Financial position

Total interest-bearing liabilities at 30 June 2009 decreased to R1 765 million from R2 120 million the previous year, which decreased the Group’s debt-equity ratio to 44,0% from 58,6% the previous year of which 8,2% was a result of the net positive after-tax fair value adjustment of strategic investments. Of the R1 765 million, R1 558 million was ringfenced to the specific underlying asset financed.

The outstanding capital balances in respect of non-recourse funding contained in special-purpose entities (which are not classified as subsidiaries of Mvelaphanda Group) relating to the original acquisition of certain investments by Mvelaphanda Group, decreased to R448 million at 30 June 2009 from R479 million at 30 June 2008.

Details of this non-recourse funding are set out below:

Investments in associates decreased marginally to R721 million from R780 million the previous year mainly as a result of accounting for the Group’s share of net profit in Avusa in the amount of R78 million less dividends received of R16 million and a further impairment of the Avusa investment amounting to R116 million.

No significant acquisitions or disposals of strategic investments were made during the year. The net carrying amount increased to R3 876 million at 30 June 2009 from R3 559 million the previous year mainly as a result of net fair value gains arising from the revaluation of these investments of
R467 million. The repayment of R163 million in respect of shareholders’ loans included in the strategic investments were repaid by investees during the current year, which were set off against the valuation increase.

Capital structure

No new ordinary shares or preference shares were issued during the current year with the issued ordinary share capital of the Company remaining unchanged at 443 000 223 ordinary shares of which 35 765 285 are held as treasury shares by a subsidiary. BEE shareholders owned and/or controlled 52% of the Company’s issued ordinary shares at 30 June 2009 taking into account the 124 425 055 BEE shares in issue and excluding the treasury shares.

Net tangible asset value per ordinary share, which is calculated based on 465 million ordinary shares in issue, assuming that the preference shares are converted into ordinary shares after November 2009, increased by 24% to R6,33 at 30 June 2009 from R6,20 at 30 June 2008.

Intrinsic net asset value

The decrease in the Group’s cash position contributed to 17% or R0,15 of the decline of R0,78 in the intrinsic net asset value per share to R7,90 at 30 June 2009 from R8,68 the previous year. A more conservative valuation of operations, in line with the current economic environment, contributed to a decline of 8,98% or R0,78 in the net intrinsic value per share.

The intrinsic net asset value per ordinary share, net of capital gains taxation and debt, is set out in the table below:

The above valuation is based on, inter alia:

• a combination of the market value, volatility and expected dividend yields in the case of investments listed on the JSE;
• application of option-pricing model in the case of the Group Five investment;
• directors’ valuation of other investments, taking into consideration the economic factors prevailing at 30 June 2009; and
• the gross cash position of the Group at 30 June 2009.

Based on the Mvelaphanda Group ordinary share price on the JSE of R4,50 on 30 June 2009, the ordinary shares were trading at a discount of 43% to the Group’s intrinsic net asset value per share of R7,90 at that date.

Based on the Mvelaphanda Group ordinary share price on the JSE of R6,20 on 31 August 2009, the ordinary shares were trading at a discount of 24,7% to the Group’s intrinsic net asset value per share of R8,23 at that date.

Cash distributions and dividends

In order to preserve cash and in a concerted effort to increase the rate of debt reduction, no dividend was declared in respect of ordinary shares for the current financial year. The total distributions to ordinary shareholders in lieu of ordinary dividends amounted to 27 cents per ordinary share for the previous year.

Preference dividends are paid to preference shareholders at a fixed rate of 5,5% per annum, equating to 55 cents per preference share for the current year.

Total payments to shareholders during the current year were R148 million, which includes dividends paid to ordinary shareholders of R118 million and dividends paid to preference shareholders of R30 million.

Conclusion

The results for the year under review have been extremely satisfactory given the negative economic environment within which the Group operated.

Acknowledgements

I extend my sincere thanks and appreciation to all our financial personnel for their continuous and dedicated support throughout the year under review, which made this report and the presentation of the financial statements possible.

Ernst Röth

Chief Financial Officer