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30 JUNE 2002
VENFIN LIMITED
AUDITED CONSOLIDATED RESULTS FOR THE FIFTEEN MONTHS ENDED
30 JUNE 2002
Registration number 1948/031037/06
ISIN ZAE000026498
Share Code VNF
ABRIDGED CONSOLIDATED BALANCE SHEET
30 June 31 March
2002 2001
R million R million
ASSETS
Property, plant and equipment 1 1
Goodwill and patents 137 132
Investments - Associated companies* 6 451 4 263
- Other 1 885 1 435
Current assets 920 1 246
Total assets 9 394 7 077
EQUITY AND LIABILITIES
Interest of own members 9 335 7 031
Current liabilities 59 46
Total equity and liabilities 9 394 7 077
*Includes one-third interest in R&V Holdings Limited (R&V). VenFin`s
attributable interest in the cash of R&V amounts to R2 992 million
(31 March 2001: R2 590 million).
ABRIDGED CONSOLIDATED INCOME STATEMENT
Fifteen months Twelve months
ended ended
30 June 31 March
2002 2001
R million R million
Revenue 274 126
Operating loss (55) (16)
Net interest income 156 82
Profit from operations 101 66
Amortisation of goodwill (129) (25)
Impairment of goodwill (21) -
Impairment of investments (252) -
Equity adjustment:
Share of net profit before taxation of
associated companies 832 685
Exceptional items (75) (123)
Profit before taxation 456 603
Taxation (223) (160)
NET PROFIT 233 443
Reconciliation of headline earnings:
BASIC EARNINGS - net profit 233 443
Plus/(minus) - attributable to own members:
- Exceptional items 72 123
- Amortisation of goodwill 129 25
- Impairment of goodwill and investments 273 -
- Tax effect * (5)
HEADLINE EARNINGS 707 586
Reconciliation of pro forma headline earnings:
HEADLINE EARNINGS - reported 707 586
Adjustment relating to e-tv (95) (77)
PRO FORMA HEADLINE EARNINGS 612 509
*Amounts smaller than R500 000
EARNINGS PER SHARE
HEADLINE EARNINGS (cents) 135.7 112.3
- DILUTED 135.5 112.3
BASIC EARNINGS (cents) 44.7 84.9
- DILUTED 44.7 84.9
PRO FORMA HEADLINE EARNINGS (cents) 117.5 97.5
- DILUTED 117.3 97.5
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Fifteen months ended Twelve months ended
30 June 31 March
2002 2001
R million R million
Opening balance 7 031 3 999
Adjustment relating to
redemption of British
American Tobacco Plc
preference shares - 2 337
Net profit for the period 233 443
Exchange rate adjustments 2 296 235
Change in reserves of
associated companies (88) 17
Shares in VenFin Limited
acquired by wholly-owned
subsidiary (137) -
Interest of own members 9 335 7 031
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Fifteen months ended Twelve months ended
30 June 31 March
2002 2001
R million R million
Cash generated from operations 141 505
Net interest received 156 82
Taxation paid (32) (2)
Dividends received 176 19
Net cash inflow from
operating activities 441 604
Investing activities (578) (294)
Net increase/(decrease) in
cash and cash equivalents (137) 310
Cash and cash equivalents
at the beginning of the period 997 687
Cash and cash equivalents
at the end of the period 860 997
ADDITIONAL INFORMATION
30 June 31 March
2002 2001
Shares in issue
- Ordinary shares of 1 cent each 486 493 650 486 493 650
- Unlisted B ordinary shares of 10
cents each 35 506 352 35 506 352
Total shares in issue 522 000 002 522 000 002
- Shares held in treasury
(ordinary shares of 1 cent each) (7 400 000) -
514 600 002 522 000 002
Weighted shares in issue 521 049 542 522 000 002
- In determining the headline
earnings, basic earnings and pro
forma headline earnings per share
the total weighted number of
shares in issue was taken into account.
- In determining the diluted headline
earnings, basic earnings and pro forma
headline earnings per share the
weighted number of shares in issue
was adjusted for the dilutive effect
of the Company`s long-term share incentive scheme
Net asset value per share (Rand)
- At book value R18.14 R13.47
- At market value and directors`
valuation* of investments
(*Refer to note under Annexure B) R27.11 R25.48
R million R million
Listed investments
Associated
- Book value 132 13
- Market value 107 107
Other
- Book value 1 706 1 197
- Market value 2 606 1 808
Unlisted investments
Associated
- Book value 6 319 4 250
- Directors` valuation* 10 189 9 934
Other
- Book value 179 238
- Directors` valuation* 179 238
(*Refer to note under Annexure B)
Capital commitments 20 -
(Including amounts authorised, but not yet contracted)
Dividends received
Dividends included in operating profit 29 17
Dividends from associated companies 85 66
ADDITIONAL INFORMATION (CONTINUED) Fifteen months Twelve months
ended ended
30 June 31 March
2002 2001
R million R million
Exceptional items
Exceptional items of subsidiary
companies consist of the following:
- Impairment of loan to e-tv (95) (77)
- Costs of restructuring * (3)
- Net capital surplus on the sale
of long-term investments 15 16
(80) (64)
Share of exceptional items of
associated companies after taxation 4 (54)
- Profit/(loss) on realisation of
investments 3 (38)
- Investments written off and provisions - (29)
- Tax effect (1) 5
- Other 2 8
Total - attributable to own members (76) (118)
*Amounts smaller than R500 000
ANNEXURE A
COMPOSITION OF HEADLINE EARNINGS
VenFin`s share
R million
Effective % interest at Fifteen months Twelve months
30 June 2002 30 June 2002 31 March 2001
Tracker 32.14 12 -
Psitek 33.09 11 1
SAIL 19.53 8 3
Inala 32.31 2 1
Intervid 17.40 (4) 1
Other* (25) (5)
4 1
Vodacom 13.50 381 241
R&V 33.33 238 295
623 537
Net interest 100.00 112 60
Corporate 100.00 7 14
Net management fees 100.00 (35) (25)
Headline earnings 707 586
- reported
Adjusted for e-tv 26.00 (95) (77)
Pro forma headline
earnings 612 509
*Included is the loss (net of interest) attributable to Fibalogic (Proprietary)
Limited amounting to R16 million
(31 March 2001: R2 million).
ANNEXURE B
COMPOSITION OF NET ASSET VALUE PER SHARE (RAND)
30 June 2002 31 March 2001
Book value Valuations Book value Valuations
Listed (1) 3.72 5.27 2.40 3.67
Unlisted (2) 2.47 9.89 2.42 12.75
R&V 10.28 10.28 6.74 7.15
Cash 1.67 1.67 1.91 1.91
Total 18.14 27.11 13.47 25.48
Market price 17.50 17.05
(1) Market value
(2) Directors` valuation
Note:
In prior years the valuations of the unlisted investments were done internally
on a conservative basis. The 30 June 2002 valuations of some of those
investments were however based on the opinions of independent professional
experts who were also used to perform capital gains tax valuations.
COMMENTS
INTRODUCTION
VenFin operates as an investment holding company focusing on technology-driven
businesses. The group actively manages its investments through regular dialogue
with other shareholders, directors and the management of the different
enterprises.
VenFin`s investments in unlisted fast-growing telecommunications and technology
companies provide a low-risk entry point into
dynamic new markets for shareholders.
VenFin`s aim is to become a global investment company. It is building a series
of formal and informal alliances with venture capitalists in major markets to
broaden deal flow and to add to the global potential it offers to its investee
companies.
CHANGE IN YEAR-END
The group changed its year-end from 31 March to 30 June. The change was
necessary to enable the group`s service company, M&I Management Services
(Proprietary) Limited, to deal with both VenFin`s and Remgro Limited`s financial
year-ends without incurring additional management costs by appointing additional
financial staff.
PRO FORMA HEADLINE EARNINGS
Due to the material effect that the equity accounted results of e-tv will have
on the results of VenFin if the Independent Communication Authority approves the
conversion of the loan to equity, the pro forma headline earnings are presented
on the basis that the attributable portion of e-tv`s loss is accounted for as a
loss in an associated company and not as an exceptional item.
FINANCIAL REVIEW OF INVESTMENTS
The headline earnings of the group on a pro forma basis for the fifteen months
increased by 20.5% from 97.5 cents to 117.5 cents per share.
The increase in earnings must be assessed taking the composition of the group`s
earnings into account.
The group`s main sources of earnings were: Vodacom Group (Proprietary) Limited
(Vodacom) (13.5% interest), which contributed approximately 54% to group
headline earnings, the associated company R&V Holdings Limited (R&V)
(33.3% interest), which contributed over 33% to headline earnings, and the
interest received from other cash resources.
In spite of the redeployment of cash into new investments, net interest received
on cash in South Africa and abroad amounted to R112 million (31 March 2001 -
twelve months period: R60 million) in the fifteen months under review.
Other investments performed as expected in difficult market conditions, with a
pro forma headline loss of R91 million (31 March 2001 - twelve months
period: R76 million loss). The majority of these investments is in an early
development stage and expected to contribute to the group`s earnings only over
the medium to long term.
A provision of R267 million was made for the impairment of goodwill and
investments in respect of Camus (an investment of R&V, an associated company of
VenFin), iTouch, eCompany and Fundamo to reflect potential risks associated with
investments in a start-up phase. This is consistent with the management of
VenFin`s prudent approach and is in keeping with the belief that above-average
returns will be enjoyed and sustained in the long term.
OPERATIONAL REVIEW OF INVESTMENTS
Associated companies
Vodacom
Vodacom again performed very well with a 38.0% increase in headline earnings to
R2 438 million and an EBITDA margin (earnings before interest, tax, depreciation
and amortisation) of 34.9% for its year-ended 31 March 2002. Due to the change
in VenFin`s year-end, it has equity accounted Vodacom`s results for the fifteen
months ended 30 June 2002. Vodacom`s headline earnings for the three months from
1 April 2002 to 30 June 2002 was R387 million.
R&V
The income of R&V consists mainly of interest earned on cash and on the
Alexander Forbes Limited bond.
The decrease in the earnings of R&V is mainly attributable to lower interest
rates and less cash, as well as non-recurring income earned in the previous
year.
An analysis and detailed composition of the performance of the various
investments appears in Annexures A and B and a full operational review of all
investments can be found in the group`s 2002 annual report.
INVESTMENTS
The most important changes in VenFin`s investment portfolio for the three months
since the last interim report were as follows:
FRS Financial Reporting Solutions (Proprietary) Limited (FRS)
During May 2002 VenFin invested an additional R4 million in FRS. At 30 June
2002, the interest in FRS was 41.4%. In terms of the shareholders` agreement,
VenFin`s interest will dilute to 33.3% if certain milestones are met by FRS.
Fundamo (Proprietary) Limited (Fundamo)
During June 2002 VenFin invested a further R2.2 million in Fundamo. At
30 June 2002, the interest was 37.6%.
R&V
R&V made the following investment:
VHF Technology SA (VHF)
During January 2002 a loan of CHF1 million was granted to VHF. An additional
CHF0.5 million loan was granted during June 2002. These loans are interest free
and repayable at the latest by 31 March 2003. Should the loans not be repaid by
this date, they are convertible into shares in VHF.
Buy-back of VenFin shares
During March 2002, VenFin`s wholly-owned subsidiary, VenFin Securities
(Proprietary) Limited, acquired 3 800 000 ordinary VenFin shares for a total
amount of R69.8 million. During June 2002 a further 3 600 000 shares were
acquired for R67.2 million. These transactions did not have a material effect on
earnings or earnings per share.
Subsequent to the year-end:
Fibalogic (Proprietary) Limited (Fibalogic)
VenFin has entered into discussions with third parties regarding the possible
disposal of its interest in Fibalogic.
GenuOne Incorporated (GenuOne)
VenFin approved an additional investment of $4 million in GenuOne.
Vodacom
On 29 August 2002 it was announced that VenFin had entered into discussions with
Hosken Consolidated Investments Limited (HCI) regarding the purchase of HCI`s 5%
interest in Vodacom. VenFin will issue further announcements as appropriate.
EXCHANGE RATE DIFFERENCES
Positive exchange rate differences arising on translation of offshore assets to
SA rand at 30 June 2002 amounted to R2 296 million and was credited directly to
reserves.
ACCOUNTING POLICIES
The annual financial statements are prepared on the historical cost basis in
accordance with South African Statements of Generally Accepted Accounting
Practice and incorporate policies which have been consistently applied and
correspond with those of the previous year in all respects.
The annual financial statements have been audited by PricewaterhouseCoopers Inc.
and their unqualified audit report is available for inspection at the registered
office of the Company.
PROSPECTS
In line with our investment strategy, new equity investments will impact
negatively on earnings in the short term as a result of the loss of interest
income on cash invested.
We also expect that the current uncertain investment market will continue in the
foreseeable future. The conservative financing model that VenFin has always used
is now bearing fruit and ensures that developing group companies are able to
continue their business in spite of the slowdown in the market.
We have strengthened our investment evaluation capability through the
appointment of further investment professionals and are already reaping the
benefits of this decision.
VenFin has a strong cash position and is well placed to continue investing in
businesses that show strong potential. Our due diligence processes in respect of
new investments take the change in market risk and conditions into account and
amend valuations accordingly.
We are confident that our strategy of taking a long-term view on investments
will continue to serve us well.
DIVIDENDS
No dividend is proposed for the fifteen months ended 30 June 2002.
Signed on behalf of the Board of Directors.
Johann Rupert
Chairman
Josua Malherbe
Chief Executive Officer/Deputy Chairman
Stellenbosch
9 September 2002
DIRECTORS AND ADMINISTRATION
Directors
Johann Rupert* (Chairman),
Josua Malherbe (Deputy Chairman/Chief Executive Officer),
Piet Beyers*, Jan Dreyer*, Jan Durand,
GT Ferreira*, John Newbury*
(*Non-executive)
Secretary
Mariza Lubbe
Listing
JSE Securities Exchange South Africa
Sector: Financial - Investment Companies
American depositary receipt (ADR) program
Cusip number 759905508 ADR to ordinary share 1:1
Depositary
The Bank of New York, 620 Avenue of the Americas, New York NY 10011
Business address and registered office
Quantum Street, Techno Park, Stellenbosch 7600
(P O Box 456, Stellenbosch 7599)
Transfer Secretaries
Computershare Investor Services Limited, 41 Fox Street,
Johannesburg 2001 (P O Box 61051, Marshalltown 2107)
Auditors
PricewaterhouseCoopers Inc.
Stellenbosch
Sponsor
Rand Merchant Bank Corporate Finance
www.venfin.com
Date: 10/09/2002 08:52:00 AM Produced by the JSE SENS Department
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