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MVG/MVGP - Mvela Group - Disposal of Further Life Healthcare Group

Release Date: 21/07/2011 09:27
Code(s): MVG MVGP
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MVG/MVGP - Mvela Group - Disposal of Further Life Healthcare Group Holdings Limited shares and collar option transaction in respect of Life Healthcare shares 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") DISPOSAL OF FURTHER LIFE HEALTHCARE GROUP HOLDINGS LIMITED ("LIFE HEALTHCARE") SHARES AND COLLAR OPTION TRANSACTION IN RESPECT OF LIFE HEALTHCARE SHARES 1. INTRODUCTION Shareholders of Mvela Group are advised that the Company has disposed of a further 1 500 000 Life Healthcare ordinary shares ("Life Healthcare shares") on the JSE Limited ("JSE") open market during the period 5 July 2011 to 8 July 2011 ("the open market disposal") for a total cash consideration of approximately R26 236 206. In addition, on 15 July 2011 Mvela Group entered into a collar option transaction with a commercial bank in respect of 7 000 000 Life Healthcare shares ("the collar option transaction"). The deemed value of the collar option transaction is R122 500 000 which is based on the reference price, per the agreement, of a Life Healthcare share of R17.50. In terms of the JSE Listings Requirements, the collar option transaction is required to be reported as if it has already been effected. It was announced on 8 July 2011 and 7 April 2011 that Mvela Group disposed of a total of 17 435 377 Life Healthcare ordinary shares for a total cash consideration of approximately R276 million ("the previous disposals"). To date 18 935 377 Life Healthcare shares have been disposed of by the Company and its remaining investment in Life Healthcare after the open market disposal amounts to 15 449 903 or 1.48% of the total issued Life Healthcare shares. 2. RATIONALE The disposals of the Life Healthcare shares are part of Mvela Group`s overall unlocking strategy to realise value for its shareholders. The sale proceeds have been utilised to pay down certain debt of portfolio companies. The collar option transaction has been entered into to lock in shareholders` value. 3. CONSIDERATION RECEIVED IN RESPECT OF DISPOSALS The total cash consideration received in respect of the open market disposal is approximately R26.2 million net of all transaction costs. 4. JSE CATEGORISATION In terms of the JSE Listings Requirements, the aggregation of the open market disposal, the collar option transaction and the previous disposals is categorised as a category 2 transaction. 5. FINANCIAL EFFECTS The unaudited pro forma financial effects of the previous disposals and the open market disposal (collectively the "Disposals") set out below have been prepared to assist Mvela Group shareholders in assessing the impact of the Disposals on the Company`s historical earnings per share ("EPS"), headline earnings per ordinary share ("HEPS"), net asset value per ordinary share ("NAVPS") and net tangible asset value per ordinary share ("NTAVPS"). The pro forma financial effects are the responsibility of the directors of Mvela Group and are provided for illustrative purposes only. The pro forma financial effects have been prepared on the basis that the Disposals had been fully implemented on 1 July 2010 for Income Statement purposes and as at 31 December 2010 for purposes of the Statement of Financial Position. The pro forma financial effects do not purport to be indicative of what the consolidated financial results would have been had the Disposals been implemented on a different date. The material assumptions are set out in the notes following the table. Due to their nature, the pro forma financial effects may not fairly present the financial position, changes of equity, results of operations or cash flows of Mvela Group after the Disposals. The net value of and the after tax profits attributable to the net assets of Life Healthcare are R248 340 711 and R38 510 994, respectively. Before the After the Percentage Disposals (1) Disposals change
EPS (cents) (53.6) (53.6) 0% HEPS (cents) (0.7) (0.6) 14.29% NAVPS (cents) 359.2 369.6 2.59% NTAVPS (cents) 359.2 369.6 2.59% Weighted average number 458,467 458,467 0% of shares in issue * (`000) Net number of ordinary 565,474 565,474 0% shares in issue (`000) *excludes treasury shares Notes: 1. Extracted from Mvela Group`s published unaudited interim results for six months ended 31 December 2010. 2. R254.5 million of the proceeds received from the Disposals has been used to reduce interest bearing debt of portfolio investments. 3. R46.8 million of the proceeds received from the open market disposal have been used to pay down CGT obligations. 4. Interest paid has been reduced by R6.1 million as a result of the disposal proceeds applied to interest bearing debt. Taxation of R2.4 million claimed in respect of this has been reversed. 5. A profit on the Disposals of R38,5 million has been recognised being the difference between the fair value of Life Healthcare shares at 1 July 2010 of R13.55 per share and the net proceeds received on the Disposals of R301,3 million. 6. A deferred taxation liability of R29,393,911 as at 1 July 2010 has been set off against the CGT incurred on the profit from Disposals. 7. The fair value adjustment of R24,683,766 less CGT of R3,455,727 provided for the six months ended 31 December 2010 have been reversed. 8. No potential impact of the collar option transaction on the Company`s historical EPS, HEPS, NAVPS and NTAVPS has been taken into account in the calculation of the pro forma financial effects. 9. The pro forma financial effects have been prepared using the same accounting policies as those applied in the most recently published annual financial statements of Mvela Group. Johannesburg 21 July 2011 Sponsor Deutsche Securities (SA) (Proprietary) Limited Date: 21/07/2011 09:27:01 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.

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