Vunani CEO pleased with group’s lack of gearing

By Gillian Jones

Financial services group Vunani (VUN) made an R8.4m pretax loss in the half-year to June if the sale of its property asset management business is stripped from the total. But‚ if the property business‚ Vunani Property Asset Management‚ is included‚ Vunani made a pretax profit of R97.3m.

Vunani sold its stake in the property business in February for R117m‚ which it used to pay down debt. CEO Ethan Dube said on Tuesday the “most pleasing” part of the results was Vunani’s lack of gearing.

Last year‚ Vunani owed the banks about R150m‚ while it now had cash of R71m for the reporting period‚ he said. The group listed on AltX in November 2007‚ shortly before the global financial crisis. As Vunani had a big portfolio of listed shares funded through debt‚ it found itself in difficulty with a large debt burden.

Mr Dube said although Vunani had sold its property asset management business‚ it intended to build another similar business. “We sold a business we had built from scratch… we were lucky to get out at a good price‚ and we think we can build something again from scratch‚” he said.

This leaves Vunani with an asset management business‚ which made a profit of R1.6m for the six months‚ and an advisory business‚ which made a loss of R1.4m. Its institutional securities broking business made a profit of R1.4m‚ while its private wealth and investments unit broke even.

Vunani also has an investment holding division‚ which includes its listed and unlisted investments‚ which made a loss of R5.6m as a result of negative fair value adjustments. Mr Dube said this division invested directly into businesses Vunani liked‚ with the proceeds used to strengthen its balance sheet.

Vunani was looking for two types of investments: those that would complement its operations and those offering growth opportunities. “We want investments in companies where we have a level of influence or control and understand the sector very well‚” Mr Dube said.

Vunani increased its stake in Purpose Vunani Asset Management‚ a Zimbabwean asset management business‚ from 45% to 55%‚ in January as part of its plans to generate 25% of earnings outside SA within the next three years‚ he said.

“ We are helping South African corporates expand into the continent through developing the relationships we have in the rest of Africa‚” he said. Vunani has relationships in Tanzania‚ Mozambique‚ Ghana and Nigeria‚ where it works with the investment bank BGL Group.

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