| Wed 1 Feb 2012, 8:00 | | MVG - Mvelaphanda Group Limited - Unaudited results of Mvela Group and its |
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MVG
MVG
MVG - Mvelaphanda Group Limited - Unaudited results of Mvela Group and its
subsidiaries for the six-month period ended 31 December 2011.
Mvelaphanda Group Limited
(Incorporated in the Republic of South Africa)
Registration number 1995/004153/06
Ordinary share code: MVG Ordinary share ISIN: ZAE 000060737
("Mvela Group", "the Company" or "the Group")
Unaudited results of Mvela Group and its subsidiaries for the six-month period
ended 31 December 2011.
Key features
- Absa and Life Healthcare have performed strongly over the period
- R129 million cash realised from disposal of investments
- Blackstar acquires 28% of Mvela Group`s equity
The following are the unaudited results of Mvela Group and its subsidiaries
for the six-month period ended 31 December 2011 with comparative figures
Summarised Group statements of financial position
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2011 2010 2011
Assets
Non-current assets 644 566 2 435 406 2 298 006
Property, plant and equipment 1 099 1 367 1 252
Investment in associate 642 702 681 326 635 385
Strategic investments - 1 752 713 1 661 369
Deferred taxation 765 - -
Current assets 2 178 711 779 090 468 140
Other investments 1 979 503 502 996 355 069
Other current assets 5 966 24 039 24 786
Cash and cash equivalents 193 242 252 055 88 285
Total assets 2 823 277 3 214 496 2 766 146
Equity and liabilities
Capital and reserves 2 451 935 2 211 870 2 357 323
Total attributable to ordinary 2 245 807 2 031 027 2 160 241
equity holders
Minority shareholders 206 128 180 843 197 082
Non-current liabilities 329 569 966 713 382 524
Interest-bearing liabilities 284 923 693 600 333 078
Equity collar liability 7 266 - -
Deferred taxation 37 380 273 113 49 446
Current liabilities 41 773 35 913 26 299
Interest-bearing liabilities 35 000 948 -
Non-interest-bearing - 2 577 -
liabilities
Bank overdraft - - 24 366
Other current liabilities 6 773 32 388 1 933
Total equity and liabilities 2 823 277 3 214 496 2 776 146
Net number of ordinary shares 529 708 565 474 529 139
in issue (000)
Net asset value per ordinary 423,9 359,2 409
share (cents)
Net tangible asset value per 423,9 359,2 409
ordinary share (cents)
Summarised Group statements of comprehensive income
Unaudited Unaudited Audited
31 December % 31 December 30 June
R`000 2011 change 2010 2011
Continuing operations
Operating income - - 6 358
Operating expense (9 390) (24 957) (31 954)
Loss from operations (9 390) (24 957) (25 596)
pre-exceptional items
Exceptional items (3 142) (8 896) (14 241)
Loss from operations (12 532) 63 (33 853) (39 837)
Net interest expense (7 691) (15 735) (24 464)
Interest income 4 788 5 893 15 482
Interest expense (12 479) (21 628) (39 946)
Share of profit/(loss) 7 317 15 495 (7 942)
from associates
Dividend income 13 631 52 687 72 256
Net fair value 93 080 145 (207 236) (229 505)
adjustments and
profit/(loss) from
investments
Cost of BEE transaction - (7 751) (15 501)
Profit/(loss) before 93 805 148 (196 393) (244 993)
taxation
Taxation charge 3 657 (46 133) 140 250
Normal and capital 3 657 (42 728) 145 921
gains (current and
deferred) taxation
Secondary tax on - (3 405) (5 671)
companies
Profit/(loss) after 97 462 (242 526) (104 743)
taxation from
continuing operations
Discontinued operations
Profit from - 35 704 35 704
discontinued operations
Total comprehensive 97 462 147 (206 822) (69 039)
income/(loss) for the
period
Total comprehensive
income/(loss)
attributable to:
Owners of the parent 88 218 (245 934) (124 471)
Other shareholders 9 244 39 112 55 432
- Preference 197 14 710 14 790
shareholders
- Minority shareholders 9 047 24 402 40 642
97 462 (206 822) (69 039)
Weighted average net 529 426 458 467 491 217
number of ordinary
shares in issue (000)
Earnings/(loss) per 16,7 (53,6) (26,0)
ordinary share (cents)
Earnings/(loss) per 16,7 127 (60,9) (32,0)
ordinary share from
continuing operations
(cents)
Earnings per ordinary - (100) 7,3 6,0
share from discontinued
operations (cents)
Headline 16,7 (0,7) 43,0
earnings/(loss) per
ordinary share (cents)
Headline 16,7 314 (7,8) 36,0
earnings/(loss) per
ordinary share from
continuing operations
(cents)
Headline earnings per - (100) 7,1 7,0
ordinary share from
discontinued operations
(cents)
Dividends per 74,2 30,0 30,0
preference share
(cents)
Interim 38,1 30,0 30,0
Arrear 36,1 - -
Summarised Group statements of changes in equity
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2011 2010 2011
Balance at the beginning of 2 357 323 4 894 283 4 894 283
the period
Disposal of subsidiaries - (12 422) (12 422)
Cost of BEE transaction - 7 751 15 501
Issued share capital* 1 151 151
Redemption of perpetual (2 654) - -
preference shares
Total comprehensive 97 462 (206 822) (69 039)
income/(loss) for the period
Dividends/distributions (197) (2 471 071) (2 471 151)
Balance at the end of the 2 451 935 2 211 870 2 357 323
period
* Sale of Mvela Group ordinary
shares held in share incentive
trust
Reconciliation between profit/(loss) attributable to owners of the
parent and headline profit/(loss) attributable to owners of the parent
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2011 2010 2011
Profit/(loss) attributable to 88 218 (245 934) (124 471)
owners of the parent
Loss on disposal of - 283 557 283 557
subsidiaries and investments
Impairment to investment in - - 50 337
associate
Profit on sale of property, - (1 415) (1 415)
plant and equipment
Tax effect - (39 302) 396
Headline profit/(loss) 88 218 (3 094) 208 404
attributable to owners of the
parent
Summarised Group statements of cash flows
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2011 2010 2011
(Loss)/profit from operations (12 532) 36 802 30 818
Non-cash items 154 51 570 43 739
Working capital 17 776 (72 979) (95 762)
Cash generated/(utilised) from 5 398 15 393 (21 205)
operations
Interest received 4 788 5 893 26 011
Interest paid (241) (22 357) (51 435)
Investment income 11 192 52 688 74 301
Normal taxation paid (103) (25 022) (14 565)
Cash available from operating 21 034 26 595 13 107
activities before the payment of
capital gains tax
Capital gains tax paid (6 034) (15 197) (46 833)
Cash available/(utilised) from 15 000 11 398 (33 726)
operating activities
Cash effects of investing 139 721 (22 288) 196 021
activities
Cash effects of financing (25 398) (248 488) (609 729)
activities
Preference dividends paid - (14 710) (14 790)
Net movement in cash and cash 129 323 (274 088) (462 224)
equivalents
Cash and cash equivalents at the 63 919 526 143 526 143
beginning of the period
Cash and cash equivalents at the 193 242 252 055 63 919
end of the period
Segmental information
Unaudited Unaudited Audited
31 December 31 December 30 June
R`000 2011 2010 2011
NET ASSETS
Consumer services 387 145 1 253 963 996 342
Financial services 1 325 883 654 440 826 689
Infrastructure and construction 51 607 138 262 83 646
Telecoms, media and technology 481 172 165 205 450 646
2 245 807 2 211 870 2 357 323
REVENUE
Revenue from discontinued - 1 886 411 1 886 411
operations
- 1 886 411 1 886 411
TOTAL COMPREHENSIVE
INCOME/(LOSS) FOR PERIOD
Consumer services 36 262 (338 667) (260 502)
Financial services 94 391 82 011 254 259
Infrastructure and (32 039) 7 712 (46 905)
construction.
Telecoms, media and technology (1 152) 14 169 (36 094)
Cost of BEE transaction - (7 751) (15 501)
Profit after taxation from - 35 704 35 704
discontinued operations
97 462 (206 822) (69 039)
Commentary
Introduction
Mvela Group continued with its value unlocking strategy during the period
under review with the disposal of 135 500 000 Vox Telecoms Limited ("Vox
Telecom")ordinary shares and 2 700 000 Life Healthcare Limited ("Life
Healthcare") ordinary shares. Further, Mvela Group redeemed its 265 362
perpetual preference shares for a redemption amount of R3 million.
Subsequent to 31 December 2011, 28% of Mvela Group`s ordinary share capital
was acquired by Blackstar Group SE ("Blackstar").
Financial review
Financial performance
Mvela Group received dividend income of R13 million (31 December 2010: R53
million) during the period under review, of which, R8 million was received
from Life Healthcare.
Net interest expense for the period under review decreased to R7 million from
R16 million for the previous comparable period mainly as a result of a
reduction of debt during the period under review.
Net fair value adjustments and profit and loss from investments amounted to a
net gain of R93 million (31 December 2010: R207 million loss) which comprises
a net gain from fair value adjustments on investments of R76 million (31
December 2010: R130 million), and a net released gain of R17 million from
disposal of investments. The net fair value adjustment of investments of R76
million mainly includes R103 million fair value gain from the Group`s indirect
investment in Absa Group Limited ("Absa"), offset by R38 million fair value
loss from the Group`s investment in Group Five Limited ("Group Five").
Profit from associate, Avusa Limited ("Avusa") amounted to R7 million against
a profit of R15 million the previous comparable period, being the Group`s
share of Avusa`s comprehensive income for the six-month period 30 September
2011.
Tax credit of R3 million (31 December 2011: R46 million charge) was charged to
the statement of comprehensive income during the period of which R12 million
relates mainly to the over-provision of deferred tax provided for on the
Group`s investment in Life Healthcare, R6 million capital gains tax ("CGT")
incurred from the sale of Life Healthcare shares and normal tax of R3 million.
Financial position
The Group`s cash position increased by R129 million at 31 December 2011, this
resulted from proceeds received mainly from the disposal of the Group`s
investments in Life Healthcare, Vox Telecom and Swissport South Africa
(Proprietary) Limited of R138 million, R16 million from dividends and net
interest received, offset by R25 million reductions of interest-bearing
liabilities.
On 21 July 2011, Mvela Group entered into a collar option transaction with a
commercial bank in respect of 7 000 000 Life Healthcare shares ("the collar
option transaction"), as at 31 December 2011 the closing Life Healthcare share
price of R20,64 per share exceeded the capped rate of R19,60 per share
resulting in an equity collar liability of R7 million.
Capital structure
On 31 December 2011 the Group redeemed its 265 362 perpetual preference shares
of R0,1 each. On 3 January 2012, preference shareholders were paid for each
perpetual preference share held, the deemed value of R10,00 plus the
preference dividend for the six-month 31 December 2011 (No.13) of 36,1 cents
and the arrear preference dividend for the six-month period ended 30 June 2011
(No.12) calculated up to 31 December 2011 of 38,14 cents, calculated on 80% of
the ruling prime overdraft rate, this equates to R3 million.
Intrinsic net asset value
The Group`s intrinsic net asset value per share increased to R3,66 from R3,65
at 31 December 2011, mainly due to the decline in the share prices of Group
Five and Avusa.
The intrinsic net asset value per ordinary share net of capital gains tax and
debt is set out in the table below:
31 December 2011 30 June 2011
Intrinsic
gross
asset Intrinsic Per Intrinsic Per
value net share net share
(after Debt asset (1) asset (1)
CGT) value value
Rm Rm Rm R Rm R
Absa Group 1 195 - 1 195 2,26 1 053 1,99
Life Healthcare 256 - 256 0,48 270 0,51
Avusa 479 (320) 159 0,30 302 0,57
Group Five 50 - 50 0,09 82 0,15
Mvelaserve 90 - 90 0,17 99 0,18
Vox Telecom - - - - 48 0,09
Other investments - - - - 26 0,04
Net cash 193 - 193 0,36 64 0,12
Total 2 263 (320) 1 943 3,66 1 944 3,65
1)Based on total number of shares in issue on 31 December 2011 net of treasury
shares of 529 million ordinary shares.
2)BEE shares issued in June 2007 and December 2010 have not been taken into
account in calculating the intrinsic net asset value per ordinary share as the
minimum option strike price of R9,18 is greater than the current Mvela Group
ordinary share price.
3)The intrinsic net asset value is unaudited and unreviewed.
Based on Mvela Group`s ordinary share price listed on the JSE of R3,50 on 31
December 2011, the ordinary shares were trading at a discount of 4,58% to the
Group`s intrinsic net asset value per ordinary share of R3,66 at that date.
Investment review
Absa
The Absa intrinsic net asset value of R2,26 per share was based on the Absa
share price of R141,0 per share at 31 December 2011 compared to R1,99 per
Mvela Group share which was based on an Absa share price of R134,81 per share
at 30 June 2011. The Absa investment comprises 61,8% of the Group`s intrinsic
net asset value at 31 December 2011.
Avusa
Based on a closing price at 31 December 2011 of R18,11 (30 June 2011: R24),
the intrinsic net asset value amounted to R0,30 per Mvela Group share compared
to R0,57 per share at 30 June 2011. The Avusa investment comprises 9% of the
Group`s intrinsic net asset value at 31 December 2011.
Group Five
Mvela Group`s interest in Group Five is valued using an option-pricing model.
Based on a share price of R22,71 at 31 December 2011 (30 June 2011: R29,90),
the intrinsic net asset value amounted to R0,09 per Mvela Group share compared
to an intrinsic net asset value of R0,15 per Mvela Group share at 30 June
2011. Mvela Group`s 12,7% investment in Group Five comprises 3% of the Group`s
intrinsic net asset value at 30 June 2011.
Life Healthcare
Of the 17 499 903 Life Healthcare shares held at 30 June 2011, 2 700 000 Life
Healthcare shares were sold during the period under review and as mentioned in
the financial review above, Mvela Group entered into a collar option
transaction in respect of 7 000 000 Life Healthcare shares.
The Life Healthcare share price at 31 December 2011 amounted to R20,64 per
share which translated to a net intrinsic value of R0,48 per Mvela Group share
compared to R0,51 per Mvela Group share at 30 June 2011. The decrease was
mainly due to the sale of 2 700 000 Life Healthcare shares and the collar
option on 7 000 000 Life Healthcare shares being fair valued at its capped
share price of R19,60. Life Healthcare comprises 13,84% of Mvela Group`s
intrinsic net asset value at 31 December 2011.
Mvelaserve
The share price of Mvelaserve at 31 December 2011 was R10,10 which translates
to R0,17 per Mvela Group share at 31 December 2011 compared to R0,18 per Mvela
Group share at 30 June 2011. Mvelaserve comprises 5% of Mvela Group`s
intrinsic net asset value at 31 December 2011.
Vox Telecom Limited
In November 2011 Mvela Group disposed of its entire interest in Vox Telecom of
135,5 million Vox shares at 45 cents per share equating to R61 million to
Business Venture Investments No. 1542, a special purpose vehicle held by
Investec Bank Limited and Lereko Metier Trustees (Proprietary) Limited.
Changes to board of directors
Messrs Bryan Hopkins, independent non-executive director, and Ernst Roth,
chief financial officer, resigned from the Board with effect from 18 January
2012. Mr Andrew Bonamour has been appointed as executive director and Messrs
William Marshall-Smith and Patrick Ntshalintshali have been appointed as non-
executive director and independent non-executive director, respectively, to
Mvela Group`s board of directors with effect from Thursday, 19 January 2012.
Mr Bonamour will assume the role of interim chief executive officer.
Accounting policies and international financial reporting standards
The unaudited summarised consolidated financial statements for the six-month
period ended 31 December 2011 ("the period") have been prepared in accordance
with International Financial Reporting Standards (IFRS) including IAS 34,
AC500 standards as issued by the Accounting Practices Board or its successor,
the JSE Listings Requirements, and in the manner required by the Companies Act
of South Africa, as amended. The accounting policies adopted are in terms of
IFRS and are consistent with the accounting policies applied in the audited
annual financial statements for the previous year ended 30 June 2011.
The unaudited financial results for the six-month period ended 31 December
2011 was compiled under the supervision of Mr A Bonamour, the interim chief
executive officer.
Dividend
Ordinary shares
The directors of Mvela Group have resolved not to declare a dividend for the
year ended 31 December 2011.
Preference shares
On 3 January 2012, preference shareholders received arrear preference
dividends of 36,1 cents per preference share and 38,1 cents per preference
share for the six-month period 31 December 2011.
Review
The board of Mvela Group is currently conducting a strategic review, the
results of which will be published in due course.
M S M Xayiya A D Bonamour
Executive chairman Interim chief executive officer
31 January 2012
Executive directors:
MSM Xayiya (Executive chairman), AD Bonamour (Interim chief executive
officer).
Non-executive Directors:
KD Dlamini*#, W Marshall-Smith, OA Mabandla*, ZP Ntshalintshali*
(*Independent #Lead independent)
Registered Office:
1st Floor, 30 Melrose Boulevard, Melrose Arch, 2076.
Telephone: 27 11 684-2652 Telefax: 27 11 684-2656
Transfer Secretaries:
Computershare Investor Services (Proprietary) Limited, 70 Marshall Street,
Johannesburg, 2001
A copy of these results is available on the Mvelaphanda Group website at:
www.mvelagroup.co.za
Johannesburg
1 February 2012
Sponsor:
Deutsche Securities SA (Proprietary) Limited
Date: 01/02/2012 08:00:01 Produced by the JSE SENS Department.
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