GENERAL REPORT

The new unlisted VenFin group has now been in existence for 18 months and this is our first full-year results. During the past 18 months we operated predominantly in a high-growth, robust environment, with resultant high record equity prices and cheap capital. During the last few months of trading and subsequent to year-end, some dark clouds have gathered on the horizon. The jury is still out at the time of the report whether this is just a passing storm or a full-blown hurricane. The problems in the sub-prime lending market in the USA, fuelled by easy obtainable debt and the availability of low-cost capital, have not fully resolved themselves at the time of this report. The exposure of banks, funds and savings capital to this asset class has not been fully comprehended yet. This will certainly change investors’ perception of risk and it is the change in risk perception and not risk tolerance that explains the surprisingly high volatility of financial markets.

During the period under review the global economy has continued to grow at an above average rate – driven mainly by sustained strong growth in China and other Asian countries. The sustained growth in the world economy has given the South African economy a steady push over the past four years, but we foresee a tapering off in growth rates given the volatile and uncertain circumstances. Assets might be repriced and the cost of capital of investment decisions will definitely change with the repricing of the risk premium again at reasonable levels.

Domestically, the South African economy is growing at a steady rate of around 4% to 5% per annum. Consumer demand has remained robust, fuelled by growing credit extension and household debt.

VenFin operates in these uncertain economic environments, which requires us to adapt to changes to remain successful in our ventures.

As explained in the last report, VenFin broadened its historic investment focus from mainly a Telecommunication, Media and Technology (TMT) player to a broader mandate. This has definitely contributed to a better deal flow in terms of quality and quantity. We are continually seeking attractive opportunities that we understand and where our investment team can add value for the benefit of VenFin and its shareholders.

FINANCIAL REVIEW

This financial report includes the results of the group for the twelve months ended 30 June 2007, and represents VenFin’s maiden full-year results. The comparative results for the six-month period from 1 January 2006 to 30 June 2006 are therefore not comparable with the results of the current financial year.

Headline earnings for the year to 30 June 2007 amounted to R233 million, or 83.0 cents per share. The headline earnings consists mainly of equity accounted earnings from associates, amounting to R155 million, as well as interest and other net income derived from cash and other investments, net of head office costs, amounting to R78 million.

Composition of headline earnings

	Twelve months	Six months
	ended	ended
	30 June 2007	30 June 2006
	R million	R million
Associates
Sabido ⁽¹⁾	72	6
Alexander Forbes ⁽²⁾	48	58
Dimension Data ⁽¹⁾	44	14
Tracker ⁽³⁾	41	28
Psitek ⁽³⁾	8	2
SAIL ⁽³⁾	7	1
Other	(11)	(2)
Amortisation of intangibles raised on acquisition	(54)	(10)

Subsidiaries
Interest and other net income	78	45
Normalised headline earnings	233	142
Non-recurring headline earnings items:
Dimension Data Bond – fair value adjustment	–	295
Finance cost relating to acquisition of surplus assets	–	(42)
Foreign exchange loss relating to repatriation of offshore cash	–	(5)
Reversal of impairment of loans	–	14
Headline earnings	233	404

Notes:
(1) These associates were equity accounted for the twelve months to 31 March 2007. In the period ended 30 June 2006, these associates were equity accounted for the three months to 31 March 2006.
(2) This investment in Alexander Forbes was equity accounted for six months to 30 September 2006, based on its interim period, compared to three months in the prior period. Effective from 1 October 2006 Alexander Forbes was reclassified to an investment held for sale due to the change of intention to dispose of the investment.
(3) These associates were equity accounted for the twelve months to 30 June 2007. In the period ended 30 June 2006,these associates were equity accounted for the six months to 30 June 2006.

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.

The underlying value of VenFin includes the fair value of financial instruments as well as the valuation of associates, either at listed market value or in the case of unlisted investments, at directors’ valuation.

The calculations to determine the directors’ valuation of the unlisted investments included an 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 factors
Underlying net asset value
Profit history
Cash flow projections

The net asset value, at market value and directors’ valuation of associates, increased by 32.4%, from R6 114 million to R8 095 million on 30 June 2007, reflecting mainly the increase in the market value of Dimension Data and the increased valuation of Sabido.

The net asset value per share, at market value and directors’ valuation of associates amounted to R29.78 on 30 June 2007, compared to R21.14 at 30 June 2006. This represents an increase of 40.9% year-onyear, reflecting the uplift effect of the share repurchase programme. The number of net shares issued at year-end to determine the net asset value per share, was 271 871 243 (2006: 289 176 698).

Compared to the closing OTC market price of R23.25 at 30 June 2007 (2006: R14.20), the share price traded at a 21.9% discount (2006: 32.8% discount) to VenFin’s net asset value at market value and directors’ valuation of associates. Excluding the cash balance and the valuation of the investment in Alexander Forbes, which was realised subsequent to year-end, the shares traded at a discount of 35.4% (2006: 41.3%). A schedule, setting out a more detailed composition of the underlying net asset value, is included at the end of this report.

INVESTMENTS

During the year under review, VenFin invested R167 million in current and new investments, of which R61 million was invested in Tracker as part of the Tracker Mobile Data transaction. Furthermore, we exited the Idion investment, receiving a total capital distribution of R142 million.

Another significant event was the approval by the Alexander Forbes shareholders of the offer by the Actis consortium to acquire the entire issued share capital of Alexander Forbes for a cash consideration of R17.33 per share. Subsequent to year-end, VenFin received proceeds amounting to R2 008 million for its shareholding, realising an Internal Rate of Return (IRR) of 25% on its investment in Alexander Forbes. (Please refer to the Director’s Report for further details of investments made during the year.)

In addition to the above, our new broader investment focus has allowed VenFin to commit an amount of R1.1 billion to be invested subsequent to year-end.

OUTLOOK

We continue to evaluate new investment opportunities on a regular basis, both in South Africa and abroad. Our investment strategy is to take a long-term view. Although we have a broader mandate than just the TMT sectors, the focus still remains on investments with the potential to make a meaningful contribution to VenFin. Investments are constantly evaluated and if the prognosis for any investment changes and it becomes clear that it cannot make a meaningful contribution to VenFin in the long term, the investment is realised. We will take cognisance of the volatile and uncertain markets in our investment decisions and in the way we manage our investments. It will be in these times that VenFin must be able to show that it can still deliver superior returns to its shareholders.

DISTRIBUTION TO SHAREHOLDERS

Repurchase of VenFin shares

VenFin has repurchased a further 17.3 million VenFin ordinary shares at an average price of R18.77 per share for R325 million during the year under review.

Dividends

The Board is of the opinion that, subsequent to the cash proceeds received on the disposal of the investment in Alexander Forbes and after making provision for the payment of an ordinary dividend of 30 cents per share, as well as for authorised and committed investment opportunities amounting to R1 146 million, the group will have surplus cash resources available. These surplus cash resources will be utilised by the group to continue its share repurchase programme and to pay a special dividend to its shareholders.

An ordinary dividend of 30 cents (2006: 25 cents) per share and a special dividend of 50 cents per share have been declared. The ordinary dividend is covered 4.1 times (2006: 2.2 times) by the cash headline earnings.

ACKNOWLEDGEMENTS

We express our sincere gratitude to everybody who contributed to the performance of the group over the past year – the shareholders for their continued support, our fellow directors for their guidance and insights, the management teams in the various group companies and our colleagues at VenFin and M&I.

We are confident that VenFin is well positioned for continued success in the years ahead

Johann Rupert Jannie Durand
Chairman Chief Executive Officer

Stellenbosch
5 September 2007