10
V
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F
I N A N N U A L R E P O R T
2006
Normalised headline earnings for the period amounted to R126 million or 43 cents per share.
The net asset value, at market value and directors’ valuation of investments, amounted to
R6 114 million, or R21.14 per share on 30 June 2006.
The new VenFin group was established in January 2006
with the acquisition of the surplus assets of the former
VenFin group (excluding the 15% interest in Vodacom)
for a cash consideration of R5 billion.
VenFin’s predecessor, the former VenFin group, was just over
five years old when Vodafone implemented the offer to
acquire all the shares in former VenFin for R47.25 per share
on 26 January 2006. If a former VenFin shareholder had
acquired the shares on listing date, 26 September 2000, at
the closing price of R25.15, an annual average growth rate
of 13.1% on the exit price of R47.25, including dividends,
would have been realised.
Former VenFin shareholders subscribed for more than 50%
of the available shares in unlisted VenFin Limited at
R11.24 per share, indicating their confidence in VenFin.
During the period under review the global economy has
continued growing at an annualised rate of more than 4%
– the third year in a row – driven mainly by sustained strong
growth in China and other Asian countries as well as
developing countries such as Russia and Brazil. This growth
was achieved despite serious geopolitical tensions which
drove the international crude oil prices to levels never
seen before. Global inflationary pressure, especially in the
developed economies, has triggered a series of interest rate
hikes in countries like the USA. Uncertainties relating to the
future movements of USA interest rates as well as growing
concerns about the current account deficit have resulted in
volatile international financial markets.
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. This has led to the South
African Reserve Bank (SARB) increasing interest rates twice
by 50 basis points to curb over zealous consumer spending
and inflationary pressures.
A rise in imports, together with a decline in the competitive-
ness of exports, has caused the current account deficit to
widen to levels last seen in the early 1980s. This deficit
leads to a volatile and weakening currency. The full effect on
the currency is currently offset by the strong levels of
commodity prices. If commodity prices weaken, there is a
probability that the rand will weaken simultaneously.
VenFin operates in these uncertain economic environments,
which requires us to adapt to changes to remain successful
in our ventures.
We have broaden our historic investment focus from mainly
a Telecommunication, Media and Technology (TMT) player
to a broader mandate. 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 from
1 January 2006 to 30 June 2006. No comparisons are
presented because the Company was dormant until the
implementation of the Surplus Assets Sale Agreement in
January 2006.
Headline earnings for the period to 30 June 2006 amounted
to R404 million, or 137.9 cents per share. Excluding the
effect of non-recurring headline earnings items, normalised
headline earnings amounted to R126 million, or 43 cents
per share for the six-month period.
GENERAL REPORT