Makalani results show headline earnings up 27%

Makalani results show headline earnings up 27%, initial capital raised fully invested

South Africa's only JSE listed mezzanine debt financier, Makalani Holdings Limited, today announced its second set of full year results to 30 June 2007. The initial capital raised in 2005 has been fully invested and the board has approved plans to raise external debt of R750 million to fund future investments. The company is also expected to obtain unitholders approval to issue units to augment the debt.

For the year ended 30 June 2007 Makalani generated revenue of R263.6 million, an increase of 22% (2006: R215.2 million). This year the majority of the revenue comes from investment income rather than interest on cash.

Headline Earnings per Linked Unit (HEPLU) grew by 27% to 1004 cents (2006: 793 cents) with total distribution per linked unit increasing by 29% to 900 cents (2006: 700 cents).

Invested assets doubled from R1.1 billion to R2.1 billion, with the annualised pre-tax yield on invested assets increasing from 12.9% in June 2006 to 15.2% in June 2007.

Though the period under review continued to be dominated by increasing local equity prices and contracting credit spreads, Makalani managed to increase its invested assets.

Makalani CEO, Vusi Mahlangu said: "This performance shows that our strategy of not sacrificing margins for asset growth is paying off. Activity in the private equity market, spend in infrastructure and healthy economic growth continue to provide opportunities for Makalani".

Subsequent to 30 June 2007, Makalani has increased its invested assets by R217 million, bringing total invested assets to R2.3 billion. The three new assets in the portfolio are as follows:

Firstly, the Bombela Concession Company which has a concession to build and operate the Guatrain project is Makalani's first infrastructure project. Makalani provided mezzanine debt finance of approximately R97 million to Bombela. In addition Makalani has a commitment to provide a further R38 million in mezzanine debt to Bombela.

Secondly, Makalani provided R101 million to two BEE entities as part of funding for an acquisition of a shareholding in TongaatHulett Limited.

Finally, Makalani provided R19 million to Izingwe Holdings to help with the acquisition of a shareholding in Prostart, a subsidiary of Barloworld Coatings.

Given the board approval to raise R750 million of debt, Makalani continues to evaluate a number of Finance Sector Charter-compliant investments.

"Looking forward, we plan to continue to apply our strategy by seeking quality assets at attractive yields in all sectors that fit our mandate to support black economic empowerment," concluded Mahlangu.