REVIEWED RESULTS · 2019-04-25 · Identify significant acquisition opportunities for the group in financial services. Increase share incentive scheme to motivate and retain high-calibre

REVIEWED RESULTSFOR THE YEAR ENDED 28 FEBRUARY 2019

ETHAN DUBE, CEO

TABLE OF CONTENTS

❑Highlights of the year 3

❑Group structure and segmental overview 7

❑Financial performance 20

❑Strategy & prospects 27

2Mission: To be Africa’s foremost boutique financial services group.

HIGHLIGHTS OF THE YEAR

HIGHLIGHTS OF THE YEAR: STRATEGIES

1. Significant increase in assets under management.

2. Significant increase in assets under administration.

3. Marked increase in advisory services deal flow.

4. Commodities trading revenue almost doubled.

5. Entered insurance space via acquisition of MMI’s insurance businesses in eSwatini (previously Swaziland).

6. Group established a R100m Fintech Fund.

7. Net profit margin up to 24.6% from 17.24%


HIGHLIGHTS OF THE YEAR: FINANCIAL RESULTS

5

➢ +21% Increase in revenuefrom continuing operations to R425.3 million…

➢ +98% Increase in net profit to R90.3 million!

➢ +117% Increase in HEPS, resulting in a

➢ +111% increase in EPS, culminating in a

➢ +19.35% Growth in dividend /share to 7.4c (6.2c in 2018).

Mission: To be Africa’s foremost boutique financial services group.

HIGHLIGHTS OF THE YEAR: FINANCIAL RESULTS

6

87155

127362

180219488

141302

42001 0

2019 Revenue (R'000)

Fund management Asset administration

Advisory services Other investments

Commodities trading Institutional securities broking

Private wealth and investments

➢ Commodities trading the most significant contributing segment to revenue at 33.2%…

➢ Diversified revenue streams by asset administration and fund management contributing 29.9% and 20.5%, respectively…


GROUP STRUCTURE AND SEGMENTAL OVERVIEW

GROUP STRUCTURE


Asset administration

Fund management

Investment banking

Private equity Property

GEOGRAPHICAL FOOTPRINT

9

Mission:

To be Africa’s foremost boutique

financial services group.

Ghana Lesotho

Zambia Zimbabwe South Africa

Democratic Republic of Congo eSwatiniMalawi

SEGMENTAL DEVELOPMENTS

10

➢ Asset administration and fund management two key business silo’s by generating revenue of R127million and R87 million, respectively….

➢ Revenue from commodities trading increased significantly to R141 million.

➢ Private wealth business sold in 2018, hence no contribution in 2019.



11

➢ Significant increase in revenue from commodities trading…

➢ Asset administration a consistent revenue stream; and

➢ Healthy growth in revenue from fund management.

➢ Commodities trading the biggest contributor to revenue…

➢ Followed by asset administration and fund management.

➢ Significant decline in revenue contribution by securities broking…



12

➢ Fair value adjustments on listed and unlisted investments bolstered “other investments” revenue…

➢ Asset administration, commodities trading, fund management and advisory services also showed healthy growth in profit.

➢ Securities broking struggled…

➢ Segmental contributions to profit in-line with relative revenue trends…

➢ Advisory services returned to profit.

➢ Securities broking eroded profits, necessitating restructuring over the latter half of the financial year.




FUND MANAGEMENT

➢Institutional fund management focus.

➢Investments included in this segment:• Vunani Fund Managers: R27.6b AUM at 28 Feb 2019 (Feb ‘18: R20.9b).• Purpose Vunani (Zimbabwe): R397m AUM at 28 Feb 2019 (Feb ‘18:

R290.4m).• Alliance Capital (Malawi): R373.5m AUM at 28 Feb 2019 (Feb ‘18:

R278.5m).

➢Segment results• Revenue of R87.2m (Feb ‘18: R64.7m).• Segment profit of R7.9m (Feb ‘18 : R4.3m).

➢ The segment continues to secure additional AUM.



ASSET ADMINISTRATION

➢ Fairheads made good progress in winning good quality mandates.

➢ Assets under administration of R6.3b (28 Feb 2018:R6.2b).

➢ Segment results• Revenue of R127.4 m (Feb ‘18: R124.8m).

• Segment profit of R13.4m (Feb ‘18: R6.7m).



INVESTMENT BANKING

Equities

Vunani Securities

Fixed Interest

Vunani Capital Markets

Institutional securities broking

JSE Sponsor

M&A

Bond Origination

Advisory services



INVESTMENT BANKING

➢ Institutional securities broking experienced difficult tradingconditions due to low trading volumes and margincompression.

• Revenue of R42m (Feb ‘18: R63.6m)• Segment loss of R7.2m (Feb ‘18: Profit R1.3m)

➢ Revenue from advisory services rebounded from theprevious year as the focus on revenue growth through theexpansion of product offering and the existing client basepaid off.• Revenue of R18m (Feb ‘18: R4.9m)• Segment profit of R4.7m (Feb ‘18: Loss R1.4m)



PRIVATE EQUITY

Investments

Listed and unlisted

Private equity

Mining investments

Other investments

Commodity broking

Coal

Boron

Commodity broking



PRIVATE EQUITY

➢ Focus on themes offering growth opportunities in the foreseeable future.

➢ Private equity initiatives explored with well established partners including Anglo American and South 32.

➢ Segment results:• Other investments

• Segment profit R61.9m (Feb ‘18: R29.8m).• Commodities trading

• Revenue of R141.3m (Feb ‘18: R84.6m).• Segment profit R9.7m (Feb ‘18: R6.1m).

MINING


Investment Location Shareholding Partner Economics

1. Black wattle Colliery

(“BWC”)

• Middelburg • 15%- debt free

• 22.5%- vendor

loan

• Bisichi PLC • Vunani earns a monthly

management fee

• A fee for securing the Quatro

allocation at R.B.C.T

• Dividends

• BWC is a junior coal miner with its own washing plant ( capacity of 1.5 million tons per annum) and leases a Transnet siding to transport coal. It has a highly

experienced management team. With a coal reserve of about 8.5 million tons BWC is currently producing approximately 100 000 tons of ROM coal per

month.

2. Butsanani Energy Investment Company

- • 33.3% • Anglo Coal (2/3) • A joint venture set up with Anglo

Coal to invest in junior coal projects

• Strong deal pipeline

• Butsanani was established some 2 years ago as a joint venture to support junior coal miners and take up investment stakes in Anglo Projects that do not fit

its core focus on large scale mining projects

• A number of investments have been considered. The first deal was a 60% investment in Rietvlei Mining Company, which was subsequently diluted to 51%.

3. Rietvlei Mining Company • 20 km outside

Middelburg

• Effective 16.8%

( 1/3 x 51 %)

• Emalangeni

Resources (local

community)

• Mwelase Group

(Pty) Ltd

• 50 million ton resource with a BFS,

mining right and water use licence

• Rietvlei was initially a project started by Anglo Coal. The mine has the potential to produce 2.5 million tons of ROM coal per annum at a CV of 21.5. Rietvlei

began mining in March and delivered its first coal in April 2019.

MINING


Investment Location Shareholding Partner Economics

4. Coal processing • Anglo Coal • 75% • Management (25%) • Processing and trading of 30 000

tons of coal per month

• In October 2016 Vunani Resources secured the right to retreat/process/mine a 2 million ton coal discard dump on an Anglo Coal Mining right.

• Following a period of ramp up the current monthly tonnage sold is approximately 35 000 tons. Off-take agreements are in place with major coal

producers/traders. Vunani Resources is using this platform to diversify its processing activities and sources of coal.

5. Project Fuelco • Anglo Coal • 25% • Anglo Coal (30%)

• BBBEE (45%)

• Processing and supply of discard

coal to Project Khanyisa, a round 1

coal Power IPP

• Project Khanyisa (major shareholder is ACWA Power) is developing a 306 MW coal power plant as part of the DMR’s IPP programme. Project Fuelco was

established by Anglo Coal to supply coal from one of its discard dumps to Project Khanyisa on a 30-year off-take agreement. Project Fuelco has completed

a BFS and financial closure is expected in Q2 2018. The capital cost of the processing facility at Project Fuelco will be funded by Project Khanyisa. Project

Fuelco has a 21.5% IRR guarantee from Anglo Coal.



PROPERTY

➢ Focus is on development as well as building property funds.

FINANCIAL PERFORMANCE

REVENUE


PROFIT AFTER TAX


KEY RATIOS


• 84% improvement in ROE to 18.9%.

• 42.6% improvement in net profit margin to 24.6% (from 17.2%).

• 66.6% improvement in EBITDA to R131.1million.

• 20.1% improvement in NAV/share to 291c.

• 50% improvement in net tangible asset value/share to 157.4c.

• Current ratio improved to 1.18 from 1.03.

STATEMENT OF COMPREHENSIVE INCOME


➢ Other income• Includes non-operational revenue earned by the group.

➢ Investment income• JSE: R0.6m.

• Blackwattle: R9.3m.

• Gidani (once off dividend): R1.1m.

➢ Fair value adjustments and impairments• Favourable fair value adjustments of R73.2m (Feb ‘18: R43.7m).

• Impairment of R9m (Feb ‘18: R2.5m).

STATEMENT OF COMPREHENSIVE INCOME


➢ Equity accounted earnings➢ Increased to R6.1m from negative R10.8m at Feb’18

• Includes Vunani’s of post-tax earnings for Alliance, Isilo Investments, BetbioZambia, Phakamani and our investment in Workforce

➢ Commodities trading related costs• Up by 91.6% due to increased sales volume

➢ Operating expenses • Increased by 6.5% compared to Feb ’18:

• Staff costs – Up by 8% (66% of total expenses). Additional staff hired & share based payment cost and bonus increases.

• Other costs include communication & information costs, professional fees and operating expenses

STATEMENT OF FINANCIAL POSITION


➢ Intangible assets• Intangible assets arose on the consolidation of Fairheads.

• Decreased by R11.2m as a result of the amortisation of the asset.

➢ Equity• 3.7 m VL shares cancelled as a result of BSI share swop. VL Shares

in issue 161.2m Feb ‘19 (164.9m on 1 Mar. ‘18).

• Cash dividend payment of R9.7m.

➢ Other financial liabilities• Decreased by R20.4m as result of scheduled repayment of

financial liabilities by the group.

STRATEGY AND PROSPECTS

STRATEGY & PROSPECTS


➢ Improve existing businesses and maximise on synergies within the group to improve profitability.

➢ Broaden the product offering on the existing platform.

➢ Identify significant acquisition opportunities for the group in financial services.

➢ Increase share incentive scheme to motivate and retain high-calibre management and staff.

➢ Unlock value in private equity deals.

➢ Continue to expand into countries around us.

➢ Year ahead looks good largely due to expected recovery in both business and consumer confidence.

THANK YOU

CONTACT US

JOHANNESBURG

Vunani CapitalVunani House, Vunani Office Park151 Katherine Street, SandownSandton 2196Office: +27 (0) 11 263 9500Email: [email protected]

CAPE TOWN

Vunani CapitalNo. 9 Long Street– 3rd FloorCnr Long & Riebeek StreetsCape Town, South Africa 8001Telephone: +27 (0) 21 481 6200Email: [email protected]

Vunani Fund Managers6th Floor, Letterstedt HouseNewlands on MainNewlands, 7700Telephone: (021) 670-4900Email: [email protected]

HARARE, ZIMBABWE

Purpose Vunani Asset Management45 Lawson Avenue Milton Park Harare, Zimbabwe Telephone:(+263) 04 791 094 / (+263) 04 796 646E-mail: [email protected]

CONTACT US

JOHANNESBURG


CAPE TOWN



HARARE, ZIMBABWE


CONTACT US

JOHANNESBURG


CAPE TOWN



HARARE, ZIMBABWE


mailto:[email protected]












Documents

REVIEWED RESULTS · 2019-04-25 · Identify significant acquisition opportunities for the group in financial services. Increase share incentive scheme to motivate and retain high-calibre