The year under review has been one of the toughest years that the Group has had to navigate in the recent past. Some of our investments felt the severe pinch of the downturn in the economy while others managed to navigate the storms without any major calamity.

Our biggest investments by value, Life Healthcare and Mvelaserve, continued to improve their operating numbers, while Absa was severely impacted by impairments in the last year.

Strategic investments

The improvement in the fair value adjustment was mainly as a result of positive sentiment in financial services and in the healthcare sector. The positive fair value swing was over R1 900 million for the year.

The highlight for the year was Batho Bonke successfully exercising its options in Absa by selling 49,9% of the options and financing 50,1% of the options by raising third-party financing worth
R1,7 billion. This has resulted in Batho Bonke owning a 5,1% interest in the ordinary share capital of Absa. As a result of exercising the options, Batho Bonke is paying a dividend of R146 million of which R65 million will be distributed as a dividend to Mvelaphanda Group.

The key highlights of Mvelaphanda Group’s investments at their last reporting period were:

• Life Healthcare

  –

  EBITDA in continuing business increased by 14,4%.

• Absa

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  Revenue for the six months ended 30 June 2009 increased by 3,6% to R2 981 million.

• Group Five

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  For the year ended 30 June 2009, revenue increased by 36% to R12 090 million.

• Avusa

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  Revenue from continuing operations was up by 8% to R4 875 million.

Mvelaserve

Mvelaphanda Group had undertaken to streamline Mvelaserve and operate it as an independent investment of the Group in the last financial year. By the end of the current financial year Mvelaserve had its own CEO and management team. This has contributed significantly to the underlying improvement and focus in the results of Mvelaserve.

The business increased revenue by 6% over the year and operating profit by 11%. A pleasing aspect of these results is that the company continued to expand and capture market share without compromising margins even within the difficult economic climate. If Trollope Mining Services, whose results were included for the first three months, are excluded for the year, then revenue was up 15% while operating profit was up 28% on a comparable basis. The year-on-year improvement in operating margin was 0,7%, resulting in a substantial operating margin of 7,3%.

As a result of the increased focus in Mvelaserve, cash generated by operations also improved significantly to R363 million from R271 million. A detailed report on Mvelaserve is set out here.

We are particularly pleased with the results of Protea Coin, which improved operating profit by 165% in the year. This is a clear indication that the merger between Protea and Coin was the right strategy to follow.

Shareholders and dividend

The Group has bought back 35 765 285 ordinary shares up to the last financial year, resulting in
406 665 000 ordinary shares in issue. All ordinary shares bought back are currently held as treasury shares.

The board has recommended that there be no ordinary dividend declared in respect of the current financial year as a result of the restructuring proposed by the board of Mvelaphanda Group.

Strategy and prospects

In the last Annual Report the significance in the changes to the BEE landscape were highlighted, as well as the discount to intrinsic NAV. In this respect Mvelaphanda Group has been undertaking a number of strategic analyses in understanding the future of BEE in South Africa. The board has therefore concluded that Mvelaphanda Group is not appropriately structured to take advantage of the changes in the BEE landscape. It is in this context that the board has recommended that the company be run as an Investment Trust and to unlock value for shareholders in the short to medium term.