Vunani profit cut lower by higher interest costs and lower investment revenues

Published Jun 24, 2024


Vunani Fund Managers reported a substantial decline in headline earnings to 7.4 cents a share for the year to February 29, compared with 30.1 cents the year before and it paid out a lower dividend.

Revenue and insurance revenue for the asset and wealth management company increased 2% to R665.2 million. However, operating profit fell 56% to R55.2m. The share price closed unchanged at R1.87 on Friday.

Earnings a share fell sharply to 9 cents from 33 cents.Total comprehensive income came to R24.2m, versus R57.9m during the year before, while attributable profit came in much lower at R14.4m compared to R52.4m in 2023.

A final dividend of 9 cents was declared for the year, slightly below 11 cents the year before.

The group, which has fund management, asset administration, insurance and investment banking as its operating segments, was positive about better prospects for the new financial year.

“With the end of the interest rate hiking cycle in sight, the group believes it is in a position to benefit from the improved growth prospects of the local economy driven by improved performance and profitability in the operating businesses,” Vunani’s directors said in the results.

Synergies between operating businesses would continue to be exploited and acquisitions would be sought that were in line with creating a diversified financial services business, they said.

In the past year, the asset administration segment contributed revenue of R205.5m (R191.7m) and a profit of R34.6m to the group’s results, compared to R33.7m in the prior year.

The insurance segment contributed revenue of R236.5m (R205.4m) and a loss of R7.6m compared to a profit of R10.3m in the prior year.

The advisory services segment revenue fell from R43.1m in 2023 to R29.3m, while profit for the year came to R0.1m (R1.3m).

The institutional securities broking segment saw revenue increase from R25.4m in the prior year to R28.4m, but it reported a wider R12.4m loss compared to a loss of R9.1m in the prior year, due to a decline in performance.

Total investment revenue amounted to R0.7m compared to R10.9m for the prior year due to lower dividends from the insurance-related investments.

Finance income increased from R8.4m to R13.2m as a result of an increase in returns from cash investment positions compared to the prior year.

Finance costs increased sharply from R8.7m in 2023 to R15.5m as a result of an increase in the interest rates and the group’s external financial liabilities.