Vunani shareholders rewarded for patience

Published Mar 26, 2014

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Johannesburg - After a roller-coaster ride, stomaching losses for the first four years after its AltX listing, Vunani’s shareholders are set to be rewarded with recurring dividends.

On Monday when Vunani published its results for the 12 months to December last year, the company declared its first annual dividend of 5c a share and topped it with a special dividend of 25c a share to distribute the proceeds of the disposal of its property asset management business last year.

Now the company wants to grow its dividend.

“We have said in the past that our desire was to get to a point where we can start paying a dividend,” Vunani’s managing director, Butana Khoza, said yesterday.

“We know it’s been quite a rough ride for our shareholders. We’d like this to be a regular feature going forward.”

Soon after Vunani listed in November 2007, the global financial crisis began in earnest in late 2008. The impact of the market downturn was severe, particularly on small cap stocks in which Vunani was largely invested.

The firm had to write off significant amounts of its investments while heavy debt related to those investments remained on its balance sheet.

After negotiating with creditors to prevent liquidation, Vunani began restructuring its business, disposing of some of its units and investment portfolios, until in 2012 the company paid off its legacy debt and returned to profit.

“It definitely feels a lot lighter to steer this particular ship. Things are looking up,” Khoza said.

The company reported a profit of R 11.7 million from operating activities after finance costs in the year under review. Khoza said that the platform was really stable now for Vunani to grow.

“You can tell that from reading the size of liabilities in the business. In 2008, the company made a loss of R770m, wrote off R865m in investments, had interest costs of R220m and debt of R1.5bn.

“Today the company has made a profit of R9m attributable to equity holders. Finance costs were R5m, fair value adjustments were R18.5m. Of the R45m interest-paying debt, less than R40m was interest.”

All of Vunani’s operating businesses, except the Zimbabwean advisory business, are now making a contribution to the bottom line. Khoza said the important thing for the business was that Vunani had retained its core leadership.

The Zimbabwean business is one that Khoza viewed as a mistake that could have been avoided. “Perhaps we went in there a bit too early,” he said.

He said Zimbabwe’s economic situation after last year’s election was unexpected and had hurt the company. The advisory business in that country recorded a loss R4.7m for the year to December.

“But there are still tremendous opportunities in that country, which is resource-rich. The question is obviously how long the current situation is going to endure. We do have investment positions in the country, not positions where we will invest a significant amount of capital. We will adopt a wait-and-see attitude.”

Although it is not planning to open an office in any other African market, it is looking at well-capitalised businesses in west and east Africa. It has concluded a co-operation deal with an investment bank in Nigeria.

Vunani leapt 15.79 percent to R2.20 on AltX yesterday. - Business Report

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