| |
| Dear Shareholder |
The Board has pleasure in reporting on the activities and financial
results of your group for the year under review.
|
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OPERATING ACTIVITIES |
| VenFin is an investment holding company. The group derives its
income mainly from dividends and equity accounted income of associated
companies in which VenFin invested. Interest is also earned on cash
resources. |
| |
| The investee companies’ operating activities are mainly spread
over telecommunication, technology and media interests and financial
and risk services. The biggest portion of the individual investments
are in South Africa, but a substantial investment, which is held
abroad, is the $100 million Dimension Data convertible bond. |
| |
GENERAL REVIEW |
| Operating results |
|
|
| Year ended 30 June: |
2005 |
2004 |
| Headline earnings (R million) |
838 |
740 |
| Interest in net profit of Vodacom (R million) |
662 |
480 |
| Interest in net profit of associated companies – excluding
Vodacom |
|
|
| (R million) |
229 |
223 |
| Net interest income and other profit/(loss) (R million) |
(53) |
37 |
| – per share (cents) |
189.8 |
151.4 |
| – diluted (cents) |
188.7 |
151.0 |
| Basic earnings – net profit for the year (R million) |
1 094 |
432 |
| – per share (cents) |
247.8 |
88.4 |
| – diluted (cents) |
246.4 |
88.1 |
| Dividends (R million) |
218 |
146 |
| – per share (cents) |
50.0 |
32.5 |
| |
|
|
| Details of the operating results are set out in more
detail in the report of
the financial director. |
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|
|
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2005 |
2004 |
| |
R million |
R million |
| Composition of headline earnings |
|
|
| Subsidiary companies |
(53) |
37 |
| Profits |
74 |
44 |
| Losses |
(127) |
(7) |
| Associated companies |
891 |
703 |
| Profits |
902 |
714 |
| Losses |
(11) |
(11) |
 |
|
|
| |
838 |
740 |
|
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ACCOUNTING POLICIES |
| Change in accounting policy |
| 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. |
| |
| Other adjustment |
| 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. |
| |
| Restatement of prior year figures as a result of the above-mentioned
adjustments: |
| |
| |
30 June 2004 |
| Balance sheet |
R million |
| Decrease in intangible assets |
(551) |
| Increase in investments – associated companies |
551 |
|
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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. |
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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. |
| |
EXCHANGE RATE DIFFERENCES |
| Net positive exchange rate differences as a result of the translation
of foreign entities into SA rand on 30 June 2005 amounted to R377
million (2004: negative R1 026 million) and were credited directly
to reserves. |
| |
INVESTMENTS |
| Refer to the Report of the
Financial Director for
the most important changes in investments for the year under review. |
| |
| Subsequent to the year-end: |
| Tracker Investment Holdings (Proprietary) Limited (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 (Proprietary) Limited (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. |
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SHARE CAPITAL |
| During the year the trustees of The VenFin Share Scheme (the “scheme”)
offered ordinary shares to participants as follows (Refer
to note 7): |
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|
|
|
Number of |
Number of |
| |
Offer |
Number of |
|
shares |
participants |
| |
price |
shares |
Number of |
accepted on |
who accepted |
| Date |
(Rand) |
offered |
participants |
30 June 2005 |
the offer |
|
|
|
|
|
|
| |
|
|
|
|
|
| 15/09/2004 |
21.01 |
536 988 |
8 |
536 988 |
8 |
| 20/09/2004 |
21.13 |
253 860 |
155 |
250 970 |
151 |
| 05/01/2005 |
26.80 |
2 542 |
1 |
2 542 |
1 |
| 01/02/2005 |
24.99 |
2 719 |
1 |
2 719 |
1 |
| 01/04/2005 |
27.50 |
825 |
1 |
825 |
1 |
| 01/06/2005 |
27.70 |
2 479 |
1 |
– |
– |
|
|
|
|
|
|
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|
799 413 |
|
794 044 |
|
|
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| The offers are valid for one year from the date of the offer.
The scheme is a deferred purchase scheme and payment is made in three
equal annual instalments, the first of which is only payable three
years after the offer date. |
| |
| Participants have no right to delivery, voting or ordinary dividends
on shares before payment has been made. Participants may choose to
pay on a later date with the resultant deferment of rights. Payment
must, however, be made within ten years. |
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SERVICE COMPANY |
| In 2000, an agreement was concluded with a service company, M&I,
to render management and support services to VenFin. The shareholders
of M&I are all employees of M&I who own all the issued ordinary
shares, other than the issued A ordinary shares in M&I and have
all irrevocably waived in writing any distributions to them in their
capacity as such shareholders in favour of VenFin and Remgro Limited
in such proportions as VenFin and Remgro Limited may agree or, failing
such agreement, in equal shares. No dividends have been declared.
Rembrandt Trust (Proprietary) Limited (Rembrandt Trust) owns all
the A ordinary shares of M&I. The A ordinary shares have the
majority of voting rights but have no rights to the income or assets
of M&I. |
| |
| VenFin pays fees to M&I which cover the overhead costs of
the management of VenFin. These fees are calculated at a maximum
of 0.463% per year of the market capitalisation of VenFin, calculated
on a monthly average basis. This percentage may not be exceeded without
the approval of 75% of all classes of shareholders of VenFin. The
fees are payable at the end of each month. For the past year, the
fees amounted to R41 million (2004: R40 million), or 0.354% (2004:
0.400%) of the average market capitalisation, and are explained in
note 13 to the annual financial statements. |
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PRINCIPAL SHAREHOLDER |
| Rembrandt Trust holds all the issued unlisted B ordinary shares
of the Company and is entitled to 47.0% (2004: 46.2%) of the total
votes exercisable by shareholders. |
| |
| View the analysis of the
shareholders. |
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SUBSIDIARY COMPANIES AND INVESTMENTS |
| Particulars of subsidiary companies, associated companies and
other investments are disclosed in Annexures
A and B. |
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DIRECTORS |
| The names of the directors appear on the Directors
page of this
report. |
| |
| In terms of the provisions of the articles of association, Messrs
P E Beyers, M J Bosman and J W Dreyer and Dr E Links retire from
the Board by rotation. These directors are eligible and offer themselves
for re-election. |
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DIRECTORS’ INTERESTS |
| At 30 June 2005 the aggregate of the direct and indirect interests
of the directors in the issued share capital of the Company amounted
to 0.14% (2004: 0.13%). |
| |
| Mr J P Rupert is a director of Rembrandt Trust which owns all
the issued unlisted B ordinary shares. |
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| An analysis of the directors’ interests in the issued share
capital of the Company appears on the Analysis of shareholders
page of this report. |
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DIRECTORS’ FEES |
| The Board recommends that directors’ fees for services rendered
during the past year be fixed at R1 790 000 (2004: R1 298 000). |
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ACQUISITION OF SHARES OF THE COMPANY |
| It is recommended that a general authority be granted to the Board
for it to acquire, should circumstances warrant it, the Company’s
own shares and to approve the acquisition of shares in the Company
by any of its subsidiaries, subject to the provisions of the Companies
Act 61 of 1973, as amended, and the Listings Requirements of the
JSE. |
| |
| Special resolutions to this effect are incorporated in the Notice
of the Annual General Meeting that appears on the Notice
to shareholders page of this report. |
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SECRETARY |
| Mrs M Lubbe is the Company Secretary and her address appears on
the Administration page of this report. |
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DIVIDENDS |
| Dividend No 3 |
| A final dividend of 50.0 cents (2004: 32.5 cents) per share has
been declared for the financial year ended 30 June 2005 in respect
of both the ordinary shares of one cent each and the unlisted B ordinary
shares of ten cents each. |
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| Payment |
| The final dividend is payable to shareholders of the Company registered
at the close of business on Friday, 14 October 2005. |
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| Shareholders may not dematerialise or rematerialise their holdings
of ordinary shares between Monday, 10 October 2005, and Friday, 14
October 2005, both days included. |
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APPROVAL |
The annual financial statements set out on pages
84 to 122 have
been approved by the Board.
(PLEASE HELP WITH LINK/S?) |
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| Signed on behalf of the Board of Directors. |
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 |
 |
| Johann Rupert |
Josua Malherbe |
| Chairman |
Chief Executive Officer |
| |
|
| Stellenbosch |
|
| 6 September 2005 |
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Report
of the Board of Directors