Vunani shares leap despite set of weak results
DURBAN - Financial services group Vunani's share price leapt more than 16percent on the JSE yesterday despite the group reporting a weak set of financial results for the six months to end August, with earnings down by 31percent.
Vunani reported a 31percent decline in both basic headline earnings per share and basic earnings per share to 10.8cents a share, down from 15.7c compared to last year.
The group attributed the decline to community unrest at their main coal operating site, resulting in an 80percent decrease in production.
Chief executive Ethan Dube said that it had been a challenging first half, with the economic environment remaining tough and with trading interruptions in their coal business.
“The coal production disruptions negatively impacted our overall results and we are relieved to have resolved these issues.
"Despite these short-term challenges, our strategy for growth remains, as we continue to explore diversification and opportunities in lucrative markets.
"We remain committed to our strategic objectives as evidenced in the recently announced acquisition of Stanlib Botswana and MMI Swaziland,” Dube said.
Mining operations were disrupted early in the year at Schoongezicht, when protesters went on a rampage by burning tyres and blocking the roads, causing a loss of production in the mine. The group said operations only resumed at the end of the half-year period.
Its revenue from continuing operations declined by 27percent to R170.5million, while profits declined by 35percent to R18.9m.
However, Vunani’s share price was up 16.11percent on the JSE to R2.09 a share, up from Wednesday’s closing price of R1.80, despite the weak earnings, before closing at R2.09.
The group declared an ordinary dividend of 7.4c a share, up from last year's 6.2c.
Looking ahead, the executives believe that recent acquisitions are a key strategic indication of the group's clear progress as a diversified financial services player and it underpins the long-term growth story.
At the beginning of last month, Vunani acquired Stanlib Investment Management Services (Stanlib Botswana) by purchasing all the shares previously held by Liberty Holdings Botswana.
Dube said the acquisition was important as the group continues to drive for expansion and diversification within the financial service market.