Wrap Text
Provisional condensed consolidated results for the year ended 28 February 2019
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")
Provisional condensed consolidated results
for the year ended 28 February 2019
The reviewed provisional condensed consolidated results have been prepared under the supervision of the Chief Financial
Officer, Tafadzwa Mika CA(SA).
SALIENT FEATURES
REVENUE OF
R425.3 million
compared to R350.9 million at 28 February 2018
PROFIT FOR THE YEAR OF
R90.3 million
compared to R45.6 million at 28 February 2018
EARNINGS PER SHARE OF
54.7c
compared to 26.0c at 28 February 2018
NET ASSET VALUE PER SHARE OF
291.2c
compared to 242.5c at 28 February 2018
DIVIDENDS PAID OF
R9.7 million
compared to R8.2 million in February 2018
Condensed consolidated statement of comprehensive income
for the year ended 28 February 2019
Re-presented
Reviewed Audited
28 February 28 February
Figures in R'000 Note 2019 2018
Continuing operations
Revenue 1 425 329 350 889
Other income 2 258 2 518
Investment revenue 10 954 5 421
Interest received from investments 170 137
Fair value adjustments * 4 73 239 43 714
Impairments * 2 (11 973) (2 841)
Equity-accounted earnings (net of income tax) 6 053 (10 823)
Commodities trading related costs * (100 594) (52 481)
Operating expenses * (293 020) (275 107)
Results from operating activities 112 416 61 427
Finance income 4 342 3 592
Finance costs (8 801) (11 055)
Net finance costs (4 459) (7 463)
Profit before income tax 107 957 53 964
Income tax expense (17 705) (7 139)
Profit from continuing operations 90 252 46 825
Discontinued operations
Loss from discontinued operations (net of income tax) - (1 269)
Profit for the year 90 252 45 556
Other comprehensive income
Items that are or may be subsequently reclassified to profit or loss
Exchange differences on translating foreign operations 2 159 (1 192)
Total comprehensive income for the year 92 411 44 364
Profit for the year attributable to:
Equity holders of Vunani Limited 88 553 41 061
Non-controlling interest 1 699 4 495
90 252 45 556
Total comprehensive income for the period attributable to:
Equity holders of Vunani Limited 89 916 40 477
Non-controlling interest 2 495 3 887
92 411 44 364
Basic earnings per share (cents) 54.7 26.0
Basic earnings per share from continuing operations (cents) 54.7 26.8
Basic loss per share from discontinued operations (cents) - (0.8)
Diluted earnings per share (cents) 53.5 26.0
Diluted earnings per share from continuing operations (cents) 53.5 26.8
Diluted loss per share from discontinued operations (cents) - (0.8)
* The comparative figures have been re-presented in line with the new IFRS 9 Financial Instruments standard requirements.
Commodities trading related costs have been re-presented out of operating expenses. No restatements or reclassifications
have been made to these comparative figures.
Condensed consolidated statement of financial position
at 28 February 2019
Re-presented
Reviewed Audited
28 February 28 February
Figures in R'000 Note 2019 2018
Assets
Property, plant and equipment 10 977 10 404
Goodwill 139 766 139 766
Intangible assets 76 164 87 388
Investments in associates * 53 390 48 108
Loans to associates * 10 118 27 387
Other investments 4 93 565 50 720
Deferred tax asset 42 826 47 010
Other non-current assets 4 74 564 54 127
Total non-current assets 501 370 464 910
Other investments 4 918 575
Inventory 29 255 -
Taxation prepaid 1 259 1 462
Trade and other receivables 121 063 73 680
Accounts receivable from trading activities 90 561 689 510
Trading securities 72 435
Cash and cash equivalents 54 446 51 584
Total current assets 297 574 817 246
Total assets 798 944 1 282 156
Equity
Stated capital 696 497 706 572
Treasury shares (56) (14 842)
Share-based payments reserve 5 506 21 646
Foreign currency translation reserve (1 742) (3 105)
Accumulated loss (230 936) (310 368)
Equity attributable to equity holders of Vunani Limit 469 269 399 903
Non-controlling interest 8 380 (566)
Total equity 477 649 399 337
Liabilities
Other financial liabilities 4 46 151 64 062
Deferred tax liabilities 22 251 25 955
Total non-current liabilities 68 402 90 017
Other financial liabilities 4 32 168 34 667
Taxation payable 5 177 8 006
Trade and other payables 114 700 60 022
Accounts payable from trading activities 90 840 687 659
Trading securities 22 86
Bank overdraft 9 986 2 362
Current liabilities 252 893 792 802
Total liabilities 321 295 882 819
Total equity and liabilities 798 944 1 282 156
Shares in issue (000s) 6 161 156 164 897
Net asset value per share (cents) 291.2 242.5
Net tangible asset value per share (cents) 157.3 104.8
Net asset value per share (cents)
Net asset value per share is the equity attributable to equity holders of Vunani Limited, utilising all shares in issue,
including treasury shares.
Net tangible asset value per share (cents)
Net tangible asset value per share is the equity attributable to equity holders of Vunani Limited, (excluding goodwill
and intangible assets) utilising all shares in issue, including treasury shares.
* The comparative figures have been re-presented in line with the new IFRS 9 Financial Instruments standard requirements.
The investment in associates and the related loans have been presented separately.
Condensed consolidated statement of changes in equity
for the year ended 28 February 2019
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 February 2017 - Audited 700 022 (15 915) 16 100 (2 521) (340 886) 356 800 (4 021) 352 779
Total comprehensive income for the period
Profit for the year - - - - 41 061 41 061 4 495 45 556
Other comprehensive income for the period - - - (584) - (584) (608) (1 192)
Total comprehensive income for the period - - - (584) 41 061 40 477 3 887 44 364
Issue of shares 7 188 - - - - 7 188 - 7 188
Share-based payments - - 5 546 - 435 5 981 - 5 981
Dividends paid - - - - (8 241) (8 241) (538) (8 779)
Delisted shares (638) 638 - - - - - -
Transfer between reserves* - 435 - - (435) - - -
Acquisition of non-controlling interests - - - - (2 302) (2 302) 106 (2 196)
Total transactions with owners, recorded directly in equity 6 550 1 073 5 546 - (10 543) 2 626 (432) 2 194
Balance as at 28 February 2018 - Audited 706 572 (14 842) 21 646 (3 105) (310 368) 399 903 (566) 399 337
Adjustment on initial application of IFRS 9 (net of income tax) - - - - (85) (85) - (85)
Adjusted balance as at 1 March 2018 706 572 (14 842) 21 646 (3 105) (310 453) 399 818 (566) 399 252
Total comprehensive income for the year
Profit for the year - - - - 88 553 88 553 1 699 90 252
Other comprehensive income for the year - - - 1 363 - 1 363 796 2 159
Total comprehensive income for the period - - - 1 363 88 553 89 916 2 495 92 411
Transactions with owners, recorded directly in equity
Acquisition of treasury shares - (1 268) - - - (1 268) - (1 268)
Share-based payments - - 7 844 - - 7 844 - 7 844
Dividends paid - - - - (9 677) (9 677) (838) (10 515)
Delisted shares (10 075) - - - - (10 075) - (10 075)
Transfer between reserves* - 16 054 (23 984) - 7 930 - - -
Disposal to non-controlling interests - - - - (7 289) (7 289) 7 289 -
Total transactions with owners, recorded directly in equity (10 075) 14 786 (16 140) - (9 036) (20 465) 6 451 (14 014)
Balance as at 28 February 2019 - Reviewed 696 497 (56) 5 506 (1 742) (230 936) 469 269 8 380 477 649
* Shares that were issued as part of the share-based payment scheme vested. The shares were transferred out of the share trust (held as treasury shares) to the
qualifying employees. The cumulative share-based payment expense in the reserve has been transferred between the non-distributable reserve and retained income on
vesting.
DIVIDENDS
Reviewed Audited
28 February 28 February
Figures in R'000 2019 2018
Ordinary dividend
Ordinary dividend number 4 of 6.2 cents (4.96 cents net of dividend withholding tax) per share was paid to ordinary shareholders on 30
July 2018 (net of treasury shares), (2018: Ordinary dividend number 3 of 5.2 cents (4.16 cents net of dividend withholding tax) per share
was paid to ordinary shareholders on 27 July 2017). 9 677 8 241
9 677 8 241
Condensed consolidated statement of cash flows
for the year ended 28 February 2019
Reviewed Audited
28 February 28 February
Figures in R'000 Note 2019 2018
Cash flows from operating activities
Net cash generated by operating activities 7 38 752 28 488
Investment revenue received 10 954 5 421
Finance income received 4 342 3 592
Finance costs paid (7 537) (9 627)
Dividends paid to shareholders (9 677) (8 241)
Dividends paid to non-controlling interest (838) (538)
Income tax paid (15 394) (12 214)
Net cash generated by operating activities 20 602 6 881
Cash flows from investing activities
Proceeds on disposal of business - 1 500
Acquisition of property, plant and equipment (2 523) (4 245)
Proceeds from repayment of loans to associates 3 000 1 186
Advances in investment and loans to associates (3 958) (7 592)
Dividends received from associates 785 741
Proceeds from repayment of other non-current assets - 1 712
Acquisition of other investments (234) (2 590)
Proceeds on disposal of other investments 490 10 292
Net cash (outflow)/inflow from investing activities (2 440) 1 004
Cash flows from financing activities
Proceeds on issue of shares - 2 772
Acquisition of treasury shares (1 268) -
Advances of other financial liabilities - 30 305
Repayments of other financial liabilities (22 175) (73 814)
Net cash outflow from financing activities (23 443) (40 737)
Net decrease in cash and cash equivalents (5 281) (32 852)
Exchange rate on foreign balances 519 *
Cash and cash equivalents at the beginning of the year 49 222 82 074
Total cash and cash equivalents at end of the year 44 460 49 222
Segmental reporting
for the year ended 28 February 2019
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, commodities trading, asset administration and advisory
services segments are geographically located in South Africa.
Reportable
segment
profit/(loss) Total Total
Revenue after tax assets liabilities
Reviewed Reviewed Reviewed Reviewed
28 February 28 February 28 February 28 February
Figures in R'000 2019 2019 2019 2019
Fund management 87 155 7 898 82 608 (19 912)
Asset administration 127 362 13 445 230 407 (86 967)
Advisory services 18 021 4 705 15 193 (10 252)
Investment banking
Institutional securities broking 42 001 (7 211) 104 945 (99 540)
Commodities trading 141 302 9 670 199 612 (65 971)
Private equity*
Other investments 9 488 61 745 166 179 (38 653)
Total 425 329 90 252 798 944 (321 295)
Re-presented
Reportable
segment
profit/(loss) Total Total
Revenue after tax assets liabilities
Audited Audited Audited Audited
28 February 28 February 28 February 28 February
Figures in R'000 2018 2018 2018 2018
Continuing operations
Fund management 64 683 4 284 66 651 (15 635)
Asset administration 124 781 6 714 234 151 (106 632)
Advisory services 4 895 (1 450) 3 321 (1 122)
Investment banking
Institutional securities broking 63 686 1 376 717 873 (706 319)
Commodities trading 84 612 6 113 17 035 (22 453)
Private equity*
Other investments 8 232 29 788 242 985 (30 540)
350 889 46 825 1 282 016 (882 701)
Discontinued operations
Private wealth and investments** 344 (1 269) 140 (118)
Total 351 233 45 556 1 282 156 (882 819)
* In the current year, the Commodities trading (previously mining) and Other investments have been refined to enable the chief decision makers to
adequately assess the performance of each segment based on the resources allocated to them. The change was also as a result of the increase in
commodities trading activities during the year. Comparative figures have been re-presented to reflect the impact of the change.
** In the prior year, the Private wealth and investments segment was presented as a discontinued operation as a result of the disposal of the client book.
Notes to the condensed consolidated financial statements
(all figures in R?000)
BASIS OF PREPARATION
The condensed consolidated financial statements are prepared in accordance with the requirements of the JSE Limited
Listings Requirements for provisional reports and the requirements of the Companies Act of South Africa. The Listings
Requirements require provisional reports to be prepared in accordance with the framework concepts and the measurement
and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting
Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting
Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The
accounting policies applied in the preparation of the condensed consolidated financial statements are in terms of IFRS
and are consistent with those applied in the previous consolidated annual financial statements, except for the adoption
of new standards effective 1 January 2018. The group has not early adopted any standard, interpretation or amendment
that has been issued but is not yet effective.
The reviewed condensed consolidated provisional financial statements have been presented on the historical cost basis,
except for other investments and certain other financial liabilities, which are fair valued. These condensed
consolidated financial statements are presented in South African Rand, rounded to the nearest thousand, which is the
group's presentation currency.
These reviewed condensed consolidated provisional financial statements incorporate the financial statements of the
company, its subsidiaries and 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.
Comparatives on the statement of comprehensive income have been presented to show the effect of the discontinued
operations.
NOTES
1. Revenue
Revenue includes trading revenue, fees earned from advisory services, brokerage, fund management fees, asset
administration fees, management fees from other investments and commodities trading as disclosed in the segmental
reporting.
2. Impairments
Reviewed Audited
28 February 28 February
Figures in R'000 2019 2018
Impairment loss on trade and other receivables (2 972) (369)
Impairment loss on loans to associates (9 001) (2 472)
(11 973) (2 841)
3. Reconciliation of headline earnings for the year
Reviewed Audited
28 February 28 February
Figures in R'000 2019 2018
Profit for the year attributable to equity holders of Vunani 88 553 41 061
Adjusted for:
Associates
Gross revaluation of investment property - (31)
Deferred taxation on revaluation - 9
Non-controlling interest - 5
Disposal of businesses
Profit on disposal - (1 500)
Taxation - 336
88 553 39 880
Headline earnings per share (cents) 54.7 25.2
Basic headline earnings per share from continuing operations 54.7 26.7
Basic headline loss per share from discontinued operations - (1.5)
Diluted headline earnings per share (cents) 53.5 25.2
Diluted headline earnings per share from continuing operations 53.5 26.7
Diluted headline loss per share from discontinued operations - (1.5)
4. Other investments, other non-current assets 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 measured at fair value through profit or loss. Financial liabilities are either
accounted for at amortised cost or classified at fair value through profit or loss. The group classifies other
non-current assets at fair value through profit or loss.
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 IFRS 9 Financial Instruments.
The group previously had an investment that was held as an associate, however, during the year the group lost its
significant influence over the investment which resulted in it being accounted for at fair value through profit or loss.
The balance of the increase in fair value adjustments relates to the increase in value of other non-current assets and
other investments.
For additional information on the fair values of other investments, other non-current assets and other financial
liabilities, please refer to note 8 of these financial results.
5. Inventory
In the current year, the group commenced a new commodity trading operations. At year-end inventory of this commodity
worth R29.2 million was on hand. The group carries its inventory at the lower of cost and net realisable value.
6. Authorised and issued stated capital
The authorised stated capital at 28 February 2019 was 500 million ordinary shares of no par value (2018: 500 million
ordinary shares of no par value). 161 155 915 shares were in issue at 28 February 2019 (2018: 164 896 942).
Reviewed Audited
28 February 28 February
Weighted average number of ordinary shares (000s) 2019 2018
Issued ordinary shares at the beginning of the year 164 897 161 296
Effect of share issue - 1 899
Effect of delisting shares* (2 737) -
Effect of own shares held (138) (5 219)
Weighted average number of shares in issue during the year 162 022 157 976
Number of shares in issue at the end of the year 161 156 164 897
Dilutive weighted average number of ordinary shares (000s)
Issued ordinary shares at the beginning of the year 164 897 161 296
Effect of share issue - 1 899
Effect of delisting shares* (2 737) -
Effect of own shares held (138) (5 219)
Effect of dilutive shares** 3 372 2 061
Diluted weighted average number of shares in issue during the year 165 394 160 037
Number of shares in issue at the end of the year 161 156 164 897
* The shares were delisted as part of a share swop agreement between the company and BSI Steel Limited ("BSI"), in which the investment in BSI Steel Limited was
disposed of for the value of the company shares held by BSI.
** The shares issued as part of the employee share incentive scheme could potentially dilute basic earnings in the future. The employee shares have a dilutive
effect. The impact of the potential dilutive shares is reflected in note 3 and the face of the statement of comprehensive income.
7. Net cash utilised by operating activities
Re-presented
Reviewed Audited
28 February 28 February
Figures in R'000 2019 2018
Profit before income tax expense from continuing operations 107 957 53 964
Loss before income tax expense from discontinued operations - (1 269)
Adjusted for:
Depreciation of property, plant and equipment 3 067 3 722
Profit on disposal of discontinued operations - (1 500)
Equity-accounted (earnings)/loss (net of income tax) (6 053) 10 823
Fair value adjustments (73 239) (43 714)
Impairment loss on loans to associates 9 001 2 472
Impairment loss on trade and other receivables 2 972 369
Amortisation of intangible assets 11 224 11 224
Share-based payments expense 7 844 5 981
Foreign currency translation loss 834 362
Lease straight-line adjustment 186 (432)
Interest received from investments and finance income (4 512) (3 729)
Investment revenue (10 954) (5 421)
Finance costs 8 801 11 055
Changes in working capital:
Increase/(decrease) in trading securities 299 (2 100)
Increase in inventory (29 255) -
Increase in trade and other receivables (41 221) (22 080)
Increase in trade and other payables 53 637 5 523
(Increase)/decrease in accounts receivable and payable from trading activities (1 836) 3 238
Cash generated by operating activities 38 752 28 488
8. 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 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.
Reviewed Audited
28 February 28 February
2019 2018
Fair values Carrying Carrying
Figures in R'000 amount Fair value amount Fair value
Financial assets measured at fair value
Other investments 94 483 94 483 51 295 51 295
Other non-current assets 70 881 70 881 50 444 50 444
Trading securities 72 72 435 435
Financial assets not measured at fair value
Loans to associates 10 118 8 464 27 387 21 949
Loans in other non-current assets 3 683 3 826 3 683 3 909
179 237 177 726 133 244 128 032
Financial liabilities measured at fair value
Other financial liabilities at fair value through profit or loss (5 663) (5 663) (5 084) (5 084)
Trading securities (22) (22) (86) (86)
Financial liabilities not measured at fair value
Other financial liabilities at amortised cost (72 656) (61 927) (93 645) (94 016)
(78 341) (67 612) (98 815) (99 186)
Total 100 896 110 114 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 and are therefore not included in the table above.
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).
Reviewed 28 February 2019
Figures in R'000 Level 1 Level 2 Level 3 Total
Financial assets designated at fair value through profit or loss 16 261 - 149 103 165 364
Financial assets measured at fair value 72 - - 72
Financial assets at amortised cost - - 12 290 12 290
Financial liabilities designated at fair value through profit or loss (22) - (5 663) (5 685)
Financial liabilities at amortised cost - - (61 927) (61 927)
16 311 - 93 803 110 114
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
Reviewed Audited
28 February 28 February
Figures in R'000 2019 2018
Level 3 comprises:
Balance at beginning of year 76 704 28 000
Total gains or losses in profit or loss 76 580 40 536
Purchases, transfers, sales, issues and settlements (9 844) 8 168
Balance at end of the year 143 440 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.
Reviewed Audited
28 February 28 February
Effect on statement of comprehensive income (profit/(loss)) and equity before taxation 2019 2018
Net asset value
10% increase 3 227 1 399
10% decrease (3 136) (1 308)
Free cash flow
10% increase 6 716 (2 182)
10% decrease (7 849) 167
Foreign exchange movement
10% increase 164 868
10% decrease (164) (868)
9. Adoption of new accounting standards
IFRS 9: Financial Instruments ("IFRS 9")
The group has adopted IFRS 9 with a date of application of 1 March 2018. IFRS 9 replaces IAS 39: Financial Instruments:
Recognition and Measurement (IAS 39). It makes major changes to the previous guidance on the classification and
measurement of financial assets and introduces an "expected credit loss" model for the impairment of financial assets.
While there have been no changes to the classification and measurement of the financial instruments in the group with
the application of IFRS 9, the naming conventions have changed.
Impairment of financial assets
IFRS 9's impairment requirements use more forward-looking information to recognise expected credit losses ("ECL") - the
ECL model. This replaces IAS 39's incurred loss model. Instruments within the scope of the new requirements included
loans and other debt type financial assets measured at amortised cost, and trade receivables measured under IFRS 15.
Recognition of credit losses is no longer dependent on the group first identifying a credit loss event. Instead, the
group considers a broader range of information when assessing credit risk and measuring expected credit losses,
including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability
of the future cash flows of the instrument.
Measurement of the ECL is determined by a probability weighted estimate of credit losses over the expected life of the
financial instrument.
The adoption of the ECL requirements of IFRS 9 have not resulted in material impairment allowances of the group's
financial assets.
Financial assets and liabilities
The group makes use of a simplified approach in accounting for trade and other receivables and records the loss
allowance as lifetime (ECLs). These are the expected shortfalls in contractual cash flows, considering the potential for
default at any point during the life of the financial instrument. The group uses its historical experience, external
indicators and forward-looking information to calculate the ECL using a provision matrix.
The group assesses impairment of trade receivables on a portfolio basis grouping those that possess shared credit risk
characteristics. These have then been grouped based on the days past due. The group has therefore concluded that the
expected loss rates calculated on the trade receivables are a reasonable approximation of the loss rates.
The group makes use of the general approach in accounting for the ECL on advances. The group assesses the ECLs on the
advances through the use of a three-stage approach. ECLs are determined for the next 12 months in stage 1, and over the
lifetime of the advance in stages 2 and 3.
As the accounting for financial liabilities remains largely the same under IFRS 9 compared to IAS 39, the group's
financial liabilities were not impacted by the adoption of IFRS 9 as these are accounted for at amortised cost (except
for certain liabilities which are fair valued).
IFRS 15: Revenue from Contracts from Customers ("IFRS 15")
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It
replaces IAS 18: Revenue. Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services.
Determining the timing of the transfer of control at a point in time requires judgements. IFRS 15 introduced a five-step
approach to revenue recognition.
The five-step model framework has been applied to the group's revenue streams which include trading revenue, fees earned
from advisory services, brokerage, fund management fees, asset administration fees, management fees from other
investments and commodities trading. Revenue is recognised when control is passed over time for all the revenue streams
except for commodities trading revenue which is recognised at a point in time.
Based on the analysis and nature of the revenue generated by the group, the impact of applying IFRS 15 results in
additional disclosures relating to the group's contracts with customers; the significant judgments, and changes in the
judgments, made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or
fulfil a contract with a customer.
10. Events after reporting date
There have been no material events between the period end and the date of the signing of the results.
11. Dividends
A dividend of 6.2 cents (4.96 cents net of dividend withholding tax) per share was paid to ordinary shareholders on 30
July 2018, (2018: 5.2 cents (4.16 cents net of dividend withholding tax) per share was paid to ordinary shareholders on
27 July 2017). Total cash of R9.7 million (2018: R8.2 million) (net of treasury shares held) was paid to ordinary
shareholders.
Dividend declared
Notice is hereby given that a gross ordinary dividend of 7.4 cents per share (2018: 6.2 cents per share) has been
declared out of income reserves on 25 April 2019 and are payable to ordinary shareholders in accordance with the
following timetable.
In terms of dividend tax effective since 1 April 2012, the following additional information is disclosed:
- The local Dividend Withholding Tax rate is 20%
- 161 155 915 shares are in issue
- The gross ordinary dividend is 7.40000 cents per share for shareholders exempt from paying Dividend Withholding Tax
- The net ordinary dividend is 5.92000 cents per share for ordinary shareholders who are not exempt from Dividend Withholding Tax
- Vunani Limited's tax reference number is 9841003032
Timetable 2019
Declaration and finalisation date announcement Thursday, 25 April
Last day to trade cum dividend Tuesday, 23 July
Shares commence trading ex-dividend Wednesday, 24 July
Record date Friday, 26 July
Dividend payment date Monday, 29 July
No dematerialisation or rematerialisation of shares will be allowed for the period from Wednesday, 24 July 2019 to
Friday, 26 July 2019, both dates inclusive.
Dividends are declared in the currency of the Republic of South Africa. The directors have confirmed that the company
will satisfy the liquidity and solvency requirements immediately after the payment of the dividend.
12. 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.
REVIEW OPINION
The condensed consolidated financial statements for the year ended 28 February 2019 have been reviewed by KPMG Inc., who
expressed an unmodified review opinion. The auditor's report does not necessarily report on all of the information
contained in this announcement/financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors engagement they should obtain a copy of the auditor's report together with
the accompanying financial information from the issuers registered office.
Overview and prospects
Vunani entered the financial year on the back of the synchronised global economic growth cycle that prevailed since late
2016. Global growth momentum however, faded over the course of 2018 as policy tightening hit home. That culminated in a
substantial increase in global financial volatility as some emerging markets suffered particularly adverse consequences.
The Rand exchange rate absorbed much of the shock impact on South Africa by weakening over the course of the financial
year by more than 19 percent against a resilient US Dollar and by 11 percent on a trade weighted basis, respectively.
Nevertheless, the exchange rate-related windfall to exporters was eroded somewhat by declining global commodities prices
over the second half of the financial year - including coal prices, which is of importance to Vunani. Domestic business
confidence remained at low levels throughout the year amidst weak consumer confidence, policy uncertainty and structural
constraints i.e. load shedding. That culminated in downward revisions of economic growth expectations as the year
progressed as vindicated from an eventual even weaker calendar year growth outcome of mere 0.8% compared to 1.4% in
2017.
Vunani's performance for the 12 months to 28 February 2019, has shown improvement when compared to the prior period to
28 February 2018.
Vunani generated total comprehensive income for the year of R92.4 million (2018: R44.4 million), while total
comprehensive income attributable to equity holders of the company amounted to R89.9 million (2018: R40.5 million).
The group's reportable segments are as follows:
- Fund management
- Asset administration
- Investment banking Advisory services
Institutional securities broking
- Private equity Other investments
Commodities trading
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 R87.2 million for the year ended 28 February 2019 (2018: R64.7 million), which is an increase from
prior year. The reportable segment profit amounted to R7.9 million for the year compared to R4.3 million at 28 February
2018.
VFM's performance improved during the year as result of increase in assets under management and higher performance fees
being earned. VFM's assets under management increased from R20.9 billion at 28 February 2018 to R27.6 billion at 28
February 2019. The increase in assets under management is key to improving the profitability of VFM.
PVAM's performance decreased in the current year when compared to prior year due to the tough economic and political
environment in Zimbabwe. Despite this the company remained profitable whilst increasing its assets management. PVAM's
assets under management increased to $28.2 million at 28 February 2019 from $24.2 million at 28 February 2018.
Alliance contributed R0.1 million in equity accounted earnings for the year compared to R1.4 million in the prior year.
Asset administration
The asset administration segment includes the group's investment in Fairheads Benefit Services Proprietary Limited
("Fairheads") which is held through Mandlalux Proprietary Limited ("Mandlalux"). Fairheads contributed revenue of R127.4
million to February 2019, compared to R124.8 million to February 2018. The segment reported a profit of R13.4 million
compared to R6.7 million in 2018. Fairheads' assets under administration amounted to R6.3 billion at 28 February 2019
(2018: R6.2 billion).
Advisory services
The segment generated revenue of R18.0 million compared to R4.9 million for the year ended 28 February 2018. The
increase in performance is due to significant mandates being completed in the year. The segment reported a profit of
R4.7 million (2018: loss of R1.5 million) during the year.
Institutional securities broking
This segment includes equity, derivative and capital market trading services to institutional clients. The segment
generated revenue of R42.0 million to February 2019 compared to R63.7 million in 2018. The decrease in revenue is due to
the tough economic environment which resulted in a decrease in trading volumes in the market. The segment reported a
loss for the year of R7.2 million (2018: profit of R1.4 million) as result the challenging economic conditions. The
segment was restructured during the year to take into account the operating environment it now operates in, so as to
return it to profitability.
Private equity
The private equity segment has been refined into other investments segment and commodities trading segment. The other
investments segment holds the group's listed and unlisted investments in the mining and property sectors and investments
in Africa. The commodities trading segment is focused primarily on coal processing and commodities trading activities.
Other investments
The other investments segment generated revenue of R9.5 million (2018: R8.2 million) during the year. The segment
reported a profit of R61.7 million for the year (2018: R29.8 million). The profit is attributable to positive fair value
adjustments on the groups' unlisted investments.
Commodities trading
The commodities trading segment includes the group's investment in Vunani Resources Proprietary Limited ("VR") and
certain equity accounted investments. The segment generated revenue of R141.3 million (2018: R84.6 million) and
contributed R9.7 million (2018: R6.1 million) in profit to the group. The performance is attributable to increased coal
processing activities within VR.
Financial performance
Revenue for the group increased by 21% to R425.3 million (2018: R350.9 million) for the year ended 28 February 2018. The
increase is due to the increased revenue from the commodities trading and advisory services segments.
Other income comprised mainly once-off income that was realised during the year and would consequently not be expected
to be repeated in subsequent financial periods. Other income for the current year has decreased by 10% from R2.5 million
to R2.3 million in February 2019.
Investment income is received in the form of dividends. Total investment income for the year amounted to R11.0 million
compared to R5.4 million for the year ended 28 February 2018. The improvement is as result of an increase in dividend
declarations from investee companies.
Positive fair value adjustments and impairments of R61.3 million (2018: R40.9 million) relate to a net increase in the
value of the groups' listed and unlisted investment portfolio that has been designated at fair value through profit or
loss.
Equity-accounted earnings for the year amounted to R6.1 million (2018: loss R10.8 million). Vunani's investment in
Workforce Holdings Limited ("Workforce") is structured such that Vunani's interest is a joint venture and accordingly,
the fluctuations in the fair value of Workforce are equity accounted.
Operating expenses increased by 6.5% from R275.1 to R293.0 million. Costs related to commodities trading activities have
been presented separately from operating expenses. The share-based payment expenses have increased as a result of the
issue of additional shares to staff, which have contributed to the increase in expenses. The devaluation of the Rand
during the year resulted in increases in information and technology costs, which are typically dollar denominated. The
group remains focused on cost containment and monitors spending on an ongoing basis.
Finance income increased to R4.3 million for the year compared to R3.6 million to 28 February 2018. Finance costs
decreased from R11.1 million for the year ended 28 February 2018 to R8.8 million for the current year, as result of a
reduction in the group's debt.
The increase in other investments and other non-current assets was mainly due to positive fair value adjustments on the
listed and unlisted investments.
The delisting of shares resulted in a decrease in stated capital of R10.1 million. The share-based payments reserve
decrease is due to certain shares vesting to staff during the year. An increase of R7.8 million (2018: R5.9 million) is
attributable to the current year IFRS 2 charge. The profit for the year attributed to non-controlling interest amounted
to R1.7 million.
Prospects
Vunani's executive believe that the group is positioned to take advantage of the continued recovery in business and
consumer confidence to further grow the business and enhance shareholder value. For the group to grow significantly, it
will target acquisitions that will complement the existing businesses. The group will continue its focus on improving
the performance of its operating businesses as well as improving synergies amongst them as these will form a solid
platform to ensure the long-term success of Vunani. Vunani is cautiously optimistic that the performance of the last
year can be maintained and that it can fuel growth in the immediate and long-term future.
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 provisional financial
statements.
Signed on behalf of the board of directors by E Dube and T Mika 25 April 2019.
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 Biermann 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, 25 April 2019, at 11:00 via a web/audio cast. The web/audio cast link is as follows:
http://www.corpcam.com/Vunani25042019.
These results are available on our website www.vunanilimited.co.za
Date: 25/04/2019 07:30:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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