186)
Total 31 538 27 987 34 429 28 846
The carrying amounts of cash and cash equivalents, accounts receivable from trading activities, trade and other
receivables, bank overdraft, accounts payable from trading activities and trade and other payables reasonably
approximate their fair values, due to their short-term nature.
Fair value hierarchy
The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair
value measurements are categorised into different levels in the fair value hierarchy based on inputs to the valuation
techniques used.
The different levels are defined as follows:
- Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Unaudited 31 August 2018
Figures in R'000 Level 1 Level 2 Level 3 Total
Financial assets designated at fair value through profit or loss 16 455 - 71 896 88 351
Financial assets measured at fair value 205 - - 205
Financial assets at amortised cost - - 27 267 27 267
Financial liabilities designated at fair value through profit or loss (118) - (5 084) (5 202)
Financial liabilities at amortised cost - - (82 634) (82 634)
16 542 - 11 445 27 987
Audited 28 February 2018 Level 1 Level 2 Level 3 Total
Financial assets designated at fair value through profit or loss 19 951 - 81 788 101 739
Financial assets measured at fair value 435 - - 435
Financial assets at amortised cost - - 25 858 25 858
Financial liabilities designated at fair value through profit or loss (86) - (5 084) (5 170)
Financial liabilities at amortised cost - - (94 016) (94 016)
20 300 - 8 546 28 846
Unaudited Audited
31 August 28 February
Figures in R'000 2018 2018
Level 3 comprises:
Balance at beginning of period 76 704 28 000
Total gains or losses in profit or loss (disclosed in fair value
adjustments and impairments) - 40 536
Purchases, transfers, sales, issues and settlements (9 892) 8 168
Balance at end of the period 66 812 76 704
A change of 10% in the unobservable inputs of the investment and liability at the reporting date would have
increased/(decreased) equity and profit or loss by the amount shown below. This analysis assumes that all other
variables remain constant.
Unaudited Audited
31 August 28 February
Effect on statement of comprehensive income (profit/(loss)) and equity before taxation 2018 2018
Net asset value
10% increase 1 417 1 399
10% decrease (1 326) (1 308)
Free cash flow
10% increase (492) (2 182)
10% decrease 492 167
Foreign exchange movement
10% increase 8 868
10% decrease (8) (868)
Events after reporting date
There have been no material events between the period end and the date of the signing of the results.
Dividends
Ordinary dividend
A dividend of 6.2 cents (4.9 cents net of dividend withholding tax) per share was paid to ordinary shareholders on
30 July 2018. Total cash of R9.7 million (net of treasury shares held) was paid to ordinary shareholders.
Going concern
The directors have made an assessment of the ability of the company and its subsidiaries to continue as going concerns
and have no reason to believe the businesses will not continue as going concerns for the foreseeable future.
Overview and prospects
Business conditions proved to be challenging over the reporting period as the South African economy officially slipped
into recession in the second quarter of the calendar year. US- led global trade wars amidst rising interest rates,
culminated in a general risk-off stance by investors. That put emerging market currencies under severe pressure. The
Rand weakened by more than 24% and 15%, against the US dollar and on a nominal and a trade weighted basis over the
reporting period, respectively. International energy prices also continued to rise. While Vunani benefited from higher
coal prices, significant increases in domestic fuel prices had a detrimental effect on business conditions in general.
Moreover, elevated levels of uncertainty amidst weak economic growth and the run-up to the 2019 national elections,
further dampened interest and activity in the domestic financial markets. A concomitant mediocre performance by the
domestic equity market as reflected by the JSE All Share Index's mere 0.6% growth, limited growth in domestic financial
asset values and as such, also detrimentally affected performance in Vunani's related businesses.
Despite difficult market conditions, Vunani performed considerably well for the 6-month period to 31 August 2018.
Vunani generated total comprehensive income for the period of R31.4 million (2017: R15.8 million), while total
comprehensive income attributable to equity holders of the company amounted to R26.6 million (2017: R13.1 million).
The group's reportable segments are as follows:
Fund management
Asset administration
- Advisory services
Investment banking
- Institutional securities broking
- Other investments
Private equity
- Mining
Fund management
The fund management segment includes the group's investments in Vunani Fund Managers Proprietary Limited ("VFM"),
Purpose Vunani Asset Management (Private) Limited ("PVAM") and Alliance Capital Limited ("Alliance"). The segment
reported revenue of R37.9 million for the period (2017: R32.0 million), which is an increase of 19%. The reportable
segment profit amounted to R2.2 million for the period compared to a profit of R1.5 million at 31 August 2017.
VFM's performance and profitability improved during the period because of an increase in assets under management and
higher performance fees earned. VFM's assets under management increased from R20.9 billion at 28 February 2018 to R25.5
billion at 31 August 2018. This 22% increase in assets under management will add to the profitability of VFM going
forward.
PVAM's profitability decreased during the period due to the ongoing challenging economic conditions in Zimbabwe, as well
as the build up to the local elections, which were held in July. PVAM's assets under management increased to $25.9
million at 31 August 2018 from $24.2 million at 28 February 2018. The increase in assets under management and
diversification of product offering is key in improving the profitability of PVAM.
Alliance, a 45% owned Malawian based asset management business had a tough start to the year. Alliance contributed
negative R0.3 million equity accounted earnings to the group for the period. Alliance assets under management increased
to MWK17.7 billion at 31 August 2018, up from MWK16.9 billion at 28 February 2018.
Asset administration
The asset administration segment includes the group's investment in Fairheads Beneficiary Services Proprietary Limited
("Fairheads"). Fairheads is making good progress in increasing its assets under administration, which amounted to R6.5
billion at 31 August 2018 from R6.2 billion at 28 February 2018. The segment contributed R5.8 million to the group's
results for the period ended 31 August 2018, compared to R4.7 million in the prior period.
Advisory services
The segment performance has improved significantly from the prior period as the team finalised several mandates during
the period. This has resulted in a 390% increase in revenue earned, from R2.4 million in the prior period, to R11.7
million to 31 August 2018. The segment reported a profit for the period of R7.8 million (2017: loss R0.1 million).
Institutional securities broking
This segment includes equity, derivative and capital market trading services to institutional clients. Revenue decreased
by 13% compared to 31 August 2017. The decrease in revenue is due to the decrease in trading volumes in the market. The
segment reported a loss for the period of R4.4 million (2017: R1.5 million). Management is currently working on a
turnaround strategy to ensure that the segment returns to profitability.
Other investments
The other investments segment holds the group's listed investments, unlisted investments, property investments and
certain equity accounted investments that are undertaken with well-capitalised strategic partners. It is the group's
strategy to dispose of its listed investments overtime to ensure an optimal use of capital. The group is progressing
with its effort to create a property portfolio, which has seen the group identify interesting opportunities. The
strategy involves partnering with investors who have experience in the property sector. The segment generated revenue
of R5.1 million (2017: R3.5 million) and generated a profit of R4.2 million at 31 August 2018, (2017: R5.0 million).
Mining
The mining segment is focused on coal processing activities. The segment includes Vunani Resources Proprietary Limited
("VR"). The segment revenue of R93.8 million (2017: R35.1 million) was up by 167%. The segment reported a profit of
R13.7 million for the period (2017: R6.1 million).
Financial performance
Revenue from continuing operations increased by 46% to R233.7 million (2017: R160.1 million) for the period ended 31
August 2018. The increase is attributable to the increased revenue from the advisory services and mining segments.
Other income decreased by 72% to R0.5 million (2017: R1.8 million) for the period ended 31 August 2018. The decrease is
due to once off non-operational revenue earned by the group in the previous period.
Investment income is received in the form of dividends. Total investment income for the current period amounted to R8.3
million as compared to R0.8 million for the period ended 31 August 2017.
Negative fair value adjustments and impairments of R3.6 million (2017: positive R6.6 million) relate to a net decrease
in the value of the group's listed and unlisted investment portfolio that has been designated at fair value through
profit or loss.
Negative equity-accounted earnings for the period amounted to R0.1 million (2017: positive R0.6 million). The group's
investment in associates had a tough start to the year compared to the prior period.
Operating expenses increased by 34% from R147.6 million to R198.8 million. The increase is attributable to the increase
in costs from coal trading. Share based payments expense also increased in the period as a result of additional awards
made to staff. The group remains focused on cost containment and monitors spending on an ongoing basis.
Finance income increased to R2.2 million for the period ending 31 August 2018 compared to R1.9 million for the period
ended 31 August 2017. Finance costs decreased from R5.9 million for the period ended 31 August 2017 to R4.4 million for
the period ended 31 August 2018, as result of a decrease in financial liabilities in the group.
The decrease in other investments was due to the disposal of a portion of the group's unlisted investment portfolio
during the period as well negative fair value adjustments to the other investments.
The increase in treasury shares is as a result of a share swop in relation to the disposal of the group's unlisted
investments. The group declared a cash dividend of R9.7 million (2017: R8.2 million) in April 2018 which was paid in
July 2018. The share-based payments reserve movement of R4.2 million is attributable to the current period IFRS 2 charge
(2017: charge of R2.0 million).
Prospects
The first six months of the year has seen the group improve its performance when compared to the prior period, despite
the tough economic environment. Vunani's executives believe that the improved profitability on the operating businesses
is a key strategy to solidify the group as a formidable financial services player and ultimately ensure the long-term
success of Vunani. Vunani's staff are critical to the success of these business and the retention of staff is therefore
critical in ensuring that the group's vision is achieved. Vunani is cautiously optimistic that it can build on the
performance of the first six months of the year to ensure that it can finish the second half of the year on a high note.
FORWARD-LOOKING STATEMENTS AND DIRECTORS' RESPONSIBILITY
Statements made throughout this announcement regarding the future financial performance of Vunani have not been reviewed
or audited by the company's external auditors. The company cannot guarantee that any forward-looking statement will
materialise and accordingly, readers are cautioned not to place undue reliance on any forward-looking statements. The
company disclaims any intention and assumes no obligation to update or revise any forward-looking statement even if new
information becomes available as a result of future events or for any other reason, other than as required by the JSE
Listings Requirements.
The directors take full responsibility for the preparation of the condensed consolidated interim results.
Signed on behalf of the board of directors by E Dube and T Mika on 11 October 2018.
CORPORATE INFORMATION
Executive directors
E Dube (Chief Executive Officer)
T Mika (Chief Financial Officer)
BM Khoza
NM Anderson
Non-executive directors
LI Jacobs - independent chairman
XP Guma - independent
NS Mazwi - independent
G Nzalo - independent
JR Macey - independent
S Mthethwa
M Golding
Company secretary
CIS Company Secretaries Proprietary Limited
Designated adviser
Grindrod Bank Limited
Financial communications adviser
Singular Systems Proprietary Limited
Transfer secretaries
Computershare Investor Services Proprietary Limited
Rosebank Towers,
15 Bierman Avenue,
Rosebank,
2196
RESULTS PRESENTATION
Vunani will be hosting the interim results presentation by CEO Ethan Dube and CFO Tafadzwa Mika, followed by a question
and answer session on Thursday, 11 October 2018, at 09:00 via a web/audio cast. The web/audio cast link is as follows:
http://www.corpcam.com/Vunani11102018.
Date: 11/10/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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