REVIEWED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2019 ETHAN DUBE, - PowerPoint PPT Presentation

REVIEWED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2019 ETHAN DUBE, CEO

TABLE OF CONTENTS ❑ Highlights of the year 3 ❑ Group structure and segmental overview 7 ❑ Financial performance 20 ❑ Strategy & prospects 27 2 Mission : To be Africa’s foremost boutique financial services group.

HIGHLIGHTS OF THE YEAR

HIGHLIGHTS OF THE YEAR: STRATEGIES 1. Significant increase in assets under management. 2. Significant increase in assets under administration. 3. Marked increase in advisory services deal flow. 4. Commodities trading revenue almost doubled. 5. Entered insurance space via acquisition of MMI’s insurance businesses in eSwatini (previously Swaziland). 6. Group established a R100m Fintech Fund. 7. Net profit margin up to 24.6% from 17.24% 4 Mission : To be Africa’s foremost boutique financial services group.

HIGHLIGHTS OF THE YEAR: FINANCIAL RESULTS ➢ +21% Increase in revenue from continuing operations to R425.3 million … ➢ +98% Increase in net profit to R90.3 million ! ➢ +117% Increase in HEPS , resulting in a ➢ +111% increase in EPS , culminating in a ➢ +19.35% Growth in dividend /share to 7.4c (6.2c in 2018). 5 Mission : To be Africa’s foremost boutique financial services group.

HIGHLIGHTS OF THE YEAR: FINANCIAL RESULTS 2019 Revenue (R'000) 42001 0 87155 141302 127362 9488 18021 Fund management Asset administration Advisory services Other investments Commodities trading Institutional securities broking Private wealth and investments ➢ Commodities trading the most significant contributing segment to revenue at 33.2%… ➢ Diversified revenue streams by asset administration and fund management contributing 29.9% and 20.5%, respectively… 6 Mission : To be Africa’s foremost boutique financial services group.

GROUP STRUCTURE AND SEGMENTAL OVERVIEW

GROUP STRUCTURE Asset Fund Investment Private equity Property administration management banking 8 Mission : To be Africa’s foremost boutique financial services group.

GEOGRAPHICAL FOOTPRINT Mission : To be Africa’s foremost boutique financial services group. Ghana Lesotho Zambia Zimbabwe South Africa Democratic Republic of Congo 9 Malawi eSwatini

SEGMENTAL DEVELOPMENTS ➢ Asset administration and fund management two key business silo’s by generating revenue of R127million and R87 million, respectively…. ➢ Revenue from commodities trading increased significantly to R141 million. ➢ Private wealth business sold in 2018, hence no contribution in 2019. 10 Mission : To be Africa’s foremost boutique financial services group.

SEGMENTAL DEVELOPMENTS ➢ Significant increase in revenue from commodities trading … ➢ Asset administration a consistent revenue stream; and ➢ Healthy growth in revenue from fund management . ➢ Commodities trading the biggest contributor to revenue… ➢ Followed by asset administration and fund management . ➢ Significant decline in revenue contribution by securities broking … 11 Mission : To be Africa’s foremost boutique financial services group.

SEGMENTAL DEVELOPMENTS ➢ Fair value adjustments on listed and unlisted investments bolstered “ other investments ” revenue… ➢ Asset administration, commodities trading, fund management and advisory services also showed healthy growth in profit. ➢ Securities broking struggled… ➢ Segmental contributions to profit in-line with relative revenue trends… ➢ Advisory services returned to profit. ➢ Securities broking eroded profits, necessitating restructuring over the latter half of the financial year. 12 Mission : To be Africa’s foremost boutique financial services group.

SEGMENTAL DEVELOPMENTS FUND MANAGEMENT ➢ Institutional fund management focus. ➢ Investments included in this segment: • Vunani Fund Managers: R27.6b AUM at 28 Feb 2019 (Feb ‘18: R20.9b). • Purpose Vunani (Zimbabwe): R397m AUM at 28 Feb 2019 (Feb ‘18: R290.4m). • Alliance Capital (Malawi): R373.5m AUM at 28 Feb 2019 (Feb ‘18: R278.5m). ➢ Segment results • Revenue of R87.2m (Feb ‘18: R64.7m). • Segment profit of R7.9m (Feb ‘18 : R4.3m). ➢ The segment continues to secure additional AUM. 13 Mission : To be Africa’s foremost boutique financial services group.

SEGMENTAL DEVELOPMENTS ASSET ADMINISTRATION ➢ Fairheads made good progress in winning good quality mandates. ➢ Assets under administration of R6.3b (28 Feb 2018:R6.2b). ➢ Segment results • Revenue of R127.4 m (Feb ‘18: R124.8m). • Segment profit of R13.4m (Feb ‘18: R6.7m). 14 Mission : To be Africa’s foremost boutique financial services group.

SEGMENTAL DEVELOPMENTS INVESTMENT BANKING Institutional Advisory securities services broking Equities JSE Sponsor Vunani Securities M&A Bond Origination Fixed Interest Vunani Capital Markets 15 Mission : To be Africa’s foremost boutique financial services group.

SEGMENTAL DEVELOPMENTS INVESTMENT BANKING ➢ Institutional securities broking experienced difficult trading conditions due to low trading volumes and margin compression. • Revenue of R42m (Feb ‘18: R63.6m) • Segment loss of R7.2m (Feb ‘18: Profit R1.3m) ➢ Revenue from advisory services rebounded from the previous year as the focus on revenue growth through the expansion of product offering and the existing client base paid off. • Revenue of R18m (Feb ‘18: R4.9m) • Segment profit of R4.7m (Feb ‘18: Loss R1.4m) 16 Mission : To be Africa’s foremost boutique financial services group.

SEGMENTAL DEVELOPMENTS PRIVATE EQUITY Other Commodity investments broking Investments Commodity broking Listed and unlisted Coal Private equity Boron Mining investments 17 Mission : To be Africa’s foremost boutique financial services group.

SEGMENTAL DEVELOPMENTS PRIVATE EQUITY ➢ Focus on themes offering growth opportunities in the foreseeable future. ➢ Private equity initiatives explored with well established partners including Anglo American and South 32. ➢ Segment results: • Other investments • Segment profit R61.9m (Feb ‘18: R29.8m). • Commodities trading • Revenue of R141.3m (Feb ‘18: R84.6m). • Segment profit R9.7m (Feb ‘18: R6.1m). 18 Mission : To be Africa’s foremost boutique financial services group.

MINING Investment Location Shareholding Partner Economics • • • • 1. Black wattle Colliery Middelburg 15%- debt free Bisichi PLC Vunani earns a monthly • (“BWC”) 22.5%- vendor management fee • loan A fee for securing the Quatro allocation at R.B.C.T • Dividends • BWC is a junior coal miner with its own washing plant ( capacity of 1.5 million tons per annum) and leases a Transnet siding to transport coal. It has a highly experienced management team. With a coal reserve of about 8.5 million tons BWC is currently producing approximately 100 000 tons of ROM coal per month. 2. Butsanani Energy Investment - • • • 33.3% Anglo Coal (2/3) A joint venture set up with Anglo Company Coal to invest in junior coal projects • Strong deal pipeline • Butsanani was established some 2 years ago as a joint venture to support junior coal miners and take up investment stakes in Anglo Projects that do not fit its core focus on large scale mining projects • A number of investments have been considered. The first deal was a 60% investment in Rietvlei Mining Company, which was subsequently diluted to 51%. • • • • 3. Rietvlei Mining Company 20 km outside Effective 16.8% Emalangeni 50 million ton resource with a BFS, Middelburg ( 1/3 x 51 %) Resources (local mining right and water use licence community) • Mwelase Group (Pty) Ltd • Rietvlei was initially a project started by Anglo Coal. The mine has the potential to produce 2.5 million tons of ROM coal per annum at a CV of 21.5. Rietvlei began mining in March and delivered its first coal in April 2019. 19 Mission : To be Africa’s foremost boutique financial services group.

MINING Investment Location Shareholding Partner Economics • • • • 4. Coal processing Anglo Coal 75% Management (25%) Processing and trading of 30 000 tons of coal per month • In October 2016 Vunani Resources secured the right to retreat/process/mine a 2 million ton coal discard dump on an Anglo Coal Mining right. • Following a period of ramp up the current monthly tonnage sold is approximately 35 000 tons. Off-take agreements are in place with major coal producers/traders. Vunani Resources is using this platform to diversify its processing activities and sources of coal. 5. Project Fuelco • • • • Anglo Coal 25% Anglo Coal (30%) Processing and supply of discard • BBBEE (45%) coal to Project Khanyisa, a round 1 coal Power IPP • Project Khanyisa (major shareholder is ACWA Power) is developing a 306 MW coal power plant as part of the DMR’s IPP programme. Project Fuelco was established by Anglo Coal to supply coal from one of its discard dumps to Project Khanyisa on a 30-year off-take agreement. Project Fuelco has completed a BFS and financial closure is expected in Q2 2018. The capital cost of the processing facility at Project Fuelco will be funded by Project Khanyisa. Project Fuelco has a 21.5% IRR guarantee from Anglo Coal. 20 Mission : To be Africa’s foremost boutique financial services group.

SEGMENTAL DEVELOPMENTS PROPERTY ➢ Focus is on development as well as building property funds. 21 Mission : To be Africa’s foremost boutique financial services group.

FINANCIAL PERFORMANCE