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Johannesburg - AltX listed financial services firm Vunani is banking on its cash-generative financial services operations to pull it through in 2009.
The group on Tuesday reported its results for the year to end-December 2008, which showed the net asset value of the business fell 88% to 8.4c per share from 67.7c the previous year.
The company's two primary business units delivered contrasting performances. Its financial services operation - which handles securities trading, fund management and investment banking - made an operating profit of R88m, in line with the previous year's performance.
The investment services business, which houses Vunani's stakes in various companies, delivered a loss of R846m as investments were written down in line with falling markets.
Cash for the group as a whole dropped from R87m to R37m and the financial side of the business generated only R33m.
In an interview with Fin24.com, CEO Ethan Dube said: "We need to prevent cash generated from operations going into the investments business."
In its results announcement, the company said the decline in the share prices of Vunani's empowerment investments has caused a breach in the respective debt covenant ratios with certain financial institutions. "The company was advised that these breaches constituted events of default in terms of the finance agreements entered into with these institutions."
Vunani added that to date, none of these institutions have initiated any formal legal processes in order to recover the amounts owing.
The listed businesses in which Vunani has stakes include Peregrine, Wesizwe Coal, JSE Ltd, BSI, Alert Steel, Buildworks, Esor, Workforce, PSV, Interwaste, Redefine Income Fund, Brikor, Kaydav, TWP and Iliad.
Asked about the net asset value figure, Dube said: "It was unfortunate in a sense that we held a variety of small- to medium-cap companies; when the market started falling, unit trusts started dumping everything."
He gave TWP as an example of an investment which fell from a high of around 2 600c to a low of 241c but also said that the group had been tied into empowerment transactions which weighed on it.
Dube also said the group would be focusing on its financial services offering in 2009.
He said: "It was always my idea to build a diversified financial services business," adding that he wanted to start retaining cash in the financial services business.
Asked whether or not the financial services business could once again hold its own in a tougher operating environment, Dube said: "I would be misleading you if I said that I thought we would escape the downturn," adding that he "wasn't expecting a big improvement in 2009".
Vunani was untraded at 30c on Tuesday.
- Fin24.com
