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MVG / MVGP - Mvela Group - Proposed Acquisition MVELAPHANDA GROUP LIMITED (Incorporated in the Republic of South Africa) Registration number 1995/004153/06 Ordinary share code: MVG Preference share code: MVGP Ordinary share ISIN: ZAE000060737 Preference share ISIN: ZAE000073540 ("Mvela Group" or "the Company") Financial effects of the proposed acquisition by Mvela Group of a 25.5% shareholding in the issued share capital of Opco, a company which will be formed to hold the operating media and entertainment assets of Avusa Limited (previously named Johnnic Communications Limited) ("Avusa"), and withdrawal of cautionary 1. Introduction Further to the cautionary announcement dated 30 October 2007 in which Mvela Group announced that it had, together with its strategic partners, concluded an agreement with Allan Gray Limited ("Allan Gray") to acquire a 30% shareholding in Opco ("the acquisition"), Mvela Group is pleased to announce that it will be acquiring a 25.5% shareholding in Opco with its strategic partners acquiring the remaining 4.5%. Opco will be formed when the operating media and entertainment assets of Avusa are unbundled from Avusa and independently listed on the main board of the JSE Limited ("the JSE"); subject to the fulfilment of conditions precedent outlined in section 5 of the cautionary announcement dated 30 October 2007. The composition of the strategic partners is currently being finalized and will be made known at the time of the listing of Opco. 2. Financial effects of the acquisition The table below sets out the pro forma financial effects of the acquisition on Mvela Group`s audited earnings per ordinary share ("EPS"), headline earnings per ordinary share ("HEPS") and fully diluted headline earnings per ordinary share ("DHEPS") for the year ended 30 June 2007, as well as Mvela Group`s net asset value per ordinary share ("NAV") and net tangible asset value per ordinary share ("NTAV") at 30 June 2007. The directors of Mvela Group are responsible for the preparation of these pro forma financial effects below, which have been prepared for illustrative purposes only and, because of their nature, may not give a true reflection of the actual financial effects on Mvela Group. Before the After the % Change acquisition acquisition
(cents) (cents) Earnings per ordinary 280.2 273.7 (2.4%) share Headline earnings per 304.8 282.5 (7.9%) ordinary share Fully diluted 242.8 227.0 (7.0%) headline earnings per ordinary share Net asset value per 1 166.2 1 160.2 (0.5%) ordinary share Net tangible asset 992.0 986.1 (0.6%) value per ordinary share Notes: The pro forma financial effects are based on Mvela Group`s audited results for the year ended 30 June 2007 (the "Before the acquisition" column). The pro forma EPS, HEPS and DHEPS in the "After Column" are based on the assumption that the acquisition was implemented on 1 July 2006, with the purchase consideration of R1.201 billion (85% of the total purchase consideration of R1.413 billion based on Mvela Group acquiring a 25.5% shareholding in Opco with its strategic partners acquiring the remaining 4.5%) in cash being paid on that day, funded 50% from Mvela Group`s cash resources and 50% from debt. In calculating the EPS, HEPS and DHEPS, the following basis was used: - The Opco attributable earnings to ordinary shareholders that were used to equity account Mvela Group`s 25.5% shareholding in Opco were based on calculated Opco attributable earnings to ordinary shareholders for the period ended 30 June 2007. These were calculated by adding half of Opco`s 30 September 2007 results to Opco`s audited results for the 12 months ended 31 March 2007 and subtracting half of Opco`s 30 September 2006 results; and - In calculating the Opco attributable earnings to ordinary shareholders, share based payments, results from disposed operations and exceptional items were excluded and it was assumed that the effective tax rate is 29%. Minority shareholder`s interest, which was deducted from the calculated profit after tax for Opco to derive the attributable earnings to ordinary shareholders, was calculated based on Avusa`s published minority interests relative to Avusa`s published profit after tax. The pro forma NAV and NTAV in the "After Column" are based on the assumption that the acquisition was implemented on 1 July 2006 and that the acquisition consideration of R1.201 billion in cash was paid on that day, funded 50% from Mvela Group`s cash resources and 50% from debt. Mvela Group is currently in discussions with financial institutions to optimise the funding structure of the acquisition. 3. Rationale for the acquisition Mvela Group`s strategy is to grow shareholder value (as measured primarily by intrinsic net asset value) through the combination of quality investments and cash generative operations. This strategy involves the acquisition of interests (comprising quality investments and/or operating businesses) primarily in operating companies where Mvela can have strategic influence over the investment. The acquisition would give Mvela Group strategic influence over a unique range of operating media and entertainment assets which it believes will outperform in the medium to long term. Opco as constituted is one of the premier media companies in South Africa, with arguably the best print assets and a strong range of businesses in media, retail, books and maps, home entertainment, music and distribution. This portfolio of assets cannot be easily replicated. Opco is ideally positioned to benefit from the development of the South African media and entertainment sector. Mvela Group believes Opco has a number of value enhancing initiatives to consider which will be fully considered after completion of the acquisition. While Mvela Group`s shareholding will assist Opco with respect to its empowerment ownership, this is not an empowerment transaction per se. It is expected that Opco will implement an appropriate BEE transaction once unbundled from Avusa and independently listed. The board of Mvela Group believes that the acquisition will positively contribute to the delivery of growth in Mvela Group`s intrinsic net asset value in the medium to long term and ultimately improve the return earned on the Group`s capital employed. 4. Withdrawal of cautionary announcement The cautionary announcement dated 30 October 2007 is hereby withdrawn. A further announcement will be made upon fulfilment (or otherwise) of the conditions precedent. Sandton 27 November 2007 Financial adviser Masazane Capital Sponsor Deutsche Securities (SA) (Proprietary) Limited Date: 27/11/2007 13:15:23 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
