Vunani Limited

Basis of preparation. Figures are from the FY2026 integrated report's five-year review [S1], supplemented by the Profile's Stock Exchange Handbook summary [S15] and prior-year filings [S2], [S4]. Vunani reports under IFRS, including IFRS 17 for insurance.

Several conventional metrics do not apply or were not disclosed in the material retrieved:

Gross profit: Not applicable; financial-services income statements do not report it.

Two operating-profit definitions: "Results from operating activities" (five-year review) differs from the "operating profit" headline figure (R120.7 m in FY2026; R80.0 m in FY2025). Both are shown. The handbook's "operating income" (FY2025: R79.966 m) matches the headline definition.

Income statement

Sources and notes:

• Five-year review lines [S1]; headline-definition operating profit, minority interest and attributable income for FY2022–FY2025 [S15]; FY2026 operating profit, attributable profit and EPS [S1], [S3]; FY2024 EPS of 9.0 cents per the June 2025 trading statement [S5].

• The handbook's attributable income for FY2022–FY2023 is shown as restated, while the FY2023 profit for the year of R5.4 m comes from [S1]. The large gap between FY2023 group profit (R5.4 m) and attributable income (R52.4 m) reflects restatements (likely IFRS 17 adoption) that are not reconciled in the material retrieved.

• FY2026 NCI is calculated as R36.4 m less R9.6 m.

• FY2026 EPS appears as 6.2 cents in the highlights page and 6.3 cents in the CFO report and SENS [S1], [S3].

• FY2024 HEPS is 8.0 cents in [S1] versus 7.4 cents in [S15].

• FY2024 DPS: the IAR shows a final dividend of 9.0 cents [S1], [S4]; the handbook shows 18.0 cents for the year [S15].

Margins and growth (calc.)

The handbook reports operating profit margins of 16.69% (FY2022), 22.72% (FY2023), 11.12% (FY2024) and 14.72% (FY2025). It calculates these on a narrower "turnover" base that excludes insurance revenue (FY2025 turnover: R543.1 m; FY2026: R648.3 m) [S15], [S16]. The revenue CAGR from FY2022 to FY2026 is 4.2% a year over four years (calc.).

Balance sheet

Sources and notes:

• Total assets, total liabilities, attributable equity and NAV [S1]. Total equity and NCI are calculated as assets minus liabilities, and NCI as total equity minus attributable equity; the FY2022–FY2025 NCI values match handbook figures [S15].

• Cash: FY2026 and FY2025 [S1]; FY2024 [S2]. The FY2025 IAR reported FY2025 cash of R163.3 m; the FY2026 comparative is R164.9 m.

• Goodwill, intangibles and insurance items [S1]; long-term liabilities, current assets and current liabilities [S15]. Net working capital is current assets minus current liabilities (calc.).

• At 31 August 2025, current assets exceeded current liabilities by R66.5 m [S8].

• The FY2026 IAR states only that "other financial liabilities" were flat year on year, with R10.0 m advanced and R12.6 m repaid in FY2026 [S1]. Net debt therefore cannot be computed from the material retrieved.

Cash flow

Sources and notes:

• [S1], [S2], [S8].

• FY2025 operating cash flow is −R19.2 m (also printed as −R19.1 m) in the FY2026 IAR, but −R9.4 m in the FY2025 IAR. This suggests a restatement or reclassification that is not explained.

• The R70.0 m proceeds on partial disposal of a subsidiary are the Fairheads sale proceeds, shown in the H1 FY2026 interim cash flow [S8], [S10].

• On a proxy basis of operating cash flow less systems investment, FY2026 free cash flow was about R27.4 m (calc.).

• No share buy-backs for capital-return purposes are disclosed. Treasury-share purchases relate to employee incentive obligations [S1].

Ratios

Sources and notes:

• Handbook rows [S15]; all other rows calculated from [S1] and [S15].

• The handbook's debt-to-equity ratio appears to be total liabilities divided by equity, so it is inflated by insurance liabilities. It is not a measure of bank leverage.

• For a financial-services group, the cash conversion cycle is in any case not a meaningful metric.

Commentary on trends, inflections and drivers

Revenue. Revenue was broadly flat from FY2022 to FY2025, in a range of about R654–693 million, before stepping up 16.7% to R808.8 million in FY2026. The FY2026 increase came from three sources:

• insurance premium growth of 20.5%;

• the Sentio merger, together with a 46.6% rise in the JSE All Share Index over the fiscal year, which lifted fund-management revenue by 30.1%; and

• a 39.1% rebound in broking revenue on higher market volumes [S1].

Asset administration was nearly flat (+1.0%) despite a decline in AUA, showing pricing resilience.

Profitability. Results from operating activities fell sharply over three years, from R107.4 m in FY2022 to R20.7 m in FY2025, and then partially recovered to R49.4 m in FY2026. The trough reflected four main pressures:

• the loss of fund-management profitability as AUM fell from R53.7 bn to R46.0 bn in FY2025 [S2];

• advisory losses as deal flow slowed;

• VIF impairments of R18.0 m in FY2025 and R36.8 m in FY2026 at Oracle; and

• net negative fair-value adjustments on insurance balances (−R34.0 m in FY2025 and −R32.7 m in FY2026) [S1].

In FY2026, operating expenses grew 14%, driven by inflation and professional fees (some likely deal-related), which absorbed part of the revenue gain [S1]. FY2026 other income of R24.8 m (FY2025: R6.9 m) included a bargain-purchase gain on the Sentio merger. That gain is non-recurring, so it flatters FY2026 IFRS earnings; it is normally excluded from headline earnings [S1].

Attributable earnings versus group earnings. The gap between group profit (R36.4 m) and attributable profit (R9.6 m) widened in FY2026 for two reasons. First, NCI now absorbs 30% of Fairheads, the group's most profitable unit, following the Old Mutual sale. Second, outside shareholders own 48% of Oracle, 40% of VFMB and 37% of VFM Sentio [S1], [S8], [S11].

On an annualised basis, the Fairheads sale transfers roughly R14 m of segment profit to NCI (calc.: 30% of R47.5 m). This structural leakage will persist and is the key trade-off of the R70 m disposal. HEPS of 10.2 cents exceeded EPS of 6.3 cents mainly because the VIF impairment is excluded from headline earnings, partly offset by the exclusion of the bargain-purchase gain.

Balance sheet. Total assets grew 61% between FY2022 and FY2026, largely because insurance-related investments (R898.3 m) and liabilities (R909.3 m) grew in step. These balances are largely matched and should not be read as group leverage [S1]. Attributable NAV per share has declined each year since FY2023, from 203.8 to 175.6 cents. The causes are dividends paid in excess of earnings (notably R56.4 m paid in FY2026 against R9.6 m attributable profit) and the FY2025 loss [S1].

Goodwill of R139.8 m and intangibles of R74.2 m together equal about 75% of attributable equity (calc.: R214.0 m against R286.7 m). This makes tangible NAV per share materially lower than reported NAV — roughly 43 cents per share before NCI adjustments (calc.; an indicative figure only, because the NCI share of intangibles is not split out).

Liquidity. Cash rose to R230.9 m in FY2026, helped by the R70 m Fairheads proceeds and positive operating cash flow, net of the R56.4 m dividend [S1], [S8]. The handbook's current ratio fell from 1.45x in FY2022 to 1.00x in FY2025, which points to tight group-level working capital before the disposal [S15].

Management guidance

There is no quantified guidance. Management expresses optimism that FY2027 will improve on FY2026, with a focus on [S1]:

• supporting the operating businesses to improve profitability;

• integrating Sentio and capturing cost synergies;

• using the Old Mutual partnership to grow Fairheads;

• regional expansion in Botswana, Lesotho, Eswatini and Namibia; and

• continued evaluation of acquisitions.

The CFO's report expects improved performance in the next financial year [S1].

Consensus

None available; there is no analyst coverage.

Bull case

1. Sentio operating leverage. South African AUM almost doubled to R64.3 bn, and the fund-management segment loss narrowed from R14.2 m to R3.8 m in a year that included only five months of Sentio. A full year of combined AUM plus cost optimisation could make the segment profitable in FY2027 [S1].

2. Sum-of-the-parts discount. The Old Mutual transaction values Vunani's 70% of Fairheads at about R163 m (calc.). That is roughly 53% of the current market capitalisation of about R308 m, before ascribing any value to Oracle (52%), VFM Sentio (63%), VFMB (60%), the broking and advisory businesses, Verso (50%) or R230.9 m of group cash [S10], [S1], [S16].

3. Earnings recovery momentum. HEPS swung from −2.8 cents to 10.2 cents. Broking revenue rose 39% and moved close to break-even, and insurance turned profitable despite a R36.8 m VIF impairment. Lower interest rates and a stronger JSE support further recovery [S1].

Bear case

1. Shareholder leakage. Minorities now take a large share of group profit (R26.8 m of R36.4 m in FY2026, calc.), and the Fairheads sale permanently transfers about 30% of the group's best earnings stream. Attributable ROE of about 3.3–5.7% (calc.) is below any reasonable cost of equity [S1].

2. Quality of earnings. FY2026 IFRS profit benefited from a non-recurring Sentio bargain-purchase gain within the R24.8 m of other income. Oracle's results depend on IFRS 17 fair-value swings and VIF impairments, and the Botswana fund business lost almost half its AUM [S1].

3. Liquidity and governance discount. About 70% of shares are held by board-associated entities; institutional ownership is effectively nil; there is no analyst coverage; the dividend fell from 35.0 to 10.0 cents; and NAV per share has declined for three consecutive years [S1], [S13], [S16].

Catalysts and monitorables (next 12 months)

• Interim results for the six months to 31 August 2026, expected around late October 2026: first full half of Sentio, broking volumes, and the Oracle claims ratio. The FY2026 claims ratio was 63.3%, against 70.8% in FY2025 (calc.: claims divided by insurance revenue) [S1].

• Fairheads AUA and member numbers (83 320 at FY2026 year-end, down from 95 254), and the first tangible results of the Old Mutual partnership [S1].

• VFMB AUM stabilisation in Botswana.

• Launch of the SADC ETF, the Lesotho asset-management operation and the Eswatini licence.

• Further consolidation deals, and any disposal or restructuring of loss-making advisory.

• The FY2027 dividend decision relative to HEPS.

• The SARB interest-rate path amid oil-driven inflation risk.

• Board renewal: King V adoption and chair succession.

Analyst verdict

Vunani Limited is a diversified, black-owned SADC financial-services micro-cap whose reported numbers understate the value of its best asset and overstate the quality of its consolidated earnings.

The positive case is concrete. The Old Mutual transaction set an arm's-length price for Fairheads, a niche administrator that earns a 22% margin and a 22% ROE. On that price, the group's retained 70% stake alone is worth about half of Vunani's market capitalisation. Group cash has risen to R230.9 million, and FY2026 marked a clear operational turn: revenue grew 16.7% to R808.8 million, HEPS returned to 10.2 cents, and insurance and broking both improved markedly. The Sentio merger gives the fund-management business real scale in South Africa for the first time, with R64.3 billion of AUM, which is the precondition for profitability in a fixed-cost industry.

The constraints are equally concrete. The group's capital-allocation history has produced a three-year decline in NAV per share, a rising share of profit going to minority shareholders (now about three-quarters of group profit), two loss-making units (advisory and, until recently, fund management), and an insurance subsidiary whose IFRS earnings are hostage to actuarial and fair-value movements. Dividends have been funded partly by asset sales rather than earnings, and the 10.0-cent FY2026 dividend almost fully distributes HEPS. Governance is founder-dominated, the free float is thin, there is no institutional sponsorship, and board renewal is overdue.

On balance, the shares — at about 1.1x book value, roughly 19x trailing HEPS and a dividend yield above 5% — reflect a market that discounts both the hidden asset value and the execution and governance risk. The investment case depends almost entirely on management showing, in the H1 FY2027 and FY2027 results, that Sentio synergies, the Old Mutual channel and broking operating leverage can lift attributable earnings, not only consolidated revenue. Until attributable ROE moves sustainably toward double digits and NAV per share stops eroding, Vunani is best regarded as a special-situation, sum-of-the-parts holding with credible but unproven recovery potential, rather than a compounding financial-services franchise. Investors should also price in the limited liquidity of the stock when sizing any position.