Report of the financial director

RESULTS FOR THE YEAR ENDED 30 JUNE 2005

Jannie Durand

OVERVIEW

VenFin’s headline earnings for the year to 30 June 2005 increased by 13.2% from R740 million to R838 million. Headline earnings per share for the year to 30 June 2005 increased by 25.4% from 151.4 cents to 189.8 cents, based on the weighted number of shares in issue totalling 441.6 million (2004: 488.9 million shares), reflecting the positive effect of the share repurchase programme.

In order to make a more meaningful evaluation of VenFin’s headline earnings the following items, included in the current year’s headline earnings, need to be taken into account:

An increase in the contribution of Sabido (Proprietary) Limited (e.tv) to VenFin’s headline earnings of R96 million due to the recognition of a deferred tax asset of R299 million in respect of e.tv’s assessed losses.
A negative fair value adjustment of R19 million on the embedded derivative attached to the Dimension Data convertible bond.
Once-off restructuring costs incurred by Alexander Forbes Limited which contributed to a loss of R20 million in VenFin’s headline earnings, as well as the effect of accounting for seven months of earnings and one month of interest for Alexander Forbes only. (For more detail, refer to note 2 of Table A.)

Most of VenFin’s investments contributed satisfactorily to headline earnings, with Vodacom once again the biggest contributor, increasing its contribution to R662 million (2004: R480 million). e.tv’s contribution to headline earnings amounted to R43 million (2004: R22 million) for the year under review (this excludes the effect of the recognition of the deferred tax asset).

R&V Holdings Limited (R&V) became a wholly owned subsidiary on 30 June 2004. As a result, a net taxation charge of R15 million was incurred on offshore interest income earned on the cash and bonds consolidated in the balance sheet, which partially offset the increase in headline earnings.

The year under review was characterised by VenFin’s involvement in the restructuring, merging and rightsizing of investee companies as well as the acquisition of a 25% equity interest in Alexander Forbes, which replaced the investment in the Exchangeable Bonds.

We also continued with our share repurchase programme, albeit on a smaller scale than the previous year. However, the full uplift effect of the shares repurchased during the latter part of the previous financial year is manifested in the weighted average number of shares in issue. This number, which is used in the calculation of the earnings per share numbers, decreased from 488 922 237 in 2004, to 441 567 058.

COMPOSITION OF HEADLINE EARNINGS

The group’s main sources of earnings were:

Vodacom, which contributed approximately 79% (2004: 65%) to headline earnings
e.tv, which contributed 17% (2004: 3%) to headline earnings
Alexander Forbes, which contributed 8% (2004: 16%) to headline earnings

HEADLINE EARNINGS

LOCAL VS OFFSHORE

TABLE A – COMPOSITION OF HEADLINE EARNINGS

VenFin’s share

Effective %

R million

interest at

Year ended

30 June

2005*

2005

2004

Vodacom

15.0

662

480

Psitek

33.0

Dimension Data Bond

– interest

100.0

– fair value adjustment

(19)

–

Tracker

32.1

GenuOne

38.3

(5)

(6)

Intervid ⁽¹⁾

– operating loss

(33)

–

– impairment of financial asset

(12)

–

Other technology

(6)

(4)

Sabido (e.tv)

– normalised headline earnings

31.5

– deferred tax

–

SAIL

36.5

Alexander Forbes ⁽²⁾

– normalised headline earnings

25.2

117

– non-recurring restructuring

costs

(20)

–

Corporate and other ⁽³⁾

(16)

Headline earnings

838

740

*	These percentage interests represent the effective holdings in the respective companies at 30 June 2005, and do not necessarily represent the percentage interest during the accounting period.
(1)	Intervid became a subsidiary only on 30 June 2004. Its earnings for the financial year ended 30 June 2004 was therefore still accounted for as an associate. The comparative operating headline loss incurred by Intervid for the year ended 30 June 2004 was R67 million.
(2)	Alexander Forbes became an associate during the year under review, whereas previously it was accounted for as an investment in an exchangeable bond by R&V. VenFin accounted for income from Alexander Forbes only up to 31 March 2005. VenFin accounted for interest on the bonds for one month and equity accounted the 25% interest for seven months only. If the Alexander Forbes transaction had taken place on 1 April 2004, and not on 6 September 2004, VenFin would have equity accounted its 25% interest in Alexander Forbes for the year from 1 April 2004 to 31 March 2005. This basis of accounting would reflect results that are more comparable with the results of the previous financial year. On this pro forma basis, Alexander Forbes’s contribution to VenFin’s headline earnings for the financial year ended 30 June 2005 would have amounted to R127 million instead of the R65 million actually included. The prior year’s figure was R117 million, reflecting interest for a twelve-month period.
(3)	The decrease in the contribution of Corporate and other to VenFin’s headline earnings is attributed mainly to the drop in interest income on the lower average cash balance in South Africa as well as a taxation charge of R12 million on offshore interest income earned on the cash consolidated in the balance sheet when R&V became a wholly owned subsidiary on 30 June 2004.

TABLE B – CONTRIBUTION TO CHANGE IN HEADLINE EARNINGS

	R million	Cents per share
HEADLINE EARNINGS TO 30 JUNE 2004	740	151.4
Increase/(decrease):
Vodacom	182	37.2
e.tv	117	23.9
Tracker	10	2.0
Alexander Forbes	(52)	(10.6)
Intervid	(45)	(9.2)
Dimension Data	(23)	(4.7)
SA interest	(51)	(10.4)
SA tax on foreign net income	(13)	(2.7)
Corporate cost (including non-tax deductibility of M&I admin fee)	(23)	(4.7)
Other	(4)	(0.8)
	838	171.4
Effect of share repurchases		18.4
HEADLINE EARNINGS TO 30 JUNE 2005	838	189.8

ASSOCIATED COMPANIES

Vodacom

Vodacom has again performed well, with headline earnings up 31.8% to R4 128 million
(2004: R3 133 million) and with an EBITDA margin (earnings before interest, tax, depreciation and amortisation) of 35.1% (2004: 34.0%) for its year ended 31 March 2005. Vodacom South Africa saw a record number of 7.8 million new gross connections to 31 March 2005.

The level of gross connections is the highest in the history of Vodacom.

Alexander Forbes

Alexander Forbes produced revenues of R4.6 billion for the year ended 31 March 2005, up 4% from the previous year. Operating profits, before non-recurring restructuring costs, increased by 1% to R790 million, having been impacted by the reduced profit contribution from its international Risk Services business.

Headline earnings per share decreased by 16% to 113 cents for the year ended
31 March 2005, primarily as a result of non-recurring restructuring costs, totalling R111 million. Alexander Forbes has significantly strengthened its balance sheet during the year, and its continued strong cash flow from operations has enabled it to maintain a 67 cents per share distribution to shareholders.

e.tv

e.tv has benefited from improved general economic conditions, better business performance and favourable currency markets. Revenue grew significantly and programming costs were reduced compared to the prior period.

For its financial year ended 31 March 2005, revenue increased by 14.1% from R503.2 million in 2004 to R574.0 million. e.tv generated R130.8 million in headline profits for the current year, before accounting for the recognition of a deferred tax asset of R298.7 million in respect of its assessed losses. This compares favourably to the R31.4 million headline profit generated in the previous financial year.

e.tv was cash flow positive at operational level for the year ended 31 March 2005.

Tracker

Tracker again showed excellent revenue growth of 25% for the year ended 30 June 2005, mainly due to its strong monthly subscription-based income stream.

Earnings for the year to 30 June 2005 increased by a healthy 60% to R80.4 million
(2004: R50.3 million), mainly as a result of better cost efficiencies on the higher revenue base.

Tracker’s net cash generated from operating activities increased by 31% on the back of the higher customer base.

Psitek

Psitek’s revenue and earnings were marginally lower during the year under review, mainly due to additional effort and costs incurred to fast-track access to, and growth in, new markets, and difficulties to gain market traction in new business developments.

SAIL

SAIL’s revenue decreased marginally by 2.5% during its financial year ended 31 December 2004. Through the ongoing restructuring process and cost-cutting exercise it nevertheless achieved a healthy increase in earnings before finance costs to R27 million (2003: R17 million). SAIL’s earnings before finance costs during its interim period to 30 June 2005 remained flat at R9.4 million (2004: R9.4 million).

SUBSIDIARIES

Corporate

Corporate consists of wholly owned subsidiaries administered at head office level as well as offshore subsidiaries managed and administered offshore, via Switzerland. Activities include treasury functions, receiving and paying of administration fees and other investment activities.

The contribution to headline earnings of net interest income earned on cash deposits in South Africa decreased from R65 million in 2004 to R14 million, mainly as a result of a lower average cash balance due to the share repurchase programme.

Dividends received from other investments contributed R13 million (2004: R12 million) to headline earnings.

Net fees paid to M&I Management Services (Proprietary) Limited (M&I) for management and support services rendered during the year amounted to R41 million (2004: R40 million) on a pre-tax basis and constituted 0.354% (2004: 0.400%) of the market capitalisation of VenFin, calculated on a monthly basis.

Intervid

Intervid posted an operating loss of R33 million for the year ended 30 June 2005
(2004: R67 million). The turnaround programme, which is being implemented, affected revenue growth. Revenue dropped by 54.1% from R255 million in 2004 to R117 million. However, a corresponding cutting of overheads had a positive effect on the bottom line.

Intervid was merged with CommsCo (Proprietary) Limited on 30 June 2005.

BASIC EARNINGS

Basic earnings per share increased by 180.3% to 247.8 cents (2004: 88.4 cents).
Basic earnings reflect earnings after goodwill amortisation, impairments of assets and non-recurring exceptional items. The increase in basic earnings is attributable mainly to capital surpluses realised on the disposal of investments and subsidiaries, as well as negative goodwill realised on acquisitions.

Included in negative goodwill is an amount of R143 million in respect of an adjustment to the goodwill that arose from the restructuring of VenFin’s interest in R&V which resulted in R&V becoming a wholly owned subsidiary of VenFin. This adjustment relates to changes in the valuation of the embedded derivative included in the Dimension Data convertible bond on the restructuring date.

During the current year attributable after-tax capital surplus on disposal of investments amounted to R189 million (2004: R24 million).

DILUTED EARNINGS

As disclosed in note 17 to the financial statements, the diluted earnings per share is calculated by adjusting the weighted number of shares for the dilutive effect of the shares offered to participants by the VenFin Share Scheme. The shares so determined, amounted to 2 501 225 (2004: 1 218 466) and were added to the weighted number of issued shares. Dilution in future years will be affected by the share price performance.

IMPAIRMENT OF INVESTMENTS AND GOODWILL

Provision for the impairment of investments and goodwill amounting to R38 million has been made, of which the most significant is a provision for R37 million against the carrying value of the investment in GenuOne Incorporated to reflect the risks associated with this investment.

CURRENCY EFFECTS

A portion of VenFin’s headline earnings is derived from foreign denominated income, mainly in euros, US dollars and pound sterling.

Below are the average exchange rates that were used to translate income and expenditure items to SA rand, as well as the closing rates used to translate foreign entities into SA rand on balance sheet date.

			Movement
Financial year: 30 June	2005	2004	%
Average exchange rate:
€/R	7.8929	8.1889	3.6
$/R	6.2109	6.8729	9.6
£/R	11.5260	11.9351	3.4
Closing exchange rate on 30 June:
€/R	8.0709	7.5786	(6.5)
$/R	6.6762	6.2300	(7.2)
£/R	11.9550	11.3027	(5.8)

The weakening of the rand against the major currencies has resulted in positive exchange rate differences on translation of foreign entities into SA rand amounting to R377 million (2004: negative R1 026 million), which were credited directly to reserves.

NET ASSET VALUE

As an investment holding company, the growth in the value of VenFin’s net assets is an important indicator of its relative performance.

Neither the book value of net assets shown in the balance sheet nor the share price necessarily reflects the true underlying value of the group.

The underlying value of VenFin includes the fair value of financial instruments (which is included in book value) as well as the valuation of associated companies, either at listed market value or, in the case of unlisted investments, at directors’ valuation.

The calculations to determine the directors’ valuations of the unlisted investments included analysis of the following factors:

Market value and earnings yield of similar listed shares, discounted for limited tradeability of the unlisted shares
Growth potential and risk factor
Underlying net asset value
Profit history
Cash flow projections

The net asset value, at market value and directors’ valuation of investments, increased by 47.2%, from R12 949 million to R19 058 million on 30 June 2005, mainly reflecting the increase in the value of Vodacom.

The net asset value per share, at market value and directors’ valuation of investments amounted to R43.72 on 30 June 2005, compared to R28.80 per share at 30 June 2004. This is an increase of 51.8% year-on-year, reflecting the effect of the share repurchase programme. The number of shares in issue at 30 June 2005 used to determine the net asset value per share, amounted to 435 946 275 (2004: 449 562 597).

Compared to the closing market price of R28.70 (2004: R19.88) prevailing at year-end, the share price trades at a 34.4% discount (2004: 31.0% discount) to VenFin’s net asset value at market value and directors’ valuation of investments.

The table below gives a more detailed composition of the underlying net asset value.

TABLE C – COMPOSITION OF NET ASSET VALUE (R MILLION)

		30 June 2005		30 June 2004
		Book value	Valuations	Book value	Valuations
Listed ⁽¹⁾		1 945	2 066	678	624
Alexander Forbes ⁽⁵⁾		1 305	1 495	–	–
Richemont A units ⁽⁶⁾		–	–	411	411
Dimension Data		403	365	–	–
FrontRange		155	155	62	62
Idion		82	51	81	79
iTouch ⁽⁶⁾		–	–	23	23
Intervid ⁽⁴⁾		–	–	72	20
SAIL ⁽³⁾		–	–	29	29
Unlisted ⁽²⁾		3 220	14 261	4 029	9 999
Vodacom		1 615	12 284	1 511	6 990
Alexander Forbes Bonds ⁽⁵⁾		–	–	1 274	1 274
Dimension Data Bond		828	828	629	666
e.tv	– equity	296	373	163	375
	– loans	74	74	150	150
Tracker		39	274	20	242
Psitek		63	118	69	96
SAIL ⁽³⁾		24	30	–	–
Loans and other investments		281	280	213	206
Cash ⁽⁷⁾		2 731	2 731	2 326	2 326
Total		7 896	19 058	7 033	12 949
Net asset value per share (Rand)		18.11	43.72	15.64	28.80
Share price (Rand)			28.70		19.88
Discount to net asset value			34.4%		31.0%
Potential CGT liability per
share (Rand) ⁽⁸⁾			(1.47)		(0.04)

(1)	Market value
(2)	Directors’ valuation
(3)	SAIL was delisted during the current year
(4)	Intervid was delisted during the current year and merged with CommsCo (Pty) Limited on 30 June 2005.
(5)	Alexander Forbes Bonds were sold during the year. Proceeds were utilised to subscribe for Alexander Forbes shares.
(6)	The iTouch and Richemont investments were sold during the current year.
(7)	Included in cash is an amount of R504 million which represents part of the cash proceeds on the sale of Richemont shares disclosed in “other current assets” on the face of the balance sheet and received on 7 July 2005. The balance of R20 million was received before year-end.
(8)	The potential capital gains tax (CGT) liability, which is unaudited, is calculated at an effective rate of 14.5% on the specific identification method, using the most favourable calculation for investments acquired before 1 October 2001.

TABLE D – CONTRIBUTION TO CHANGE IN NET ASSET VALUE (AT VALUATION)

			Rand per
	Reasons for change	R million	share
NET ASSET VALUE AT 30 JUNE 2004		12 949	28.80
Vodacom	increase in valuation	5 294	11.78
Dimension Data	equity shares and conversion option	527	1.17
Cash	net movement	405	0.90
Alexander Forbes	conversion and increase in share price	221	0.49
FrontRange	share price increase and additions	93	0.21
Richemont	disposal	(411)	(0.92)
e.tv	repay loan and dilution	(78)	(0.17)
iTouch	disposal	(23)	(0.05)
GenuOne	impairment	(37)	(0.08)
Other		118	0.26
		19 058	42.39
Effect of share repurchases			1.33
NET ASSET VALUE AT 30 JUNE 2005		19 058	43.72

INVESTMENT REPORT

New investments

VenFin receives investment inquiries through a number of sources, including our sister companies and their networks, our advisors, our existing investee companies as well as through general awareness of the company in the venture capital markets. In addition, the investment team proactively investigates the investment market for new opportunities.

In the year under review, VenFin received approximately 170 new investment applications.
Of these applications, 129 investment opportunities were assessed at a desktop level and the investment team undertook 14 detailed investigations of new investments, including a number of proactive investment opportunities.

In addition to new investments, VenFin performs due diligences on existing portfolio companies with a view to making an investment decision regarding the current holding. This resulted in some investments being exited and VenFin’s holding in others being increased. It also led to the consolidation of investments of which CommsCo and Intervid are examples. The investment team also supported a number of investee companies with restructuring efforts, BEE transactions and general corporate activities.

In order to strengthen its network globally, VenFin made additional investments in two equity capital funds, one in China and one based in Hong Kong. In addition to providing VenFin shareholders with access to high-growth opportunities in markets that they otherwise would not have access to, these investments provide VenFin and its investees with access to networks and expertise in markets outside South Africa.

Investment evaluation process

VenFin follows a rigorous investment evaluation process before a new investment is made.
A similar rigorous process is also applied to any follow-on investments.

The investment process consists of the following steps:

an initial high level assessment of the opportunity, followed by
a presentation and/or report to the VenFin Executive Committee, whereafter
a term sheet is negotiated with the potential investee, followed by
a full due diligence process, whereafter
a full report is presented to the VenFin Executive Committee and, should consensus be reached,
a full presentation and recommendation to the VenFin Board.

The investment process includes a detailed due diligence on the investment opportunity. The due diligence process typically involves two investment executives and includes, inter alia, financial and legal due diligence, management interviews, market assessment, competitive analysis, customer and partner interviews.

The VenFin Executive Committee meets each month to discuss the existing portfolio and consider new investment opportunities.

The main criteria used by the investment team when considering an investment are:

quality and balance of the incumbent management team and their previous experience in the type of business they are pursuing;
potential impact on VenFin’s net asset value in the long term;
barriers to entry, such as intellectual property, licences, first mover advantage;
opportunity to internationalise the business;
the value VenFin can add to the investee, be it through its own management team, sister companies or investee network.

Monitoring and adding value to investments

VenFin’s aim is to provide strategic input and direction to its investee companies. This is done through board representation and frequent interaction and facilitation with the companies. Each year VenFin holds an investee conference to which each company is invited. The aim of the conference is to facilitate potential portfolio synergies.

Monitoring of investments takes place through representation on relevant board committees and, where possible, VenFin builds in rights via shareholders’ agreements.

CHANGES TO INVESTMENT PORTFOLIO

The most significant changes to VenFin’s investment portfolio during the year ended 30 June 2005 were:

£100 million Alexander Forbes Exchangeable Bonds (the bonds)

During the year under review, VenFin sold the bonds to Alexander Forbes Limited (Alexander Forbes) for a cash payment of R1 159.5 million and £12.5 million. The R1 159.5 million was used to subscribe for 114.8 million Alexander Forbes shares.

A further 1.1 million Alexander Forbes shares were acquired in the open market for
R12 million during September 2004. On 30 June 2005, VenFin’s effective interest in Alexander Forbes was 25.2%. The investment is accounted for as an associate.

Repurchase of VenFin shares

VenFin’s wholly owned subsidiary, VenFin Securities (Pty) Limited, acquired a further
13.7 million VenFin ordinary shares at an average price of R22.11 per share for
R301.9 million. On 30 June 2005, the number of shares in treasury was 38.7 million, or 8.6% of the issued ordinary shares of 1 cent each.

Since the repurchase programme started in the 2002 financial year, a total of 86.3 million ordinary shares (19.3% of the current issued ordinary shares of 1 cent each) have been acquired at an average price of R19.49 per share.

Intervid Limited (Intervid) / CommsCo (Pty) Limited (CommsCo)

Through a scheme of arrangement in terms of section 311 of the Companies Act, 1973
(Act 61 of 1973), as amended, VenFin acquired all the Intervid shares it did not already own for a cash consideration of R9 million and 99 458 VenFin shares. Intervid became a wholly owned subsidiary and was delisted on 24 August 2004.

On 30 June 2005, Intervid and CommsCo merged their respective businesses into an integrated security and infrastructure company, with VenFin’s effective interest in this merged entity totalling 46.1%.

SAIL Group Limited (SAIL)

As previously reported, VenFin, as a member of a consortium, made an offer for the shares held by the other shareholders of SAIL.

On 31 December 2004, the transaction was executed when VenFin, on behalf of the consortium, acquired 172.9 million SAIL shares for R71 million. Subsequently, 28.1 million SAIL shares were repurchased by SAIL, while the remaining 144.8 million shares were converted into SAIL preference shares. Following this transaction, VenFin’s effective interest in SAIL is 36.5%.

FrontRange Limited (FrontRange)

VenFin invested a further R64 million in FrontRange and the total cost of this investment now amounts to R102 million or R3.34 per share. On 30 June 2005, VenFin’s effective interest in FrontRange was 19.0%.

Dimension Data Holdings plc (Didata)

RFS Finance Limited, a wholly owned offshore subsidiary of VenFin, acquired 94 million Didata shares for £33.7 million. On 30 June 2005, these shares represented 7.0% of Didata’s issued shares. Assuming a conversion of the Didata bond into equity, VenFin’s interest in the enlarged issued share capital of Didata will be 18.4%. The equity interest of 7% is classified as an investment in an associate. From 1 April 2005 it will be accounted for according to the equity method.

Cueincident (Pty) Limited (Cueincident)

VenFin invested R12 million in Cueincident, which designs, installs, maintains and operates electronic facilities management systems by utilising surveillance technology. Customers include local government, state-owned enterprises and large corporates. On 30 June 2005, VenFin’s interest in Cueincident amounted to 12.4%.

GEMS Oriental and General Funds (GEMS II and III)

VenFin invested a further $5.0 million in GEMS II, for a total investment to date of
$12.6 million.

VenFin committed $12.5 million to GEMS III, a fund started during 2005 by the same management team as GEMS II. GEMS III aims to raise $300 million and will also make direct investments in the Asian Pacific region. No amount has been drawn on this commitment yet.

Milestone China Opportunities Fund I L.P. (Milestone China)

VenFin has invested a further $2 million in Milestone China. The total investment now amounts to $2.5 million, with a further $2.5 million committed.

Richemont Depositary Receipts (DRs)

During June 2005, RGH Investments Limited, a wholly owned foreign subsidiary of VenFin, sold its remaining 25.3 million Richemont DRs for R524 million. An after-tax capital surplus of R173 million was realised.

Inala Technology Investments (Pty) Limited (Inala)

VenFin disposed of its 33.5% interest in Inala for R5 million and a capital surplus of R1 million has been realised.

Psitek (Pty) Limited (Psitek)

VenFin sold shares in Psitek for R11 million to the Psitek share trust. A capital surplus of
R3 million was realised. On 30 June 2005, VenFin’s interest in Psitek was 33.0%.

Sabido (Pty) Limited (e.tv)

During the year under review e.tv issued and allotted 2 million shares to its employee share trust, while VenFin sold 159 938 e.tv shares to the share trust, resulting in a dilution of VenFin’s effective interest in e.tv to 31.5% on 30 June 2005 (2004: 33.0%).

Subsequent to the year-end:

Tracker Investment Holdings (Pty) Ltd (Tracker)

During July 2005, VenFin purchased an additional 1 128 Tracker shares for R12 million and its interest in Tracker now amounts to 33.7% (30 June 2005: 32.1%).

Fraxion Holdings (Pty) Ltd (Fraxion)

VenFin invested R3 million in Fraxion for a 33.3% interest. Fraxion develops and markets a spend management solution that allows companies to manage and control all spending activities by offering real-time visibility into spending behaviour and budget positions.

CASH FLOWS

Net cash outflow from operating activities amounted to R17 million (2004: inflow of
R135 million). This operating cash flow includes net interest and dividends received from cash and other investments. Total dividends received from associated companies and other investments for the year under review, amounted to R534 million (2004: R341 million).
R146 million was utilised to pay a dividend of 32.5 cents per share.

A total of R2 022 million (2004: R1 187 million) was invested during the year under review.
Of this amount, R1 171 million was utilised to acquire a 25.2% interest in Alexander Forbes, R244 million to repurchase 2.5% of the issued listed shares of VenFin, R64 million for an additional 7.9% stake in FrontRange and R377 million to acquire a 7% interest in Dimension Data.

Proceeds on the disposal of investments amounted to R1 890 million (2004: R324 million), and includes the net proceeds on the disposal of the Alexander Forbes Exchangeable bonds.

Cash and cash equivalents amounted to R2 227 million (2004: R2 389 million) at year-end. This amount is made up as follows:

R million		30 June 2005	30 June 2004
Local
Cash at the centre		415	286
Operating subsidiary		–	63
Offshore		1 812	2 040
Cash and cash equivalents – balance sheet		2 227	2 389

Cash and cash equivalents consist of the following currencies:


	%	ZAR	Currency
Currency	exposure	million	million
ZAR	18.6	415	R415
Euro	71.5	1 591	€197
GBP	8.8	196	£16
USD	1.1	25	$4

Per balance sheet	100.0	2 227

DISTRIBUTION TO SHAREHOLDERS

Repurchase of VenFin shares

As mentioned previously, VenFin Securities acquired during the year under review a net number of 13 453 291 ordinary VenFin shares for a total of R298 million.

Since the repurchase programme started in the 2002 financial year, a total of 86.3 million ordinary shares (19.3% of the current issued ordinary shares of 1 cent each) were repurchased at an average price of R19.49 per share.

Dividend

A dividend of 50.0 cents (2004: 32.5 cents) per share has been declared.

This dividend is covered 3.8 times (2004: 4.7 times) by headline earnings and 2.1 times (2004: 2.3 times) by cash earnings. Cash earnings is calculated by adding to the headline earnings the dividends received from associated companies and subtracting the equity-accounted headline earnings from associated companies.

FINANCIAL POSITION

VenFin has a strong balance sheet with no gearing and with shareholders’ funds totalling
R7 896 million (2004: R7 033 million) on 30 June 2005. The increase in shareholders’ funds is mainly attributable to the increase in carrying value of investments as well as the positive currency translation effect due to the weakening of the rand.

This strong financial position enables VenFin to move swiftly should any potential investment opportunities arise.

ACCOUNTING DEVELOPMENTS

The accounting policies applied during the current financial year are consistent with those of the previous year, with the exception of the the implementation of the South African Statement of Generally Accepted Accounting Practice, AC 501: Accounting for secondary taxation on companies (STC).

AC 501: Accounting for secondary taxation on companies (STC)

In terms of this accounting statement, a deferred tax asset should be recognised for unutilised STC credits to the extent that it is probable that the entity will declare dividends against which the STC credits can be utilised.

VenFin’s history regarding dividends received against ordinary dividends paid suggests increasing STC credits in time. It is therefore unlikely that in the foreseeable future VenFin’s STC credits will be utilised against ordinary dividends paid. Consequently, no deferred tax asset has been created for the Company’s unutilised STC credits of R958 million.

Restatement of comparative figures in respect of goodwill

Goodwill attributable to investments in associated companies is included in the carrying amount of associates in the 2005 annual financial statements, while previously it was reported under “intangible assets”. The comparative balance sheet has been restated accordingly.

International financial reporting standards (IFRS)

With effect from 1 July 2005, VenFin will implement IFRS and in the group’s financial statements for the year ending 30 June 2006, the comparative figures for 2005 will be restated accordingly. In the announcement of the interim results for the six months ending 31 December 2005, which will be presented in terms of IFRS, the effects of these new accounting standards will be disclosed fully.

CONCLUSION

The contribution of the financial staff at M&I, VenFin and from our investee companies has been invaluable during this year under review. I thank you for all your efforts.

Jannie Durand Financial Director