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Venfin Ltd - INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2002
(UNAUDITED)
VENFIN LIMITED
Registration number 1948/031037/06
ISIN ZAE000026498 Share Code VNF
INTERIM REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2002 (UNAUDITED)
INCREASE IN PRO FORMA HEADLINE EARNINGS PER SHARE: + 39.8%
INCREASE IN HEADLINE EARNINGS PER SHARE: + 26.0%
ADDITIONAL INVESTMENT OF R450 MILLION IN VODACOM
INVESTMENT OF $100 MILLION IN DIMENSION DATA CONVERTIBLE
BOND
ABRIDGED CONSOLIDATED BALANCE SHEET
Unaudited Audited
31 30 September 30
December June
2002 2001 2002
R million R million R million
ASSETS
Non-current assets
Property, plant and equipment - 1 1
Goodwill and patents 505 122 137
Investments - Associated 6 040 5 212 6 451
companies
- Other 1 156 1 500 1 885
Deferred taxation 11 - -
7 712 6 835 8 474
Current assets 1 456 1 201 920
Cash and cash equivalents 1 398 1 168 865
Other current assets 58 33 55
Total assets 9 168 8 036 9 394
EQUITY AND LIABILITIES
Capital and reserves
Interest of own members 9 107 7 997 9 335
61 39 59
Current liabilities
Short-term interest-bearing loans - 3 5
Other current liabilities 61 36 54
Total equity and liabilities 9 168 8 036 9 394
ABRIDGED CONSOLIDATED INCOME STATEMENT
Unaudited Six months Audited
ended
31 Fifteen
December months
2002 ended
Company Associated 30
and its June
2002
subsidiaries Companies Total Total Total
R million R million R million R million R million
Revenue 163 163 94 274
Operating loss (13) (13) (23) (55)
Net interest 75 75 61 156
income
Profit from 62 62 38 101
operations
Amortisation of (19) (27) (46) (14) (129)
goodwill
Impairment of - - - (22) (21)
goodwill
Impairment of - (17) (17) (223) (252)
assets
Equity
adjustment:
Share of net
profit before 350 350 276 832
taxation of
associated
companies
Exceptional items 362 * 362 (18) (75)
Profit before 405 306 711 37 456
taxation
Taxation (33) (90) (123) (69) (223)
NET PROFIT/(LOSS) 372 216 588 (32) 233
Reconciliation of
headline
earnings:
BASIC EARNINGS -
net profit/(loss) 372 216 588 (32) 233
Plus/(minus) -
attributable to
own members:
- Exceptional (362) - (362) 16 72
items
- Amortisation of
goodwill 19 27 46 14 129
- Impairment of
goodwill and - 17 17 245 273
assets
- Tax effect 13 - 13 - *
HEADLINE EARNINGS 42 260 302 243 707
Reconciliation of
pro forma
headline
earnings:
HEADLINE EARNINGS
- reported 42 260 302 243 707
Adjustment
relating to e-tv - - - (24) (95)
PRO FORMA
HEADLINE 4 2 260 302 219 612
EARNINGS**
EARNINGS PER
SHARE
HEADLINE EARNINGS
(cents) 8.2 50.5 58.7 46.6 135.7
- DILUTED 8.1 50.5 58.6 46.6 135.5
BASIC EARNINGS
(cents) 72.3 42.0 114.3 (6.1) 44.7
- DILUTED 72.2 42.0 114.2 (6.1) 44.7
PRO FORMA HEADLINE 8.2 50.5 58.7 42.0 117.5
EARNINGS** (cents)
- DILUTED 8.1 50.5 58.6 42.0 117.3
*Amounts smaller than R500 000
**Refer to Annexure A, as well as note on "Pro forma headline earnings" under
comments.
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Audited
Six months Fifteen
ended months
ended
31 30 30
December September June
2002 2001 2002
R million R million R million
Opening balance 9 335 7 031 7 031
Cumulative opening balance adjustment (AC 808 - -
133)
Net profit for the period 588 (32) 233
Exchange rate adjustments (807) 1 075 2 296
Change in reserves of associated companies (87) (77) (88)
Fair value adjustments for the period (AC (368) - -
133)
Realisation of fair value adjustments of
financial instruments (348) - -
Shares in VenFin Limited acquired by wholly-
owned subsidiary (14) - (137)
Interest of own members 9 107 7 997 9 335
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Audited
Six months Fifteen
ended months
ended
31 30 30
December September June
2002 2001 2002
R million R million R million
Net operating profit before taxation 711 37 456
Adjustments (767) (101) (453)
Operating profit/(loss) before working
capital changes (56) (64) 3
Working capital changes (2) 209 138
Cash generated from/(utilised in) (58) 145 141
operations
Net interest received 75 61 156
Dividends received 20 66 176
Taxation paid (22) (16) (32)
Net cash inflow from operating 15 256 441
activities
Investing activities 523 (88) (578)
Net increase/(decrease) in cash and cash
equivalents 538 168 (137)
Cash and cash equivalents at the
beginning of the period 860 997 997
Cash and cash equivalents at the end of
the period 1 398 1 165 860
ADDITIONAL INFORMATION
31 30 30
December September June
2002 2001 2002
Shares in issue
- Ordinary shares of 1 cent each 486 493 486 493 650 486 493
650 650
- Unlisted B ordinary shares of 10
cents each 35 506 352 35 506 352 35 506 352
Total shares in issue 522 000 522 000 002 522 000
002 002
- Shares held in treasury
(ordinary shares of 1 cent each) (8 150 000) - (7 400 000)
513 850 522 000 002 514 600
002 002
Weighted shares in issue 514 487 522 000 002 521 049
568 542
- 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.
31 30 30
December September June
2002 2001 2002
Net asset value per share
(Rand)
- At book value R17.72 R15.32 R18.14
- At market value and R24.86 R26.31 R27.11
directors` valuation of
investments
R million R million R million
Listed investments
Associated
- Book value 94 81 132
- Market value 91 213 107
Other
- Book value 777 1 248 1 706
- Market value 777 1 776 2 606
Unlisted investments
Associated
- Book value 5 946 5 131 6 319
- Directors` valuation 10 111 10 318 10 189
Other
- Book value 379 252 179
- Directors` valuation 379 252 179
Capital commitments 13 14 20
(Including amounts authorised, but
not yet contracted)
ADDITIONAL INFORMATION (CONTINUED)
Six Fifteen
months months
ended ended
31 30 30
December September June
2002 2001 2002
R million R million R
million
Dividends received
Dividends included in operating profit 18 2 29
Dividends from associated companies 2 2 85
Exceptional items
Exceptional items of subsidiary
companies consist of the following:
Impairment of loan to e-tv - (24) (95)
Net capital surplus on the disposal of
- Richemont depositary receipts 361 - -
- other long-term investments 1 - 15
Total before taxation - per income 362 (24) (80)
Taxation (13) - -
Total after taxation 349 (24) (80)
Share of exceptional items of associated * 8 4
companies after taxation
Total - attributable to own members 349 (16) (76)
*Amount smaller than R500 000
ANNEXURE A
COMPOSITION OF HEADLINE EARNINGS
VenFin`s share
R million
Effective % Six months Fifteen
interest at 30 September month
31 December Six months 2001 30 June 2002
2002* 31 December
2002
Tracker 32.14 3 4 12
Psitek 33.09 17 2 11
Intervid 17.27 (4) 3 (4)
e-tv 33.05** (17) - -
Other (4) (6) (18)
(5) 3 1
Vodacom 15.00 165 130 381
R&V 33.33 94 87 241
254 220 623
Net 44 112
interest 53
received
Corporate 11 (8) 7
Net (13) (35)
management (16)
fees
Headline 243 707
earnings
- 302
reported
Adjusted 33.05** (24) (95)
for e-tv -
Pro forma
headline
earnings 302 219 612
*These percentage interests represent the effective holdings in the respective
companies at 31 December 2002, and do not
necessarily represent the percentage interests during the accounting period.
**Assuming conversion of loan to equity.
ANNEXURE
B
COMPOSITION OF NET ASSET VALUE PER SHARE (RAND)
31 December 2002 30 September 2001 30 June 2002
Book Valuation Book Valuation Book Valuation
value s value s value s
Listed (1) 1.83 1.69 2.73 3.81 3.72 5.27
Unlisted(2) 4.07 11.35 2.16 12.24 2.47 9.89
R&V 9.10 9.10 8.20 8.03 10.28 10.28
Cash 2.72 2.72 2.23 2.23 1.67 1.67
Total 17.72 24.86 15.32 26.31. 18.14 27.11
Market 17.61 17.30 17.50
price
Market value
Directors` valuation
COMMENTS
Accounting policies
The interim results have been prepared in accordance with accounting statement
AC 127 (Interim financial reporting), the Listing Requirements of the JSE
Securities Exchange South Africa and the South African Companies Act.
The accounting policies used in the preparation of the interim financial
statements are consistent with those used in the annual financial statements for
the year ended 30 June 2002, with the exception of accounting for financial
instruments, and conform with South African Statements of Generally Accepted
Accounting Practice.
Change in accounting policies
With effect from 1 July 2002 VenFin adopted AC 133 (Financial Instruments:
Recognition and Measurement). In accordance with the transitional provisions of
AC 133, VenFin recorded a cumulative adjustment gain of R808 million as an
opening balance adjustment to retained earnings in order to recognise the
difference between the carrying values and fair values of financial instruments
at 1 July 2002.
Due to the fact that the comparative figures are not restated under the
transitional provisions of AC 133, certain items are not directly comparable on
a line-for-line basis with that of prior financial periods.
Change in year-end
As previously reported, VenFin changed its year-end from 31 March to 30 June.
Therefore the results for the comparative six months period ended 30 September
2001 are not directly comparable with that for the six months ended 31 December
2002.
Pro forma headline earnings
In order to achieve a more meaningful comparison with the prior periods, pro
forma headline earnings are presented for the current period.
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 of South
Africa (ICASA) 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.
Due to the implementation of AC 133, and the fact that ICASA has not yet
approved the conversion of the loan to equity, VenFin has valued the loan in
accordance with the provisions of AC 133 and included the adjustment in headline
earnings. Due to this change in the accounting treatment of the loan to e-tv,
the headline earnings for the period under review corresponds with the pro forma
headline earnings.
Financial review of investments
The headline earnings per share for the six months increased by 26.0% from 46.6
cents to 58.7 cents, although it is not directly comparable due to the change in
year-end. The pro forma headline earnings per share for the six months
increased by 39.8% from 42.0 cents to 58.7 cents.
The group`s main sources of earnings were: Vodacom Group (Proprietary) Limited
(Vodacom) (13.5% interest for the full period), which contributed approximately
55% to group headline earnings, the associated company R&V Holdings Limited
(R&V) (33.3% interest), which contributed over 31% to headline earnings, and
interest received from other cash resources.
Net interest received on cash in South Africa and abroad amounted to R53 million
(30 September 2001: R44 million) in the six months under review.
Other investments performed as expected in difficult market conditions, with a
headline loss of R5 million (30 September 2001: R3 million profit). The
majority of these investments is in an early development stage and expected to
contribute to the group`s earnings over the medium to long term.
Exchange rate differences
Negative exchange rate differences arising on the translation of offshore
interests to SA rand at 31 December 2002 amounted to R807 million and were
debited directly to reserves.
Investments
The most significant changes to VenFin`s investment portfolio for the six months
ended 31 December 2002 were:
FRS Financial Reporting Solutions (Proprietary) Limited (FRS)
During November 2002, VenFin invested a further R3 million in FRS. At 31
December 2002, the interest in FRS was 42.9%.
Fibalogic (Proprietary) Limited (Fibalogic)
VenFin sold its interest in Fibalogic on 30 September 2002. A capital surplus
of R1 million was realised and is accounted for as an exceptional item.
Compagnie Financi
re Richemont AG (Richemont)
On 31 December 2002, VenFin exercised the put option acquired from Merrill Lynch
International in respect of 51 858 000 Richemont depositary receipts held by
VenFin ("the Richemont transaction"). The total cash proceeds realised by VenFin
as a result of exercising the put option amounted to R945.2 million. A capital
surplus of R348 million was realised and is accounted for as an exceptional
item.
Vodacom
VenFin acquired from Hosken Consolidated Investments Limited (HCI) an additional
1.5% interest in Vodacom with effect from 31 December 2002 for a total
consideration of R450 million. The proceeds from the Richemont transaction were
in part used to settle this amount. At 31 December 2002, VenFin`s interest in
Vodacom was 15.0%.
Midi TV (Proprietary) Limited (e-tv)
During April 2000 VenFin granted an indirect, interest-free loan of R281.8
million to Sabido (Proprietary) Limited (Sabido), the holding company of e-tv.
An additional R38.6 million was advanced to HCI for e-tv during the 2002
financial period. During January 2002, VenFin advanced a further loan of R280
million to HCI. This loan was interest-bearing and fully secured.
During September 2002 R199.4 million of this interest-bearing loan was converted
into an interest-free loan to HCI for e-tv. The balance of the loan was repaid
on 31 December 2002. If the interest-free loans to Sabido and HCI were to be
converted into equity in Sabido on 31 December 2002, VenFin`s indirect interest
in e-tv would be 33.1%.
Idion Technology Holdings Limited (Idion)
During November 2002 VenFin invested R2.5 million in Idion. At December 2002,
VenFin`s effective interest in Idion was 2.2%.
GenuOne Incorporated (GenuOne)
During the period under review an additional investment of $4 million was made
in GenuOne. At 31 December 2002, VenFin`s effective interest in GenuOne was
37.8%.
Veritas Venture Partners (Cayman) L.P. (Veritas)
VenFin approved an investment of $1.5 million in VVP Fund II, L.P. of which $150
000 had been drawn at 30 June 2002. During the period under review an additional
$150 000 was drawn.
R&V
R&V, an associated company of VenFin, made the following investment during the
period under review:
Dimension Data Holdings plc (Didata)
On 31 December 2002, R&V Technology Holdings Limited, a wholly-owned subsidiary
of R&V, subscribed for a $100 million seven-year convertible bond issued by
Didata. If converted, R&V will hold an equity interest of approximately 12.3%
of the fully diluted share capital of Didata.
Buy-back of VenFin shares
During the period under review, VenFin`s wholly-owned subsidiary, VenFin
Securities (Proprietary) Limited, acquired an additional 750 000 ordinary VenFin
shares for a total amount of R13.9 million. These shares, together with the 7
400 000 shares bought during the fifteen months ended 30 June 2002, are held as
treasury shares. The 8 150 000 shares bought to date represent 1.7% of the
issued ordinary shares of 1 cent each.
DIVIDENDS
No dividend is proposed for the six months ended 31 December 2002.
Signed on behalf of the Board of Directors.
Johann Rupert
Chairman
Josua Malherbe
Chief Executive Officer/Deputy Chairman
Stellenbosch
6 March 2003
DIRECTORS AND ADMINISTRATION
Directors
Johann Rupert* (Chairman),
Josua Malherbe (Chief Executive Officer/Deputy Chairman),
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, 70 Marshall Street,
Johannesburg 2001 (P O Box 61051, Marshalltown 2107)
Auditors
PricewaterhouseCoopers Inc.,
Stellenbosch
Sponsor
Rand Merchant Bank Corporate Finance
www.venfin.com
Date: 06/03/2003 05:03:02 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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