Mvela assets take a knock

Zweli Mokgata

Zweli Mokgata

The Mvelaphanda Group took a step forward with a rise in revenue but two steps back as its assets took a severe slide last year.

The company's revenue rose by 11percent to R1.89billion for the six months ended December 2008. Yolanda Cuba, Mvela's chief executive, said yesterday: "Deteriorating market conditions caused the intrinsic net asset value of our investments to decline by almost R2billion, or 34percent, despite their sound operational nature.

"We are confident that our operations and investments are appropriately structured to withstand the current economic uncertainty and to benefit from sound financial and operational management in the long run," she said.

The company's operational division, MvelaServe, was the only significant cash generator during the period - bringing in R219million in cash. The unit outsources various services such as security, catering, cleaning and facilities leasing.

The group, which has shares in Absa (indirectly), Avusa, Life Healthcare, Group Five and Vox Telecom, earned R106million from investments compared to a loss of R679million the previous corresponding period.

At the beginning of July last year the 25.5percent acquisition of Avusa - which owns Sowetan, The Times and the Sunday Times, among other titles - was concluded. The downturn in the economy saw Mvela's stake in Avusa drop from R797million to R534million, a 33percent drop in six months.

This asset, along with Vox and Absa (37percent down from R1.3billion), was the worst performing. Vox share value was negative due to a low share price.

Life Healthcare performed relatively well with the shareholding rising from R1.3billion to R1.4billion in the latest period.

Group Five added strength to the balance sheet by increasing the value of Mvela's 10.7percent by 35percent to R377million.

Deslin Naidoo, chief executive of UC Securities, said the company had done better than the performance of the previous period when it made a loss. "They were a good set of results considering where they were coming from. The losses they made were as a result of operations not coming on line and lack of maturity of some of their assets," he said.

In the past year, the company's share price has dropped to just above R4 a share from March 2008 levels just under R8 per share.