Directors' report
Nature of business
Mvela Group is a broad-based, black-controlled, owned and managed diversified group. The Group holds direct and indirect interest in a range of investments which include, Absa, Avusa, Group Five, Life Healthcare, Mvelaserve and Vox Telecom.
Strategy
Mvela Group will continue with its unbundling strategy with a key focus on unlocking value and generating a satisfactory return on capital for shareholders over time. Mvela Group will not actively pursue new investment acquisitions.
Group results
The financial statements set out fully the financial position, financial performance and cash flows for the Group for the financial year ended 30 June 2011. The audited financial results for the year end 30 June 2011 was compiled under the supervision of Mr E Röth, the chief financial officer.
Subsidiaries and associates
The interest in subsidiaries and associated companies are set out here.
The Group unbundled its 53,3% shareholding in Health Strategic Investments Limited (“Health Strategic”) and its 100% shareholding in Mvelaserve Limited (“Mvelaserve”) on 20 August 2010 and 6 December 2010 respectively. As part of the Group’s unbundling of Mvelaserve, the Group disposed of its 75% interest in Zonke Monitoring Systems (Proprietary) Limited to Mvelaserve on 29 October 2010.
The aggregate headline net profit after taxation of subsidiaries from continuing operations attributable to the Company amounted to R684 025 000 (2010: R1 480 828 000).
Share Capital
Ordinary shares
There were no changes to the number of authorised share capital during the current year. The issued ordinary share capital of the Company increased by 121 999 596 to 565 473 650 ordinary shares following the conversion of 53 995 906 convertible perpetual cumulative preference shares during the year. All issued shares have been fully paid up. The authorised and issued number of ordinary shares are disclosed in note 11 to the financial statements.
Treasury shares
No ordinary shares were repurchased during the year. The total number of ordinary shares held by a subsidiary of the Group at 30 June 2011 is 35 765 285 as disclosed in note 11 to the financial statements.
Preference shares
There were no changes in the number of preference shares authorised. The issued preference shares decreased to 265 362 preference shares following the conversion of 53 995 906 preference shares into 121 999 596 ordinary shares. The authorised and issued preference shares are disclosed in note 11 to the financial statements. The preference shareholders earned dividends at a rate of 5,5% per annum up to 4 November 2010 and at 80% of the ruling prime overdraft rate from 5 November 2010 until 30 June 2011.
Redeemable option-holding shares (“BEE shares”)
As the redeemable option-holding shareholders did not participate in both the Health Strategic and Mvelaserve unbundling, the Group intended on compensating such shareholders by allotting and issuing a further 151 798 568 redeemable option-holding shares. The issued and authorised redeemable option-holding shares increased to 276 223 624 redeemable option-holding shares from 124 425 056 redeemable option-holding shares the previous financial period. Further, the option exercise price was adjusted down to R9,18 from R17,50. The BEE shares can be exercised between 19 June 2011 and 9 June 2012. The authorised and issued number of redeemable option-holding shares is disclosed in note 11 to the financial statements. The additional issue of BEE shares also enhanced and secured the Group’s BEE shareholding credentials.
Share incentive scheme
569 746 (2010: 569 746) of Mvelaphanda Group’s ordinary shares were held by the Share Incentive Scheme at 30 June 2011.
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| 2011 | 2010 | |||||
| Number | Strike price (cents) |
Number | Strike price (cents) |
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| Number of options/scheme shares outstanding at 30 June |
9 000 000 | 710 – 880 | 23 557 423 | 710 – 880 | ||
| Options/scheme shares exercised/sold | (9 000 000) | 710 – 880 | (7 916 424) | 710 – 880 | ||
| Options/scheme shares cancelled/lapsed | — | — | (6 640 999) | 710 – 880 | ||
| Number of options/scheme shares outstanding at 30 June |
— | — | 9 000 000 | 710 – 880 | ||
Shareholder Spread
Details of shareholder categories are set out here.
Dividends
Ordinary shares
The directors of Mvela Group have resolved not to declare a final dividend for the year ended 30 June 2011 following the cash preservation policy followed by the Group until the effect of the restructuring is far advanced.
Preference shares
On 11 April 2011, preference shareholders received 30,03288 cents per preference share and R14 790 000 on 20 September 2010.
Net asset value per share and tangible net asset value per share
Net asset/tangible net asset value per share of 409 cents is based on net asset/tangible net asset value of R2 160 241 000 and is calculated using the net number of ordinary shares in issue of 529 139 000.
Directors and Secretary
The names and brief curricula vita of the directors appear here. Further information on the directors, including their interest in the shares of the Company, share-based remuneration schemes and the emoluments paid to directors are provided here.
Ms Cuba resigned as chief executive officer (CEO) with effect from 31 December 2010. In view of the Group’s unbundling strategy, the JSE approved that the position of CEO remains vacant for a period of 18 months from 30 March 2011. In this regard, the Group will provide a quarterly report to the JSE on its progress with the unbundling of its assets.
Mvelaphanda Management Services (Proprietary) Limited resigned as the Company secretary with effect from 5 December 2010 and Mvelaphanda Treasury and Financial Services (Proprietary) Limited was appointed as Company secretary effective from 6 December 2010.
In terms of clause 53.2 of the articles of association, Messrs Dlamini and Mabandla retire at the forthcoming annual general meeting but, being eligible, offer themselves for re-election.
Directors’ interest and emoluments
Details of emoluments paid to the directors are set out below. All emoluments were paid by a subsidiary of Mvelaphanda Group.
Directors’ interest and emoluments for 30 June 2011
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| Salaries, directors’ fees |
Allowances and fringe benefits |
Bonus | Other† | Retirement benefit and medical aid contributions and other payments |
Total | |||
| R’000 | R’000 | R’000 | R’000 | R’000 | R’000 | |||
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| Executive# | ||||||||
| YZ Cuba* | 1 887 | 27 | 3 621 | 4 284 | 226 | 10 045 | ||
| E Röth | 1 770 | 60 | 2 375 | 1 785 | 4 | 5 994 | ||
| M Xayiya | 3 398 | 90 | 3 022 | 2 380 | — | 8 890 | ||
| Non-executive | ||||||||
| K Dlamini | 302 | — | — | — | — | 302 | ||
| B Hopkins | 502 | — | — | — | — | 502 | ||
| O Mabandla | 389 | — | — | — | — | 389 | ||
| 8 248 | 177 | 9 018 | 8 449 | 230 | 26 122 |
| † | Share options which were cash settled. |
| # | Executive directors do not receive directors’ fees. |
| * | Ms Cuba resigned as chief executive officer of the Group with effect from 31 December 2010. |
Directors’ interest and emoluments for 30 June 2010
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| Salaries, directors’ fees |
Allowances and fringe benefits |
Bonus | Other† | Retirement benefit and medical aid contributions and other payments |
Total | |||
| R’000 | R’000 | R’000 | R’000 | R’000 | R’000 | |||
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| Executive# | ||||||||
| YZ Cuba | 3 574 | 45 | 2 600 | 3 782 | 451 | 10 452 | ||
| E Röth | 2 373 | 120 | 1 400 | 1 218 | 7 | 5 118 | ||
| M Xayiya | 3 178 | 180 | 2 400 | 2 390 | — | 8 148 | ||
| Non-executive | ||||||||
| K Dlamini | 247 | — | — | — | — | 247 | ||
| B Hopkins | 415 | — | — | — | — | 415 | ||
| O Mabandla | 301 | — | — | — | — | 301 | ||
| D Moshapalo* | 95 | — | — | — | — | 95 | ||
| MZ Mpofu* | 99 | — | — | — | — | 99 | ||
| RM Patel* | 57 | — | — | — | — | 57 | ||
| CD Stein* | 177 | — | — | — | — | 177 | ||
| 10 516 | 345 | 6 400 | 7 390 | 458 | 25 109 |
| † | Share options which were cash settled. |
| # | Executive directors do not receive directors’ fees. |
| * | Messrs Moshapalo, Patel and Stein and Ms Mpofu resigned as non-executive directors of the Group with effect from 25 November 2009. |