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VenFin Limited -
VenFin Limited -
Registration number 1948/031037/06
ISIN ZAE000026498 Share Code VNF
AUDITED CONSOLIDATED RESULTS FOR THE TWELVE MONTHS ENDED 30 JUNE 2003
Headline earnings per share 130.2 cents
Increase in headline earnings per share compared to 2002:
15-months adjusted headline earnings
+10.8%
Comparative 12-months adjusted headline earnings
+42.8%
Maiden dividend per share
25 cents
ABRIDGED CONSOLIDATED BALANCE SHEET
30 June 30 June
2003 2002
R million R million
ASSETS
Non-current assets
Goodwill 556 138
Investments - Associated companies* 5 595 6 451
- Other 636 1 885
6 787 8 474
Current assets 1 468 920
Cash and cash equivalents 1 414 865
Other current assets 54 55
Total assets 8 255 9 394
EQUITY AND LIABILITIES
Interest of own members 8 205 9 335
Current liabilities 50 59
Total equity and liabilities 8 255 9 394
*Includes one-third interest in R&V Holdings Limited (R&V). VenFin"s
attributable interest in the cash of R&V amounts to
R1 712 million (30 June 2002: R2 992 million).
ABRIDGED CONSOLIDATED INCOME STATEMENT
Fifteen
Twelve months end months
30 June 2003 ended
30 June
Company and 2002
its Associated
subsidiaries companies Total Total
R million R million R million R million
Revenue 256 256 274
Operating loss (40) (40) (55)
Net interest income 179 179 156
Profit from operations 139 139 101
Amortisation of (86) (19) (105) (129)
goodwill
Impairment of goodwill (70) (13) (83) (21)
Impairment of assets - (234) (234) (252)
Equity adjustment:
Share of net profit
before taxation of
associated companies 769 769 832
Exceptional items 357 5 362 (75)
Profit before taxation 340 508 848 456
Taxation (51) (204) (255) (223)
NET PROFIT 289 304 593 233
-
Reconciliation of
headline earnings:
BASIC EARNINGS - net
profit 289 304 593 233
Plus/(minus) -
attributable to own
members:
- Exceptional items (357) (5) (362) 72
- Amortisation of
goodwill 86 19 105 129
- Impairment of
goodwill and assets 70 247 317 273
- Surplus on disposal
of property, plant and
equipment - (1) (1) -
- Tax effect 13 * 13 *
HEADLINE EARNINGS 101 564 665 707
Reconciliation of
adjusted headline
earnings:
HEADLINE EARNINGS -
reported 101 564 665 707
Adjustment relating to
e-tv - - - (95)
ADJUSTED HEADLINE
EARNINGS (2002)** 101 564 665 612
*Amounts smaller than R500 000
**Refer to Annexure A, as well as note on "Adjusted headline earnings (2002)"
under commentary.
SEGMENTAL ANALYSIS - HEADLINE EARNINGS Twelve months Fifteen months
ended ended
30 June 2003 30 June 2002
R million R million
Adjusted**
Telecommunication 404 394
Technology (1) (3)
Media (28) (87)
Risk services 135 161
Corporate 155 147
665 612
EARNINGS AND DIVIDENDS PER
SHARE
Twelve months Fifteen
ended 30 June 2003 months
ended
30 June
Company and 2002
its Associated Total Total
subsidiaries companies
HEADLINE EARNINGS (cents) 19.8 110.4 130.2 135.7
- DILUTED 19.8 110.3 130.1 135.5
BASIC EARNINGS (cents) 56.6 59.5 116.1 44.7
- DILUTED 56.6 59.5 116.1 44.7
ADJUSTED HEADLINE EARNINGS 19.8 110.4 130.2 117.5
(cents)**
- DILUTED 19.8 110.3 130.1 117.3
DIVIDENDS (cents) 25.0 -
Twelve
months
ended
30 June
2002
ADJUSTED HEADLINE EARNINGS
- BASED ON A COMPARATIVE 12- 19.8 110.4 130.2 91.2
MONTH PERIOD
(cents)**
**Refer to Annexure A, as well as note on "Adjusted headline earnings (2002)"
under commentary.
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Twelve Fifteen
months months
ended ended
30 June 30 June
2003 2002
R million R million
Opening balance 9 335 7 031
Net after-tax cumulative opening balance 808 -
adjustment (AC 133)
Net profit for the period 593 233
Exchange rate adjustments (1 345) 2 296
Change in reserves of associated companies (99) (88)
Net after-tax fair value adjustments for the (512) -
period (AC 133)
Realisation of fair value adjustments of financial (347) -
instruments
Shares in VenFin Limited acquired by wholly-owned (228) (137)
subsidiary
Interest of own members 8 205 9 335
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Twelve Fifteen
months months
ended ended
30 June 30 June
2003 2002
R million R million
Net operating profit before taxation 848 456
Adjustments (958) (453)
Operating profit/(loss) before working capital
changes (110) 3
Working capital changes (12) 138
Cash generated from /(utilised in) operations (122) 141
Net interest received 179 156
Taxation paid (41) (32)
Dividends received 112 176
Net cash inflow from operating activities 128 441
Investing activities 426 (578)
Net increase/(decrease) in cash and cash
equivalents 554 (137)
Cash and cash equivalents at the beginning of the
period 860 997
Cash and cash equivalents at the end of the period
1 414 860
ADDITIONAL INFORMATION
30 June 30 June
2003 2002
Shares in issue
- Ordinary shares of 1 cent each 486 493 650 486 493 650
- Unlisted B ordinary shares of 10 cents 35 506 352 35 506 352
each
Total shares in issue 522 000 002 522 000 002
- Shares held in treasury (ordinary shares (21 646 966) (7 400 000)
of 1 cent each)
500 353 036 514 600 002
Weighted shares in issue 510 601 673 521 049 542
- In determining the headline earnings, basic earnings and adjusted
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
adjusted 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.
30 June 30 June
2003 2002
Net asset value per share (Rand)
- At book value R16.40 R18.14
- At market value and directors" valuation
of investments R24.17 R27.11
R million R million
Listed investments
Associated
- Carrying value 19 132
- Market value 52 107
Other
- Carrying value 607 1 706
- Market value 607 2 606
Unlisted investments
Associated
- Carrying value 5 576 6 319
- Directors" valuation 9 982 10 189
Other
- Carrying value 29 179
- Directors" valuation 29 179
Capital commitments 12 20
(Including amounts authorised,
but not yet contracted)
ADDITIONAL INFORMATION (CONTINUED)
Twelve months Fifteen months
ended 30 June 2003 ended 30 June 2002
R million R million
Dividends received
Dividends included in operating profit 20 29
Dividends from associated companies 92 85
Exceptional items
Exceptional items of subsidiary
companies consist of the following:
Impairment of loan to e-tv - (95)
Net capital surplus/(loss)
on the disposal of
- Richemont depositary receipts 361 -
- other long-term investments (4) 15
Total before taxation - per
income statement 357 (80)
Taxation (13) -
Total after taxation 344 (80)
Share of exceptional items of
associated companies after taxation 5 4
Total - attributable to own members 349 (76)
ANNEXURE A
COMPOSITION OF HEADLINE EARNINGS
VenFin"s share
R million
Effective %
interest at Fifteen
30 June Twelve months
2003*** months 30 June 2002
30 adjusted for
June e-tv
2003
ASSOCIATED COMPANIES
Vodacom 15.0 376 381
R&V 33.3 211 238
- Dimension Data 24 -
- Alexander Forbes 135 161
- Other 52 77
Psitek 32.0 27 11
Tracker 32.1 8 12 *
Inala 19.5 1 2 *
SAIL 17.3 (4) 8
Intervid 36.9 (6) (4)*
GenuOne 33.0 (22) (9)
e-tv (24) (95)
Other (3) **
564 544
SUBSIDIARIES 101 68
Net interest received
Net management fees
Corporate and other
128 112
(29) (35)
2 (9)
Headline earnings 665 612
* Accounting period: 18 months to 30 June 2002
** Amount smaller than R500 000
*** These percentage interests represent the effective holdings in the
respective companies at 30 June 2003, and do not necessarily represent the
percentage interest during the accounting period.
ANNEXURE B
COMPOSITION OF NET ASSET VALUE PER SHARE (RAND)
30 June 2003 30 June 2002
Book value Valuations Book value Valuations
Listed (1) 1.27 1.32 3.72 5.27
Unlisted 3.96 11.68 2.47 9.89
(2)
R&V(2) 8.34 8.34 10.28 10.28
Cash 2.83 2.83 1.67 1.67
Total 16.40 24.17 18.14 27.11
Share price 16.80 17.50
(1) Market value
(2) Directors" valuation
COMMENTARY
INTRODUCTION
VenFin operates as an investment holding company focusing on telecommunication,
technology and media businesses. The group actively manages its investments
through regular dialogue with other shareholders, directors and the management
of investee companies.
CHANGE IN YEAR-END
As previously reported, VenFin changed its year-end from 31 March to 30 June in
the 2002 financial period. Therefore the results for the comparative 15-month
period ended 30 June 2002 are not directly comparable with those for the 12
months ended 30 June 2003.
ACCOUNTING POLICIES
The annual financial statements are prepared on the historical cost basis,
unless otherwise indicated, in accordance with South African Statements of
Generally Accepted Accounting Practice, the requirements of the South African
Companies Act and the Listing Requirements of the JSE Securities Exchange South
Africa and incorporate policies which are consistent with those of the previous
period, with the exception of accounting for financial instruments.
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 an after-tax cumulative adjustment gain of R808.2
million as an opening balance adjustment to reserves 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.
ADJUSTED HEADLINE EARNINGS (2002)
Due to the material effect that the equity accounted results of e-tv would have
had on the results of VenFin if the Independent Communication Authority of South
Africa (ICASA) had approved the equity interest in Sabido (Proprietary) Limited,
the holding company of e-tv, VenFin presented adjusted headline earnings in
prior periods on the basis that the attributable portion of e-tv"s loss was
accounted for as a loss in an associated company and not as an exceptional item.
As a result of the approval by ICASA in March 2003, VenFin has equity accounted
e-tv for the year under review. On account of this change in the accounting
treatment of e-tv, the headline earnings for the period under review corresponds
with the adjusted headline earnings.
Therefore, in order to achieve a more meaningful comparison with the current
period, adjusted headline earnings are still presented for the prior period.
FINANCIAL REVIEW
Headline earnings
Headline earnings for the 12 months to 30 June 2003 was R665 million compared to
headline earnings of R707 million for the 15 months to 30 June 2002. Headline
earnings per share was 130.2 cents for the 12 months to 30 June 2003 compared to
135.7 cents for the 15-month period to 30 June 2002.
Headline earnings per share for the 12 months to 30 June 2003 increased by 10.8%
to 130.2 cents, from the adjusted headline earnings of 117.5 cents for the 15-
month period to 30 June 2002.
Based on a comparative 12-month period to 30 June 2002, the increase in headline
earnings per share for the year to 30 June 2003 would have been 42.8%, from an
adjusted 91.2 cents to 130.2 cents.
Composition of headline earnings
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) (15.0% interest), which
contributed approximately 57% (2002: 62% for a 13.5% interest) to adjusted
headline earnings
Associated company R&V Holdings Limited (R&V) (33.3% interest), which
contributed 32% (2002: 39%) to adjusted headline earnings
Net interest income from cash resources, which contributed 19% (2002: 18%) to
group earnings.
Vodacom
Vodacom again performed strongly, with headline earnings of R2 308 million and
an EBITDA margin (earnings before interest, tax, depreciation and amortisation)
of 33.9% for its year ended 31 March 2003. Vodacom"s headline earnings for the
three months from 1 April 2003 to 30 June 2003 were R699 million.
R&V
The majority of R&V"s earnings is interest generated by the Alexander Forbes and
Dimension Data convertible bonds and on cash.
The decrease in earnings from R&V is mainly attributed to the accounting of 12
months earnings as opposed to 15 months in the previous period.
Corporate (Wholly-owned subsidiaries)
The contribution of net interest income to headline earnings increased by 14.3%
to R128 million (2002: R112 million), mainly as a result of a higher average
cash balance, as well as the high interest rate levels that prevailed on local
cash.
Dividends received from other investments contributed R19.7 million (2002: R29.1
million) to headline earnings.
Impairment of investments and goodwill
Provision for impairment of investments and goodwill amounting to R70 million
has been made as follows:
An impairment provision amounting to R13 million has been made against the
carrying value of FRS due to it still being at a development stage.
The unamortised goodwill created on the investments previously made in Intervid
amounting to R34 million, and SAIL amounting to R23 million, were impaired to
reflect the diminution in the value of these assets.
The write-down by R&V of the Intervid International convertible loan amounting
to R226 million is included in the impairment of assets of associated companies
amounting to R234 million.
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 2003 annual report, due for distribution
by the end of September 2003.
CHANGES TO INVESTMENTS
The most significant changes to VenFin"s investment portfolio for the twelve
months ended 30 June 2003 were:
Vodacom
VenFin acquired an additional 1.5% interest in Vodacom from Hosken Consolidated
Investments Limited (HCI), with effect from 31 December 2002 for a total
consideration of R451.1 million. The proceeds from the Richemont transaction
mentioned below, were in part used to settle this amount. At 30 June 2003,
VenFin"s interest in Vodacom was 15.0%.
Compagnie Financiere 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 net cash proceeds realised by VenFin
as a result of exercising the put option amounted to R942.9 million. An after-
tax capital surplus of R347.5 million was realised and is accounted for as an
exceptional item.
Sabido (Proprietary) Limited (Sabido)
During April 2000 VenFin granted an indirect, interest-free loan of R281.8
million to Sabido, the holding company of Midi TV (Proprietary) Limited (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 R280.0
million to HCI. This loan was interest-bearing and fully secured.
During September 2002 R200.0 million of this interest-bearing loan was replaced
by an interest-free loan to HCI for e-tv. The balance of the loan was repaid on
31 December 2002. VenFin"s indirect interest in e-tv was 33.0% on 30 June 2003.
GenuOne Incorporated (GenuOne)
During the period under review an additional investment of $4 million was made
in GenuOne. At 30 June 2003, VenFin"s effective interest in GenuOne was 36.9%.
Idion Technology Holdings Limited (Idion)
During the period under review VenFin invested R11.4 million in Idion. At 30
June 2003, VenFin"s effective interest in Idion was 6.0%.
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.
FRS Financial Reporting Solutions (Proprietary) Limited (FRS)
During November 2002, VenFin invested a further R3 million in FRS. At 30 June
2003, the interest in FRS was 42.9%.
Fibalogic (Proprietary) Limited (Fibalogic)
VenFin sold its interest in Fibalogic on 30 September 2002. A capital loss of
R4.3 million was realised and is accounted for as an exceptional item.
R&V
On 31 December 2002, R&V, an associated company of VenFin, subscribed for a $100
million seven-year convertible bond issued by Dimension Data Holdings plc
(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 (VenFin Securities), acquired an additional 14
246 966 ordinary VenFin shares for a total amount of R228.3 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 21 646 966 shares bought
to date represent 4.4% of the issued ordinary shares of 1 cent each.
Prospects
We continue to evaluate new investment opportunities on a regular basis both
inside and outside South Africa. Our investment strategy is to take a long-term
view and we believe that the current market offers good opportunities. We have
changed our focus slightly and are concentrating on larger investments which can
make a meaningful contribution to VenFin.
Subsequent to the year-end:
VenFin Share Trust (Trust)
Subsequent to the year-end VenFin Securities sold 8 896 346 of the treasury
shares to the Trust for a net consideration of R149 million. This disposal was
financed by way of a loan to the Trust.
Veritas
VenFin has invested a further $150 000 into the fund. Total investments now
amount to $450 000.
Richemont A units
Subsequent to the year end, RGH Investments Limited, a wholly-owned subsidiary
of VenFin, sold 2.2 million Richemont A units for an amount of R312 million.
EXCHANGE RATE DIFFERENCES
Negative exchange rate differences arising on translation of offshore assets to
SA Rand at 30 June 2003 amounted to R1 345 million (2002: R2 296 million
positive exchange rate differences) and was debited directly to reserves.
DIRECTORS
Messrs M J Bosman and AG Fletcher, Dr E Links and Prof EC Botha were appointed
as independent non-executive directors on 8 September 2003.
AUDIT REPORT
The annual financial statements have been audited by PricewaterhouseCoopers Inc.
and their unqualified audit reports on the comprehensive annual financial
statements and the summarised financial statements are available for inspection
at the registered office of the Company.
DIVIDEND
The dividend declared hereunder represents VenFin"s maiden dividend.
Declaration of Dividend No 1
Notice is hereby given that a final dividend of 25 cents per share has been
declared in respect of both the ordinary shares of one cent each and the
unlisted B ordinary shares of ten cents each, for the financial year ended 30
June 2003.
Dates of importance:
Last day to trade in order to participate Friday, 10 October 2003
in the final dividend
Trading on or after this date will be ex Monday, 13 October 2003
the final dividend
Record date Friday, 17 October 2003
Payment date Monday, 20 October 2003
On payment date, Monday, 20 October 2003, if so mandated, dividends due to
holders of certificated securities will either be transferred electronically to
bank accounts, or alternatively, cheques will be posted to their registered
addresses.
Dividends in respect of dematerialised shareholdings will be credited to
shareholders" accounts at their broker or CSDP on Monday, 20 October 2003.
Shareholders may not dematerialise or rematerialise their holdings of ordinary
shares between Monday, 13 October 2003 and Friday, 17 October 2003, both days
inclusive.
The Annual Report will be posted to members during September 2003.
Signed on behalf of the Board of Directors.
Johann Rupert Josua Malherbe
Chairman Chief Executive Officer/Deputy Chairman
Stellenbosch
8 September 2003
DIRECTORS AND ADMINISTRATION
Directors
Johann Rupert* (Chairman),
Josua Malherbe (Deputy Chairman/Chief Executive Officer),
Piet Beyers*, Mike Bosman*, Liesbeth Botha*, Jan Dreyer*, Jan Durand,
GT Ferreira*, Anthony Fletcher*, Elias Links*, 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
Carpe Diem Office Park, Quantum Street, Techno Park, Stellenbosch 7600
(P O Box 456, Stellenbosch 7599)
Transfer Office
Computershare Limited, 70 Marshall Street,
Johannesburg 2001 (P O Box 61051, Marshalltown 2107)
Auditors
PricewaterhouseCoopers Inc.
Stellenbosch
Sponsor
Rand Merchant Bank (A division of FirstRand Bank Limited)
Corporate Finance
www.venfin.com
Date: 09/09/2003 08:00:21 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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