Vunani reports drop in profit as economic headwinds knock interims

Looking ahead, Vunani’s leadership highlighted that a more favourable interest rate environment could support growth across its operations. File photo

Looking ahead, Vunani’s leadership highlighted that a more favourable interest rate environment could support growth across its operations. File photo

Published Oct 30, 2024

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Vunani, which has fund management, asset administration, insurance and investment banking as its operating segments reported a drop in profits for the period ending August 31, 2024 due to a challenging macroeconomic environment.

Vunani said during the reporting period it faced a combination of subdued economic growth, escalating geopolitical tension, and high interest rates as significant headwinds. These factors, alongside policy uncertainties in South Africa ahead of national elections, contributed to an environment that dampened business confidence.

Vunani's net profit after tax decreased to R22.8 million from R36.1m in the prior period, while total comprehensive income dropped to R22.5m from R35.9m the prior year.

Revenue and insurance premium revenue from operations also dipped by 3% to R327.8m, compared to R336.7m, largely impacted by reduced performance in its fund management and advisory services. Basic and diluted headline earnings per share fell to 6.7 cents from 18.2 cents.

The fund management segment, which includes the group’s investments in Vunani Fund Managers and Vunani Fund Managers Botswana, reported revenue of R69.2m, a decrease of 20% from the prior period. The reportable segment loss amounted to R5m for the period compared to a profit of R9.7m the prior period. Assets under management dropped from R42.8 billion to R38.3bn.

The asset administration segment, which includes the group’s investment in Fairheads Beneficiary Services, Fairheads Financial Services and Verso Group, contributed revenue of R104.9m from R101.9m and a profit of R21m from R20m the prior year.

The insurance segment, which includes the group’s investment in Oracle Insurance and Oracle Life, contributed revenue of R123.4m from R123m ) and a profit of R11.4m in the period compared to a profit of R8.1m in the prior period.

Advisory Services revenue decreased from R14.9m to R11.2m, while it reported a loss for the period of R4.1m (2023: profit of R1.7m).

Looking ahead, Vunani’s leadership highlighted that a more favourable interest rate environment could support growth across its operations.

It said, “Despite the tough start to the first half of the year, the group believes that it is in a position to benefit from the improved growth prospects of the local economy driven by lower interest rates, and expected economic growth. This should result in improved performance and profitability in the operating businesses.

“The group will continue its focus on improving the synergies of its operating businesses as a key growth strategy. Vunani will continue to look at acquisitions that are in line with creating a diversified financial services business,” Vunani said.

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