| Thu 21 Jun 2001, 0:00 | | Venfin Limited - Audited Consolidated Results |
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Reg No 1948/031037/06
Audited consolidated Results for the year ended 31 march 2001
Creation of VenFin Limited through the restructuring of Rembrandt Group
Limited during September 2000
Maiden VenFin annual results for the year ended 31 March 2001
Increase in pro forma headline earnings per share of 7.4%
R1 842 million invested during the year
Abridged balance sheet
2001 2000
R million R million
Pro forma
ASSETS
Property, plant and equipment 1.1 1.4
Goodwill and patents 131.8 0.2
Investments - Associated companies* 4 262.9 1 418.7
- Other 1 435.1 1 224.7
Current assets 1 246.4 1 362.7
Total assets 7 077.3 4 007.7
Equity and liabilities
Interest of own members 7 030.8 3 998.7
Current liabilities 46.5 9.0
Total equity and liabilities 7 077.3 4 007.7
* Includes one-third interest in R&V Holdings Limited (R&V).
VenFin's attributable interest in the cash of R&V, amounts to R2 590
million.
Abridged cash flow statement
2001
R million
Cash flow from operating activities 505.5
Net interest received 82.0
Taxation paid (2.4)
Dividends received 19.0
Net cash outflow from operating activities 604.1
Investing activities (294.3)
Net increase in cash and cash equivalents 309.8
Cash and cash equivalents at the beginning of the year 687.3
Cash and cash equivalents at the end of the year 997.1
Abridged consolidated statement of changes in equity
2001
R million
Balance at 1 April 2000 3 998.7
Adjustment relating to redemption of British
American Tobacco Plc preference shares 2 336.7
Net profit for the year 443.1
Exchange rate adjustments 234.9
Change in reserves of associated companies 17.4
Interest of own members 7 030.8
Abridged income statement
2001 2000
Company
and its Associated
subsidiaries companies Total Total
R million R million R million R million
Pro forma
Revenue 126.4 126.4 173.6
Operating profit before
Depreciation 72.5 72.5 157.1
Depreciation (0.5) (0.5) (0.6)
Finance costs (5.5) (5.5) (0.5)
Operating profit 66.5 66.5 156.0
Amortisation of goodwill (4.0) (21.3) (25.3) (12.0)
Equity adjustment: Share of
net profit before taxation of
associated companies 685.2 685.2 613.3
Exceptional items (63.9) (59.4) (123.3) (18.1)
Profit before taxation (1.4) 604.5 603.1 739.2
Taxation (21.2) (138.8) (160.0) (204.3)
NET PROFIT FOR THE YEAR (22.6) 465.7 443.1 534.9
Reconciliation of headline earnings:
Basic earnings - net profit
for the year (22.6) 465.7 443.1 534.9
Plus/(minus) - attributable
to own members:
- Exceptional items 63.9 54.1 118.0 (2.2)
- Amortisation of goodwill 4.0 21.3 25.3 12.0
- Net surplus, after taxation,
on disposal of property,
plant and equipment - (0.1) (0.1) 1.3
Headline earnings 45.3 541.0 586.3 546.0
Earnings per share
Headline earnings (cents) 8.7 103.6 112.3 104.6
Basic earnings (cents) (4.3) 89.2 84.9 102.5
Additional information
2001 2000
Shares in issue
- Ordinary shares of 1 cent each 486 493 650 486 493 650
- B shares of 10 cents each 35 506 352 35 506 352
Total 522 000 002 522 000 002
In determining the headline earnings and basic
earnings per share the total number of shares
in issue was used.
Net asset value per share
- At book value R13.47 R7.67
- At market value and directors' valuation of
investments R25.48 R25.85
R million R million
Pro forma
Listed investments
Associated
- Book value 12.8 -
- Market value 106.9 -
Other
- Book value 1 196.8 1 164.7
- Market value 1 807.9 1 799.2
Unlisted investments
Associated
- Book value 4 250.1 1 418.7
- Directors' valuation 9 934.4 10 278.9
Other
- Book value 238.3 60.0
- Directors' valuation 238.3 60.0
Dividends received
- Dividends included in operating profit 17.2 17.8
- Dividends of associated companies set off
against investments 66.2 58.2
Exceptional items
Exceptional items of subsidiary companies
consist of the following:
- Provision against loan provided (77.1) -
- Cost of restructuring (2.6) -
- Amounts previously provided
against investments
- written back - 33.4
- Net capital surplus on the sale of
long-term investments 16.1 4.5
- Other (0.3) -
(63.9) 37.9
Share of exceptional items of
associated companies after taxation (54.1) (35.7)
- Cost of restructuring of
British American Tobacco Plc - (80.7)
- Loss on realisation of investments (38.5) -
- Investment written off and provisions (28.8) -
- Tax effect 5.3 20.3
- Other 7.9 24.7
Total - Attributable to own members (118.0) 2.2
Comments
Restructuring
The restructuring of Rembrandt Group Limited (Rembrandt) was approved by the
shareholders at an Annual General Meeting of Rembrandt held on 21 September
2000.
In terms of the restructuring Rembrandt's underlying interests were re-
organised into two separate companies, namely VenFin Limited (VenFin) and
Remgro Limited (Remgro), with effect from 1 April 2000. VenFin consists
mainly of Rembrandt's telecommunication and technology interests. The share
capital of VenFin has also been restructured to create a new class of
unlisted B shares, which were issued to Rembrandt Trust (Pty) Limited.
VenFin was listed on the JSE Securities Exchange South Africa (JSE) on 26
September 2000.
Comparative figures
The pro forma comparative figures in the income statement and balance sheet
for the year ended 31 March 2000 represent the figures of Rembrandt after
adjustments have been made for investments transferred to Remgro in terms of
the restructuring and are based on the audited annual financial statements
of Rembrandt.
No pro forma comparative figures are available for the consolidated
statement of changes in equity and for the cash flow statement as VenFin in
its present form only exists since 1 April 2000.
Accounting policies
The annual financial statements are prepared on the historical cost basis in
accordance with the South African Statement of Generally Accepted Accounting
Practice and incorporate the policies which, with the exception of
accounting for goodwill, are in accordance with those of Rembrandt as
applied in the previous year.
financial review of investments
The headline earnings of the Group increased by 7.4% from 104.6 cents to
112.3 cents per share.
The increase in earnings must be assessed after taking the composition of
the Group's earnings into account. This is discussed more fully below.
Associated companies
The most important source of the Group's headline earnings for the past
financial year (91.5%) consists of the Group's share of the net income of
Vodacom Group (Pty) Limited (13.5% interest) and R&V Holdings Limited (R&V)
(33.3% interest).
The other investments in associated companies consist mainly of new
investments in technology businesses of which the majority are still in a
development phase and will only contribute to the Group's earnings over the
medium to long term.
The assets of R&V consist mainly of investments in Alexander Forbes Limited,
Camus Limited and cash.
Cash resources
The other main source of headline earnings (10.9%) consists of interest
received in South Africa and abroad.
Interest received in South Africa and abroad, viewed together with the one-
third share in the interest received from associate R&V, contributed 52.5%
to the Group's headline earnings during the past year.
These results were achieved in spite of a decrease of 40.7% in interest
received. This decrease is due to the redeployment of cash into new
investments made during the year.
Vodacom performed very well with a 37.4% increase in headline earnings.
The detailed composition of headline earnings appears below.
Composition of revenue and headline earnings
Revenue Headline earnings
Associated company VenFin
Effective R % R % R %
of
% interest million change million change million total
Vodacom 13.50 13 263.5 37.23 1 788.4 37.37 241.4 41.2
Intervid 17.11 88.8 102.74 19.5 223.92 0.7 0.1
Luna 35.94 74.0 8.47 9.2 271.73 3.0 0.5
Tracker 32.14 107.3 35.61 (12.4) 20.98 - 0.0
Inala 22.91 117.5 44.38 4.6 71.24 1.4 0.2
Psitek 20.00 47.1 17.65 2.9 12.82 0.6 0.1
eCompany* 14.10 41.2 94.29 (28.5) (341.70) (1.6) (0.3)
Fundamo 32.38 0.3 ** (8.3) ** (0.9) (0.1)
Fibalogic 95.97 19.0 125.67 (2.1) 51.41 (2.0) (0.3)
242.6 41.4
R&V 33.33 726.7 *** 295.1 50.3
537.7 91.7
Corporate
and other
Interest 100.00 63.9 10.9
Other 100.00 (15.3) (2.6)
Total 586.3 100.00
The 12 month figure is compared with an 8 month figure at eCompany
Holdings Ltd.
** The results are for 5 months ended 31 December 2000 and there are no
comparative figures.
*** No comparative figures are available because the Company was only
constituted with effect from 1 April 2000.
The percentage change represent the change in the results of associated
companies/subsidiaries. As a result of changes during the year in the
shareholding of VenFin in the respective investments, it does not
necessarily represent the change in the Group's earnings.
Investments
VenFin is party to shareholders' agreements in respect of almost all its
investments. These agreements regulate the important business aspects of the
investments.
VenFin is continually involved in evaluating potential investments and
acquisitions, both within South Africa and abroad. VenFin focuses on high
growth technology investments which possess proprietary intellectual
property with international potential.
A total of R1 842 million was invested during the year, of which R489
million was invested in South Africa and R1 353 million was invested abroad.
The most important new investments for the year under review were as
follows:
Operating companies
Luna Corporation Limited (Luna)
VenFin made a further investment of R70.9 million in Luna during April 2000.
On 31 March 2001 the interest was 35.9%. Luna is the holding company of
Southern African Investments Limited (SAIL), which is listed on the JSE.
Luna holds 83.4% of SAIL's shares.
Midi TV (Proprietary) Limited (e-tv)
e-tv is the only independent free-to-air television broadcaster in South
Africa. During April 2000 VenFin made an indirect loan of R281.8 million to
Sabido (Proprietary) Limited (Sabido). If this loan had been converted into
equity in Sabido, the holding company of e-tv, VenFin's indirect interest in
e-tv would have been 26% and would have been accounted for as an investment
in an associated company. On this basis, VenFin's attributable share of the
loss of e-tv for the year to 31 March 2001 would have amounted to R77.1
million. The intended conversion of this loan to equity is subject to the
approval of the Independent Communication Authority of South Africa, this
amount has been provided against the loan as an exceptional item.
Intervid Limited (Intervid RSA)
During the year VenFin acquired an interest of 17.1% in Intervid RSA at a
cost of R57 million.
Tracker Investment Holdings (Proprietary) Limited (Tracker)
Tracker issued further shares during December 2000 to a third party for
cash, resulting in VenFin's interest being diluted from 42.9% to 32.1%.
Inala Technology Investments (Proprietary) Limited (Inala)
Further investments were made in Inala during the year at a cost of R6
million. On 31 March 2001 the interest was 22.9%.
eCompany Holdings Limited (eCompany)
On 2 July 2000 VenFin acquired an interest of 14.1% in eCompany at a cost of
R25 million.
Fundamo (Proprietary) Limited (Fundamo)
VenFin acquired a 32.4% interest in Fundamo at a cost of R14 million during
October 2000.
Investment companies
R&V Holdings Limited (R&V)
R&V made the following investments during the year:
Alexander Forbes Limited (Alexander Forbes)
During September 2000 an investment of 100 million was made in a 6% per
annum guaranteed bonds, redeemable on 15 September 2005 or convertible into
53 694 620 ordinary shares in Alexander Forbes.
Camus Limited (Camus)
During June 2000 a 5% interest was acquired in Camus at a cost of 1.5
million with the option of increasing it to 50% at no cost provided that
R&V, with the initiative of VenFin, succeeds in increasing the value of
Camus to certain agreed levels by exploiting the technology and its
application.
A further interest of 5%, independent of the above-mentioned, was acquired
at a cost of $5.2 million during July 2000. An interest of 8.6%, was also
acquired at a cost of $10.3 million during September 2000.
The discussions with third parties regarding the use of the technology
developed by Camus has been suspended due to the inability of Camus to apply
the technology in its current format on a broad commercial basis. Further
work is now being conducted to validate and develop the technology in order
to find wide commercial applications for it.
RGH Holdings Soci t Anonyme, Luxembourg (RGH)
RGH, which is a wholly-owned subsidiary, made the following investments
during the year:
iTouch plc (iTouch)
During July 2000 an interest of 2.5% in iTouch was acquired for 5 million.
Certus International Soci t Anonyme (Certus)
During December 2000 a loan of $1.5 million was made to Certus, which is
convertible into equity based on certain capitalisation events.
Subsequent to the year-end:
Intervid International AG
RFS Holdings Limited, Jersey, an associated company of VenFin and a wholly-
owned subsidiary of R&V, funded Intervid International during April 2001 in
the sum of $50 million. The funding was effected by way of a loan
compulsorily convertible into equity in Intervid International or Intervid
RSA within four to six years from date of advance.
Intervid RSA
During June 2001 VenFin acquired a further 1 000 000 shares in Intervid RSA
at a cost of R6 million.
Dividends
No dividend is proposed for the year to 31 March 2001.
The annual report will be posted to the members during July 2001.
Signed on behalf the Board of Directors.
Johann Rupert Josua Malherbe
Chairman Chief Executive Officer/Deputy Chairman
Stellenbosch
20 June 2001
Directors and administration
Directors
Johann Rupert* (Chairman), Josua Malherbe (Deputy Chairman/Chief Executive
Officer), Piet Beyers*, Jan Dreyer*, Jan Durand
(*Non-executive)
Secretary
J C Engelbrecht
Listing
JSE Securities Exchange South Africa Sector: Telecommunications
American depositary receipt (ADR) program
Cusip number 759905508 ADR to ordinary share 1:1
Depositary
The Bank of New York, 101 Barclay Street, New York NY 10286
Business address and registered office
Carpe Diem Offices, Quantum Street, Techno Park, Stellenbosch 7600
(PO Box 456, Stellenbosch 7599)
Transfer Secretaries
Computershare Services Limited, 41 Fox Street
Johannesburg 2001 (PO Box 61051, Marshalltown 2107)
Auditors
PricewaterhouseCoopers Inc.
Sponsor
Rand Merchant Bank Corporate Finance
