Mvelaphanda Group, South Africa’s largest black-owned, -controlled and -managed diversified industrial and financial group, on Tuesday announced a 124% increase in headline earnings per ordinary share to 322c per share for the year ended June 30 2006, on the back of a stellar investment performance and solid results from its operations.
Mvela CEO Stephen Levenberg described the results as highly satisfactory.
“We passed two major milestones in that our net profit attributable to ordinary shareholders exceeded R1-billion, coming in at R1,145-billion, and the value of our gross assets grew to over R6-billion. This is particularly pleasing given that both performance milestones were passed as the group celebrated its first full financial year since the merger of the businesses and assets of Mvelaphanda Holdings and Reserve.
“We continue to refine our investment strategy to concentrate on the industrial and financial sectors, and have made significant strides in establishing a solid base for future growth and value creation,” he said.
Mvela measures its own performance primarily by the growth in its intrinsic net-asset value, a calculation based on the market value or directors’ valuations of Mvela’s investments and operations, net of capital-gains tax and associated debt.
As at September 1 2006, Mvela’s intrinsic net asset value per share had grown by 44% (since June 30 2005) to R12,05. As at June 30 2006, Mvela’s intrinsic net asset value per share had grown by 41% (since June 30 2005) to R11,77.
Levenberg said the results had been achieved through strong performances in the three fundamental areas of the business, namely investments, operations and corporate activity.
Profit from investments grew by 218% from R268-million to R853-million, largely as a result of the performances of the group’s strategic investments in Absa, Life Healthcare and Group Five.
On June 30 2006 Mvela accepted an offer from Mvela Holdings to dispose of its stake in Mvela Resources for R1,183-billion in cash. This was approved by Mvela shareholders on August 28 2006 and has been implemented.
Mvela’s executive chairperson Tokyo Sexwale said the group now has approximately R1,5-billion in cash.
“This makes Mvela one of very few companies in South Africa with strong BEE credentials, proven transactional and management expertise and substantial financial resources to conclude large-scale investment transactions,” Sexwale said.
Profit from Mvela’s operations increased by 30% to R262-million, and the margin increased to 8,5% from the prior year’s 6,2%. Levenberg said cash generated of R337-million was in line with expectations and confirmed the highly cash-generative nature of the group’s operations.
He said that Total Facilities Management Company continues to perform well in its ten-year facilities management contract with Telkom.
Mvela’s security services businesses were impacted by the three-month strike by security guards, and the increase in the number of armed attacks on assets-in-transit vehicles. The group’s other operations performed in line with expectations.
Levenberg noted that several value-enhancing corporate activities were concluded during the year, including a major R547-million capital raising that was achieved without diluting Mvela’s BEE credentials, the R1,183-billion cash sale of Mvela Resources, the acquisition of an additional 2,47% effective interest in Absa and the purchase of 10,8% of Group Five.
Looking ahead, executive chairperson Tokyo Sexwale said that while Mvela possesses impeccable BEE-credentials it should nevertheless be measured on its investment merits.
“We have built a solid platform to nurture and grow an industrial and financial group of magnitude. Our cash resources of R1,5-billion give us the ability to conclude major BEE and other corporate transactions, and we are confident of our ability to continue to deliver sound and steady growth in our intrinsic net asset value,” he said. — I-Net Bridge