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EX-99 9 ex99_threee.htm Page 1

EXHIBIT 99.3

VENFIN LIMITED FINANCIALS

ANNUAL REPORT

CONTENTS

Tribute 1

Group mission

Investment philosophy

Group investments

Group proﬁle

Financial highlights

Share statistics

Directors and Board committees

Executive management

General report

Net asset value

Investment review

Corporate governance

Sustainability report

Annual ﬁnancial statements

Analysis of shareholders

Dates of importance to shareholders

Administration

Notice to shareholders

Form of proxy

Attached

Incorporated in the Republic of South Africa

Registration number 2004/034954/06

ISIN ZAU000000028

www.venﬁn.com

ANNUAL REPORT 06

TRIBUTE

V E N F I N A N N U A L R E P O R T 2006

DR ANTON AND MRS HUBERTE RUPERT

On this occasion,

the Board of VenFin wishes to pay tribute to

Dr Anton Rupert, founder of the Rembrandt group of companies

from which VenFin emanated, and his wife Huberte Rupert who both

passed away during the last year.

Dr Rupert’s business acumen and visionary leadership, supplemented

by the energy and enthusiasm of his wife, laid the solid foundation

on which this Company could further build successfully. They left us

a rich cultural heritage, a legacy of integrity and leadership of which

we all can be justly proud of.

Their example will always guide us and we will remember their

enormous contribution with gratitude and affection.

E N

I N A N N U A L R E P O R T

2006

GROUP MISSION

FOCUSING ON HIGH GROWTH INVESTMENT OPPORTUNITIES THAT EXCEED OUR COST

OF CAPITAL. OUR HISTORIC EXPERIENCE LIES IN THE TELECOMMUNICATION, MEDIA

AND TECHNOLOGY AS WELL AS FINANCIAL AND RISK SERVICES SECTORS AND WHILE

WE WILL CONTINUE TO SEEK ATTRACTIVE OPPORTUNITIES IN THESE SECTORS, WE

WILL NOT LIMIT OUR FUTURE INVESTMENT SCOPE TO THESE SECTORS

VENFIN IS AN ACTIVE INVESTMENT HOLDING COMPANY

VENFIN IS NOT A PASSIVE INVESTOR, BUT SEEKS

TO MANAGE ITS INVESTMENTS ACTIVELY

through regular dialogue

with other shareholders, directors and management of investee companies and by providing strategic

input through board, audit and other committee representation and shareholders’ agreements.

VENFIN ADDS VALUE TO ITS INVESTMENTS

through its close

relationships with the associated group, as well as our networks, which include formal and informal

alliances with venture capitalists in major global markets. These global venture capital networks, in

addition to broadening our deal ﬂow, provide both our shareholders and investee companies with

access to important markets which would otherwise be difﬁcult to access directly. VenFin also provides

support facilities such as technology outsourcing and ﬁnancial and risk management services on a

voluntary participation basis to its investee companies.

LOOKING TO MAKE INVESTMENTS IN BUSINESSES THAT:

· possess proprietary intellectual property that provides barriers to entry;

· have the potential for internationalisation;

· have a strong and committed management team with a proven track record;

· VenFin understands and where its team of investment professionals can add value; and

· represents an opportunity that has the size, or has the potential to grow to a size, sufﬁcient to allow

it to have a meaningful impact on VenFin’s Net Asset Value while exceeding our cost of capital.

INVESTMENT PHILOSOPHY

VENFIN IS A MEDIUM TO LONG

TERM INVESTOR

GROUP INVESTMENTS

VE NFI N A N N U A L R E P O R T

2006

(1) Percentages represent the VenFin group’s holding in the total issued shares of each investee company.
(2) Outstanding commitment of USD 5 million
(3) Outstanding commitment of USD 1.4 million
(4) Outstanding commitment of USD 0.6 million
(5) Annexures A and B provide further information of subsidiary companies and investments.

EQUITY INVESTMENTS

Interest

(1)

Alexander Forbes

24.5%

Dimension Data

18.3%

Sabido (e.tv)

31.4%

Tracker

33.7%

Psitek

28.2%

SAIL

38.1%

Idion

34.9%

VHF Technologies SA

25.3%

Johanna

9.5%

Trina

1.3%

Cash Axcess

50.0%

Cueincident

12.4%

Destiny Corporation

20.0%

Fraxion

33.3%

Fundamo

43.1%

i to i technologies

48.5%

CORPORATE

VenFin Finance Corporation

100%

Short-term investments of surplus cash in South Africa

VenFin Financial Investments

100%

Provides corporate services to the VenFin group and
investee companies

VenFin Holdings

100%

Short-term investments of surplus cash abroad and
other investments

FUND INVESTMENTS

Carrying value

GEMS II

USD 5.5 million

GEMS III

(2)

USD 6.2 million

Milestone China

(3)

USD 2.6 million

Veritas

(4)

USD 0.6 million

AT 30 JUNE 2006

E N

I N A N N U A L R E P O R T

2006

GROUP PROFILE

ALEXANDER FORBES

is an international provider of

financial and risk services. It also has an asset management
business, Investment Solutions, that has more than
R124 billion in assets under management.

www.alexanderforbes.co.za

DIMENSION DATA

is a leading global technology company

that provides solutions and services, which optimise and
manage the performance of IT infrastructure.

www.dimensiondata.com

e.tv

is the only independent free-to-air television

broadcaster in South Africa.

www.etv.co.za

TRACKER’S

core business is the sale and installation of

vehicle tracking systems and the tracking and recovery of
stolen vehicles in South Africa.

www.tracker.co.za

PSITEK

has established itself as a leader in providing

products in the fixed-line and mobile telecommunication
arenas in South Africa and internationally.

www.psitek.com

SAIL

provides professional services to the sporting and

entertainment industry in South Africa. SAIL also has
investments in Sports Brands.

www.sail.co.za

IDION,

through its international subsidiary, Vision

Solutions, provides solutions that assure the high
availability of a company’s applications and data.

www.idion.com

VHF TECHNOLOGIES SA,

based in Switzerland, develops

and manufactures thin film amorphous silicon solar cells
on a plastic substrate.

www.flexcell.com

CASH AXCESS

provides ATM-related products and services

to the African financial and retail markets.

www.cashaxcess.com

INFORMATION ON THE COMPANIES IN WHICH INVESTMENTS ARE HELD

E N

I N A N N U A L R E P O R T

2006

CUEINCIDENT

provides command control centres with

high-technology surveillance devices and cameras for the
monitoring of entire areas in South Africa.

www.cueincident.com

i to i technologies

offers integrated solutions to safeguard

assets, people and information by protecting, monitoring,
detecting and responding. i to i further provides ICT
services to selected clientele.

www.itoitechnologies.com

DESTINY CORPORATION,

a South African black economic

empowered investment company, makes equity investments
with a long-term capital appreciation outlook.

www.destinycorporation.co.za

GEMS,

based in Hong Kong, is a private equity fund

management group that makes investments in the Asia
Pacific Region.

www.gems.com.hk

FRAXION

develops advanced Spend Management

Software that allows companies to control, manage and
analyse spending behaviour in real time.

www.fraxion.co.za

MILESTONE CAPITAL,

based in mainland China, is a

China-focused private equity investment ﬁrm.

www.mcmchina.com

FUNDAMO

is a leading global supplier of enterprise

software products for mobile payment and mobile banking
solutions.

www.fundamo.com

VERITAS,

based in the USA, is Israel’s oldest

venture capital ﬁrm and primarily invests in seed-stage
technology companies.

www.veritasvc.com

E N

I N A N N U A L R E P O R T

2006

FINANCIAL HIGHLIGHTS

2006

Normalised headline earnings *

R126 million

Interest in net proﬁt of associates

R97 million

Net interest income and other proﬁt

R29 million

Headline earnings

R404 million

Earnings – net proﬁt for the period

R240 million

Normalised headline earnings per share

43.0c

Headline earnings per share

137.9c

Earnings per share

81.9c

Dividend per share
– ordinary

25.0c

– special

25.0c

Net asset value (NAV) per share
– at book value

R13.20

– at market value of listed investments and directors’

valuation of unlisted investments

R21.14

Closing price per share at 30 June (over-the-counter market at BJM)

R14.20

* In determining normalised headline earnings, the headline earnings is adjusted for non-recurring items.

NET ASSET VALUE

(AT VALUATION)

E N

I N A N N U A L R E P O R T

2006

Weighted number of VenFin ordinary shares in issue (’000)

292 918

Market capitalisation at 30 June (R million)

4 106

Information on shares traded through over-the-counter market at
BJM Private Client Services from 4 April 2006 until 30 June 2006:

Price (cents per share)
– 30 June

1 420

– Highest

1 500

– Lowest

1 350

Number of shares traded (’000)

9 359

Value of shares traded (R million)

131

Shares traded/weighted number of ordinary shares (%)

3.2

Number of transactions

425

SHARE STATISTICS

VENFIN SHARE PRICE

Cents per share

Closing price

E N

I N A N N U A L R E P O R T

2006

DIRECTORS

Johann Rupert

(56)

Chairman

Dillie Malherbe

(50)

Deputy Chairman

G T Ferreira

(58)

Jannie Durand

(39)

Chief Executive Officer

Neville Williams

(42)

Financial Director

Audit and Risk Committee

Dillie Malherbe (Chairman)

Jannie Durand

Neville Williams

Remuneration and Nomination Committee

Johann Rupert (Chairman)

G T Ferreira

Investment Committee

Dillie Malherbe (Chairman)

Jannie Durand

G T Ferreira

Neville Williams

Management Committee

Jannie Durand (Chairman)

Hein Carse

Stefan de Villiers

Anniel Lambrechts

Peter Liddiard

Gregory Roberts-Baxter

Chris van den Heever

Neville Williams

BOARD COMMITTEES

COMPOSITION AT 30 JUNE 2006

APPOINTED 2006

VE NFI N A N N U A L R E P O R T

2006

EXECUTIVE MANAGEMENT

COMPOSITION AT 30 JUNE 2006

Hein Carse (44)

Qualifications

BEng (Electronic) (University of Stellenbosch)

MEng (Electronic) (University of Stellenbosch)

MBA (University of Pretoria)

Stefan de Villiers (45)

Qualifications

BSc Aeronautical Engineering (University of the Witwatersrand)

Anniel Lambrechts (34)

Qualifications

BAcc (University of Stellenbosch)

Hons BCompt (University of South Africa)

CA(SA)

Peter Liddiard (41)

Qualifications

BComm (University of Port Elizabeth)

PDA (University of Port Elizabeth)

CA(SA)

Gregory Roberts-Baxter (33)

Qualifications

BSc Electrical Engineering (University of the Witwatersrand)

MSc Electrical Engineering (University of the Witwatersrand)

MBA (University of Cape Town)

Chris van den Heever (41)

Qualifications

BSc Chemical Engineering (University of Stellenbosch)

MBA (University of Stellenbosch)

E N

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

E N

I N A N N U A L R E P O R T

2006

Composition of headline earnings

Period ended Period

30 June 2006

accounted

R million

for

Associates
Alexander Forbes

(1)

Jan – March

Tracker

Jan – June

Dimension Data

(2)

Jan – March

Sabido (e.tv)

(1)

Jan – March

Psitek

Jan – June

SAIL

Jan – June

Other

(2)

Amortisation of intangibles
raised on acquisition

(10)

Subsidiaries
Interest and other net income

Jan – June

Normalised headline earnings

126

Non-recurring headline earnings
items:
Dimension Data Bond –

fair value

adjustment

(2)

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

Deferred tax raised on STC credits

Headline earnings

404

Notes:

(1)

The investments in Alexander Forbes and Sabido were equity

accounted for three months to 31 March 2006, their financial year-

end. Going forward, VenFin will equity account its interests in these

associates from 1 April to 31 March.

(2)

The investment in Didata was equity accounted for the three months

to 31 March 2006, the end of Didata’s interim period. Going forward,

VenFin will equity account its interest in Didata over a twelve-month

period as follows:

– Six months to 30 September

– Interim period to 31 March

The Didata bond was converted into an equity interest of 12.2% on

13 April 2006. VenFin’s interest in the enlarged share capital of

Didata increased to 18.3%.

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 investments, amounted to R6 114 million, or

R21.14 per share on 30 June 2006. The number of net

shares issued at year-end to determine the net asset value

per share, amounted to 289 176 698.

A schedule, setting out a more detailed composition of

the underlying net asset value, is included at the end of

this report.

E N

I N A N N U A L R E P O R T

2006

INVESTMENTS

In addition to the acquisition of the Surplus Assets in

January 2006, VenFin converted the USD100 million

Didata bond into 188.1 million Didata shares, increasing

its interest to 18.3% in Didata. Furthermore, we exited the

FrontRange investment, receiving a total cash distribution

of R163 million. (Please refer to the Director’s Report for

further detail of investments made during the period.)

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 now have a broader mandate than just the

Telecommunication, 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.

DISTRIBUTION TO SHAREHOLDERS

Repurchase of VenFin shares

VenFin has repurchased 3.8 million VenFin ordinary

shares at an average price of R14.19 per share for

R54 million during the period under review.

Dividend

An ordinary dividend of 25 cents per share and a special

dividend of 25 cents per share have been declared.

The ordinary dividend is covered 2.2 times by the cash

headline earnings on an annualised basis.

ACKNOWLEDGEMENTS

We express our sincere gratitude to everybody who

contributed to the performance of the group over the past

period – 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

4 September 2006

GENERAL REPORT

E N

I N A N N U A L R E P O R T

2006

Composition of net asset value (R million)

Pro forma

(4)

30 June 2006

1 January 2006

Book value

Valuations

Listed

(1)

1 845

3 072

2 313

Alexander Forbes

506

1 692

1 681

Dimension Data

1 322

409

Idion

FrontRange

–

167

Unlisted

(2)

719

1 788

2 192

Dimension Data Bond

–

867

e.tv – equity

143

691

327

– loans

Tracker

120

606

379

Psitek

SAIL

Fund investments

107

Other net assets

264

276

342

Cash

1 254

954

Total

3 818

6 114

5 459

Net asset value per share (Rand)

13.20

21.14

18.63

Share price (Rand)

14.20

11.24

Discount to net asset value

32.8%

39.7%

Potential CGT liability (R million)

(3)

(213)

(125)

(1) Market value

(2) Directors’ valuation

(3) 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.

(4)

Pro forma net asset value is calculated assuming the payment of the purchase consideration (R5 billion) as well as the subscription

for new VenFin shares (R3 287 million) had taken place on 1 January 2006.

NET ASSET VALUE

E N

I N A N N U A L R E P O R T

2006

INVESTMENT REVIEW

ALEXANDER FORBES

Alexander Forbes Limited (Alexander Forbes) is a leading

provider of financial and risk services internationally.

Listed on the JSE Limited (JSE) in South Africa, the

group has over 5 000 employees in 27 countries in

Africa, Asia Pacific, Europe and Latin America. Primary

operations are based in South Africa and the United

Kingdom. The group focuses on its clients to deliver fast,

efficient local services by empowered people wherever

they operate.

Main activities include:

Risk services

· Risk and insurance programme management and

consulting

· Insurance and reinsurance broking

· Alternative risk finance consulting and facilities

· Claims management

· Premium and claims financing

· Insurance products and services for the individual

Financial services

· Retirement fund administration and consulting

· Actuarial services

· Health care consulting and health management

services

· Pension-backed lending

· Asset consulting

· Personal financial planning

· Direct marketing of financial products

Multi-manager investments through subsidiary

Investment Solutions

Overview of the year to 31 March 2006

The year to 31 March 2006 has been characterised by:

· 11% revenue growth, with income from operations

exceeding R5 billion for the first time.

· Continued strong operating results across South

African and African businesses (+13%).

· Distribution to shareholders of 59 cents per share.

· An independent review of Alexander Forbes’ South

African Financial Services business, resulting in

a proposed settlement to clients of R380 million and

a further provision raised of R100 million. The group

will institute additional compliance procedures and

has introduced a number of significant changes to

ensure transparency in all dealings with its clients.

Alexander Forbes’ objective is to be the industry

leader in corporate governance and disclosure to

clients.

Trading results of operations

Trading results increased to R791 million for the year. This

result was achieved on the back of 11% revenue growth,

with income from operations exceeding R5 billion for the

first time. The International Risk Services business

continued to experience difficult trading conditions during

the current year. As detailed below, it is currently reviewing

the optimal positioning of International Risk Services to

capitalise on the number of growth and development

opportunities. Trading results from the group’s other

operations increased by 15% in comparison to the previous

year.

EQUITY INVESTMENTS

VenFin has significant minority interests in the following investments and give strategic guidance
to these companies through board and subcommittee representation. We are a medium to long-
term investor in these companies with the intention of realising returns that meet or exceed our
cost of capital through these investments.

· Investment Solutions

The group’s multi-manager investment subsidiary,

Investment Solutions, recorded 23% revenue growth

in its African operations. There was even stronger

growth in the trading result; up 29% to R264 million

resulting from the operational gearing integral to the

Investment Solutions business model. Average assets

under management increased by 33%, with closing

assets in South Africa reaching R114 billion on

31 March 2006. The business benefited from strong

equity market growth and net new business inflows,

totalling R3 billion for the year. Relative investment

performance continued to be competitive, with most

portfolios in line with, or ahead of, their benchmarks.

The UK Investment Solutions business, launched

in September 2003, continued to attract new

clients, with assets under management doubling to

£890 million on 31 March 2006. This business is

gathering momentum as it approaches £1 billion of

assets under management, with a competitive three-year

investment performance track record. The trading loss

recorded by this business is a reflection of the investment

made in growing its client and asset base.

Global assets under management totalled R124 billion

at 31 March 2006.

· Africa Risk & Insurance Services

The Africa Risk & Insurance Services business

delivered a trading result of R187 million, marginally

down on the previous year. This was achieved despite

a R12 million decrease in operational interest income,

a R16 million reduction in contribution from Personal

Lines insurance and against a backdrop of difficult

industry conditions. Excluding operational interest and

the reduced contribution from Personal Lines

insurance, the Africa Risk & Insurance business

recorded 7% revenue growth and 11% growth in

profits. This is a most credible result given the trading

conditions prevailing during the year and the results

recorded within the industry.

· Africa Financial Services

The Africa Financial Services business recorded strong

revenue growth, with trading results from operations

up 12% to R219 million for the year. This growth

was driven by a strong performance from the core

Actuarial Consulting business, with increased revenue

from special projects, including those relating to

legislative change. The Retirement Funds Admini-

stration business delivered a solid result, with the

number of members under administration increasing

to almost 1.5 million at 31 March 2006.

· International Risk Services

The International Risk Services business continued to

trade in difficult conditions, including rate reductions

experienced in a number of insurance classes,

particularly in Professional Indemnity. The business

also incurred costs in implementing positive changes,

defending its market position and hiring new production

talent, all of which negatively impacted on short-term

profitability. Thanks to positive underlying growth,

revenue decreased only marginally as a result of the

factors mentioned above, particularly in the International

E N

I N A N N U A L R E P O R T

2006

E N

I N A N N U A L R E P O R T

2006

and Specialist lines. Trading results from operations

decreased to £1.6 million for the year.

· International Financial Services

The International Financial Services businesses achieved

revenue growth of 24%, delivering a trading result of

£10.3 million – up 39% on the previous year. The actuarial

consulting business acquired in 2002, Lane Clark &

Peacock, recorded exceptional growth in revenue and

profits, benefiting from increased demand for its services

in the UK and Swiss markets resulting from continuing

pensions market turmoil and legislative change.

BEE

In 2006, the group was again included in the JSE’s SRI

index. In South Africa, its black economic empowerment

(BEE) credentials are imperative in growing the business.

For Alexander Forbes, BEE has always been a business

imperative. Its policy remains to transform the business

and to work with all stakeholders to do so to their mutual

advantage.

The future

The group’s strategy is centred on delivery to stakeholders

through growth in its core businesses. Alexander Forbes

continued to trade strongly in the majority of its operations

and is reviewing the position of its International Risk

Services business in order to optimise value for

shareholders. In addition, the group has had unsolicited

approaches by a number of private equity groups with a

view to potentially making an offer for the entire group.

Alexander Forbes’ focus remains to satisfy its clients’

needs and to offer value in an environment where it can

demonstrate uncompromising corporate governance and

ethical standards.

During the past two years, the group reviewed its historical

business practices to ensure that its clients can be confident

in their future dealings with it.

DIMENSION DATA

Dimension Data Holdings plc (Dimension Data) is a leading

global technology company that provides solutions and

services that enable businesses to plan, build, support,

optimise and manage their IT infrastructures. The company

is listed on the London Stock Exchange (LSE) and has a

secondary listing on the JSE.

Dimension Data applies its expertise in networking,

security, operating environments, storage and contact

centre technologies and its skills in consulting, integration

and managed services to create customised client

solutions. The company is a leader in the field of

simplifying and consolidating IT infrastructures through

Internet Protocol (IP) convergence.

With revenues approaching USD3 billion and more than

9 000 employees in over 30 countries, Dimension Data

has a global footprint that supports highly personalised,

regional execution while leveraging the domain experience

and depth of a large company.

EQUITY INVESTMENTS

INVESTMENT REVIEW

In December 2002, R&V Technology Holdings Limited

(R&V), a wholly owned subsidiary of VenFin, subscribed

to a USD100 million seven-year convertible bond issued

by Dimension Data. RFS Finance Limited, a wholly owned

subsidiary of VenFin, subsequently acquired 93 970 485

shares in the open market, representing a shareholding of

7% in Dimension Data. In April 2006, R&V elected

to convert the USD100 million convertible bond into

188 121 978 ordinary Dimension Data shares. On

conversion, the additional shares amounted to 12.2% of

the enlarged issued share capital of Dimension Data,

bringing VenFin’s total equity interest in Dimension Data

to 18.3%.

Overview of the period to 31 March 2006

Dimension Data reported good progress in the first half of

2006, with robust revenue growth and substantially improved

returns. The growth in revenue was fuelled by solid growth in

both the company’s core network integration and the

Solutions line of business, where both revenues increased by

17% (stripping out the impact of currency fluctuations

and adjusting for acquisitions) over the first half of 2005.

The Solutions line of business comprises converged

communications, customer interactive solutions (CIS), data

centres and storage (DCS), operating environments and

messaging (OE&M), as well as security. The Solutions

business now accounts for 30% of revenue, up from 28% in

the comparative period.

Dimension Data’s most significant line of business is network

integration, comprising 51% of group revenues for the

period. The 17% growth in network integration revenues

was supported by good demand in the company’s larger,

multinational accounts and by particularly strong demand in

the USA and Australia.

The Solutions line of business was established to focus on

high-growth markets where Dimension Data is well positioned

to compete. The strong overall growth in the Solutions

revenues was driven by continued good demand for IP

Telephony and Security products and services and by solid

performances from the Customer Interactive Solutions and

Operating Environments and Messaging businesses.

Dimension Data continued to see solid growth in services

and product turnover. Good double-digit growth was achieved

in four of the five regions in which the group operates, with

only Europe performing below expectations.

An ongoing focus on costs resulted in a further

improvement in the group’s operating margin to 2.6%

from 2.1% in the prior period, with operating profits

before exceptional items increasing by 45%.

Dimension Data acquired the remaining stakes in Internet

Solutions and Plessey. Full ownership of Internet Solutions

provides opportunities to benefit from the deregulation of

the South African telecommunications market. The

group’s footprint across the African continent is further

established through Plessey, a leading African supplier of

telecommunications solutions.

The future

Dimension Data continues to experience robust demand

and the group remains confident that it can continue to

deliver profitable growth.

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SABIDO (e.tv)

Sabido Investments (Proprietary) Limited’s (Sabido) most

significant investment is e.tv., the only independent free-to-

air television broadcaster in South Africa.

Overview of the year to 31 March 2006

Sabido has continued to perform well during the period

under review. e.tv’s double-digit growth has been driven by

an increase in its black middle-income viewership. e.tv

retained its position as the most-watched English-medium

channel in South Africa and the second largest channel

overall. Programming cost has decreased again in the

reporting period. e.tv showed a 6% growth in audience

share year on year (TAMS March 2006) and currently

holds a 21% share of the prime-time audience. Its

“yesterday” viewership is 11.2 million (AMPS 2004/2005).

Programmes which contributed to e.tv’s growth in audience

share are its 7pm news and the daily local dramas

Backstage and Scandal, in addition to films and wrestling,

which continue to attract the highest viewership ratings.

Television advertising has also grown significantly compared

to radio and print advertising in the past period.

BEE

e.tv is a fully black empowered company in both ownership

and employment, which has met and exceeded its

employment equity objectives: 72% of its employees are

black, 44% are women and 5% are disabled. Over 80% of

its management staff are historically disadvantaged

individuals. e.tv spends in excess of 5% of its salary bill on

training.

The future

e.tv has a few projects under review to expand its business

into Africa. Nigeria and Tanzania have progressed well

and the vision to become a pan-African media business

will get momentum in the new financial year. e.tv also

intends to explore various opportunities which have arisen

from the development of new distribution technologies

and, in doing so, plans to transform itself into a multi-

platform content provider. Sabido has a 34% shareholding

in Dreamworld, the future film studio situated in Faure,

Cape Town. The development of phase one, that includes

sound stages, offices and warehouses, will take place in

the next eighteen months.

TRACKER

As a major player in the South African stolen vehicle

recovery industry, Tracker Investment Holdings (Proprietary)

Limited’s (Tracker) core business is the sale and installation

of vehicle tracking systems and the tracking and recovery

of stolen vehicles.

Tracker’s contract partnership with the South African

Police Service (SAPS) in terms of which Tracker’s

technology is used to track and recover stolen vehicles

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throughout South Africa, has proved highly successful.

Since its inception in 1996, more than 29 700 stolen

vehicles have been recovered, 6 151 criminals arrested

and 271 chop shops and vehicle syndicates exposed

through the usage of Tracker technology.

The product range currently comprises three products,

namely Tracker Retrieve (basic stolen vehicle recovery

system), Tracker Alert (retrieve plus an early alert

enhancement) and Tracker Locate (GPS-based monitoring

system with stolen vehicle recovery capabilities).

Overview of the year to 30 June 2006

Tracker had an excellent year with strong growth in

its subscriber base and profits. During the year

Tracker’s subscriber base increased to 378 000 vehicles.

Recent market research indicated that Tracker is now

the most recognised stolen vehicle recovery brand in

South Africa.

The vehicle insurance industry remained the most

important sales channel and various close relationships

with insurers are in place. Other sales channels include

dealerships, fitment centres and a national call centre.

The future

As insurers increasingly insist on the installation of stolen

vehicle recovery devices, the number of competitors in the

stolen vehicle recovery market is expected to increase

even further, which will increase the demand for a lower-

price solution. Tracker’s management is responding to this

challenge by driving down input costs, while still investing

in its systems to maintain the highest possible recovery

rates as well as excellent customer support services.

PSITEK

Psitek (Proprietary) Limited (Psitek) prides itself on

creating the best and most appropriate communications

products that solve specific needs and overcome the

problems of emerging markets. To date, product

development and market focus have been in the fixed-

line and mobile telecommunications markets. A number

of products and business model solutions have been

created and sold globally.

The Psitek brand and its superb quality, service and

support record is now well recognised by customers and

partners around the world, while brands such as Adondo

(supervised payphone for the formal market segment),

Fusion (least-cost routing device and last-mile FWT

device), Jembi (supervised payphone for the informal

market segment) and the Tici-B (fixed wire network

supervised payphone) are well established, recognised

and preferred by many users.

Psitek has an exceptional product development capability,

distributes and supports its products around the world

and has a wholly owned world-class manufacturing facility

(Elprom) for its products.

Overview of the year to 30 June 2006

Consolidated revenues for the year amounted to

R250 million, a disappointing result when compared to

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the prior year. Sales shortfalls were the result of a number

of factors, including a significant shift in the supervised

payphone market in South Africa, increased competition

from lower-cost products from outside of South Africa,

the strength of the rand during the period and the fact

that establishing new markets outside of South Africa has

taken longer and required more effort than initially

planned.

On a positive note, the changes in the market required new

product and solution innovations which were developed

during the year and which have, where already deployed

into the market, started to compete very successfully with

the lower-cost imports. In addition to this, the company

focused on strategic business partner relationships across

all regions and these are starting to realise the anticipated

benefits for both Psitek and its customers.

Regional heads have been responsible for driving market

activity across a number of regions, including South Africa

and the SADC countries, East Africa (out of Nairobi where

Psitek East Africa has been established as a branch), West

Africa, North Africa, Asia Pacific (out of Kuala Lumpur

where Psitek Asia has been established as a branch) and

Latin and South America.

The future

The outlook for the new financial year is positive.

Emphasis will be placed on creating new revenue streams

from new products, new market segments and new

solutions built around tangible products.

SAIL

SAIL Group Limited (SAIL) provides professional services

to the sport, leisure and entertainment industries. It also

holds investments in sports brands. During the year

under review it extended its service offerings by acquiring

two businesses, Circa Hospitality and Sports Plan. SAIL

now operates four business units: SAIL Sports and

Entertainment (SSE), Circa Hospitality (Circa), Navitute

and Investments.

SSE creates brand value for its corporate clients through

conceptualising, implementing and managing sponsorship

and events on behalf of clients. The business unit also

sources and supplies branded and promotional items to

its clients.

Circa focuses on commercialising hospitality rights to sport

and entertainment events and the provision of hospitality-

related infrastructure and equipment rental services.

Navitute is the new business unit created to incorporate

the business of Sports Plan and other initiatives.

It focuses on owning events, player management,

commercialising events and properties, and providing

consulting services and outsourced management services

within the sport, leisure and entertainment industry.

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Investments include Blue Bulls Rugby (Proprietary)

Limited (50%), Western Province Rugby (Proprietary)

Limited (24.9%) and Silverton Travel (Proprietary) Limited

(Edusport Travel) (25.1%).

SAIL has secured a new main sponsorship for Western

Province Rugby. Edusport Travel achieved significant

growth in revenue from incentive travel to international

sporting events.

Overview of the period to 30 June 2006

SAIL continued to produce growth in revenue and earnings

from its core businesses. In line with its strategy

to disinvest from its non-core businesses, including the

smaller rugby companies, the carrying value of non-

performing assets has been fully impaired.

BEE

VenFin has initiated the sale of SACTWU’s stake in SAIL

to Vuwa, headed by Bulelani Ngcuka. The effective date

of the transaction was 1 May 2006.

For the purposes of the transaction, SAIL was valued at

45 cents per share. The amount previously owed to

VenFin by SACTWU will now be transferred to Vuwa on

loan account. The financing for Vuwa has been entered

into on substantially the same terms and conditions as

SACTWU.

VenFin and the management of SAIL are confident that

Vuwa can make a positive contribution to SAIL from a

strategic, alliance and networking perspective.

The future

SAIL continues to benefit from extended opportunities

among its existing clients. SAIL acquired the rights to

the Vodacom Challenge soccer tournament and secured

the appearance of Manchester United for the 2006

tournament. The tournament will extend for a further four

years and SAIL is currently in discussion with other

international soccer clubs for the remaining tournaments.

The Gauteng Government appointed SSE to manage

their sports sponsorships for a two-year period. Hyundai

appointed Navitute to stage events in South Africa leading

up to the Soccer World Cup in 2010.

SAIL will continue to support rugby in South Africa

actively through involvement with industry stakeholders

to promote the progressive restructuring of the game.

IDION

Idion Technology Holdings Limited (Idion), a technology

investment holding company, is listed on the JSE

Limited (JSE). Idion’s operating subsidiary, Vision

Solutions International Incorporated (Vision), is a

leading international high-availability (“HA”) solution

provider. The company delivers solutions for protecting

companies’ mission-critical applications and information

from planned and unplanned downtime with its ORION

software, services and support.

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With more than 2 000 clients and 12 000 licences around

the world, the company works closely with IBM and a global

network of channel partners to deliver world-class solutions.

Vision Solutions is an IBM Premier Business Partner and an

IBM High Availability Business Partner. The company

operates through offices in the United States, Europe and

Asia-Pacific markets.

At the core of Vision’s product offerings is its ORION HA

solution, which enables clients to provide real-time

redundancy and availability at the data and application layers

to ensure continued operations for mission-critical, transaction

intensive on-demand applications. It maximises system

availability on multiple computing platforms, namely System

i/OS, Windows, Linux and AIX. In addition to its technology,

Vision provides extensive professional services and supports

and maintains a world-class certified customer care centre.

Overview of the period to 30 June 2006

2005 marked another successful year as management

executed the group’s strategy of building a world-class

information management software company. Despite increased

competition in certain key geographical markets, Vision

reported its fourth consecutive year of headline profitability

and positive cash flows from operations, while making sizeable

investments in product development, geographic expansion

and its people. During the period Vision continued to

strengthen its key alliances and partnerships with major

independent software vendors. Revenues from these

relationships have steadily grown over the past several years.

The future

Idion’s focus on the IBM eServer platform continues to

present growth opportunities. The group’s prospects

remain positive as Vision’s ORION products and its OS

Director and OS Data Manager products continue to gain

market acceptance.

VHF

VHF Technologies SA (VHF), based in Yverdon in

Switzerland, develops and manufactures thin-film solar

cells, using its proprietary very-high-frequency plasma

technology to deposit thin layers of amorphous silicon

onto plastic substrates.

Owing to its highly-flexible substrates, VHF is able to

deliver innovative solar consumer products (e.g. rollable

battery chargers) and to provide integration solutions for

the building industry and industrial OEM markets. The

VHF product is a flexible photovoltaic (PV) solar cell, as

opposed to the well-established rigid crystalline silicon

solar panel on a glass substrate, which currently comprises

90% of the PV market.

A small percentage of VHF’s production is being sold via its

website, while the balance is used for product research. The

VHF Flexcell product’s main competitive advantages are:

· The product is lightweight and flexible, allowing for

total integration on building elements of various

shapes and enabling roll-to-roll manufacturing, and

· A cheap plastic substrate is used, which should

provide a substantial cost reduction to glass substrate

panels.

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VenFin has invested CHF3 million in VHF, which is still in

a product development phase. This is one of three

investments that VenFin has made in the solar industry to

date, the others being in Johanna Solar Technology GbmH

(Germany) and Trina Solar Limited (China). With these

three investments VenFin now covers all three main PV

technologies in the industry, being crystalline silicon-

based (Trina Solar), thin-film amorphous silicon-based

(VHF) and thin-film CIS (copper indium sulphide)-based

(Johanna Solar).

Overview of the year to 30 June 2006

In June 2006, VHF received an investment of

CHF10.8 million from Q-Cells AG (Germany), the second

largest manufacturer of crystalline silicon cells in the world.

The future

In addition to the expansion of their core business, Q-Cells is

currently developing new business opportunities in the sector

of thin-film PV technologies, hence its investment in VHF.

The Q-Cells investment should allow VHF to commercialise

its technology over the next 18 months, followed by the

building of a manufacturing plant in Germany.

JOHANNA

VenFin invested EUR2.47 million in Johanna Solar Technology

GbmH (Johanna), a new company committed to building a

30 MW solar cell plant in Germany. The company will be

based in the federal state of Brandenburg, which offers

lucrative financial incentives and subsidies and provides a

strong solar research and development environment.

Johanna will use a CIS (copper indium sulphide)-based

silicon-free technology, specifically copper indium gallium

sulphide selenium (CIGSSe), which was developed by the

Johannesburg University. Johanna has entered into a

manufacturing licence agreement with the university, which

also allows it to sell sublicences outside South Africa.

The benefits claimed for the CIGSSe technology are similar

to other thin-film technologies, being a lower price than

the incumbent crystalline silicon-based technologies as

well as the usage of non-silicon materials. The licensor

claims a higher conversion efficiency of sunlight to

electricity compared to most other thin-film technologies.

TRINA

Based in Jiangsu Province in China, Trina Solar Limited

(Trina) is a leading integrated solar photovoltaics (PV)

manufacturer. Since its inception in 1998 the company has

changed from a solar systems integrator to a company

covering most of the PV crystalline silicon value chain, from

silicon ingots, wafers and modules to system integration.

Trina’s products are used in on-grid solar power generating

systems and stand-alone systems. Trina currently sells its

products to customers in Europe, Taiwan and China.

In May 2006, VenFin invested USD1.5 million in Trina as

part of a consortium, led by Milestone China, that invested

a total of USD40 million, representing a 34% shareholding.

The proceeds will be used for capacity expansion and

working capital. Milestone China is actively involved in the

business.

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CASH AXCESS

Cash Axcess is an early-stage business providing

automated teller machine (ATM)-related products and

services to the African financial and retail markets.

Cash Axcess started as a South African-based subsidiary

of the Nasdaq-listed Global Axcess Corporation. In

May 2006 VenFin subscribed for a 50% share in

Cash Axcess.

Cash Axcess has established a platform providing for

two complementary business units: ATM transaction

processing and management, referred to as distributorship

and merchant programmes respectively, and the sale,

distribution and maintenance of ATMs. These programmes

are focused on the low-end ATM market and facilitate the

provision of ATMs in areas that may not justify the cost of

a fully-fledged ATM, thus providing banking facilities to

areas not previously serviced by banks.

Cash Axcess is an authorised distributor of the Tidel (US)

range of ATMs. It uses a number of innovative techniques

such as GPRS communications, retailer cashing and the

recycling of cash from drop safes to reduce the total cost

of ownership of its ATMs.

Overview of the year to 30 June 2006

Cash Axcess entered into a relationship with Mercantile

Bank and Capitec Bank. From July 2006, Cash Axcess

has been piloting the recycling of cash from drop safes

via its ATMs through an arrangement with Coin Security.

The future

Cash Axcess envisages expanding its ATM network with

its partners in South Africa. It is rapidly expanding its

sales and operations capabilities as the demand for ATMs

grows. The company believes that there is significant

demand for additional ATMs in South Africa, in particular

low-end ATM devices, and that it is well positioned to

benefit from this demand.

CUEINCIDENT

Cueincident (Proprietary) Limited (Cueincident) provides

command control centres with high-technology

surveillance devices and cameras for the monitoring of

entire areas such as cities, roads, railways, harbours and

airports. Over the past eight years the company has

become a leader in the design, implementation and

management of operations in incident management for

installations in South Africa.

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Installations and operations in Johannesburg, Rosslyn

and Pretoria attracted an enormous amount of local and

international media interest. Operating in collaboration

with the SAPS, Metropolitan Police, National Intelligence

Agency (NIA), as well municipal, rail and banking

services, the company contributed to a sustained 80%

drop in street crime, a reduction of some 90% in losses

at Spoornet City Deep, an improvement in municipal

services and increased business and investor confidence

in the Gauteng region.

BEE

Cueincident’s BEE equity ownership is 35.63%. BEE

shareholders are Circle Capital Ventures (23.75%) and

Mvelaphanda. Employment Equity is at 92.16%, with the

executive now transformed with 84% of the senior

executives being black.

The future

The sales team is aggressively pursuing revenue and

income-base diversification. Public and private sector

clients have been targeted and their general reception

was positive, and follow-up meetings are scheduled for

the near future. In the private sector, clients range from

shopping mall owners and financial institutions to

upmarket residential estates. In the public sector, clients

range from national government departments and

municipalities to state agencies. Another initiative

entailed exploring the utilisation of Cueincident’s fiber

optic platform for other complementary applications and

new revenue streams.

DESTINY

Destiny Corporation (Proprietary) Limited (Destiny) is an

early-stage Johannesburg-based company whose primary

business is making equity investments with a view to long-

term capital appreciation. VenFin owns 20% of Destiny and

provides strategic and operational support to the company

and is taking a long-term view on the investment.

Overview of the year to 30 June 2006

During its first year of operations, Destiny acquired a 49%

interest in Claude Neon Limited, a pan-African, South

African-based signage manufacturing business. At present

the company is looking at transactions in diverse fields

such as construction, real estate, telecommunications

and agriculture.

BEE

Destiny is a black-controlled business that was started

by young black professionals with investment banking

experience.

The future

The year ahead is viewed as a consolidation period

in which the company will increasingly establish itself

as a recognised player and strengthen its position in

the marketplace, while working to conclude additional

transactions.

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FRAXION

Fraxion Holdings (Proprietary) Limited (Fraxion) develops

advanced Spend Management Software that allows

companies to control, manage and analyse spending

behaviour in real time. The solution, which integrates into

most mid-range ERP platforms, has 15 000 users in

Southern Africa and Europe.

The company operates from South Africa and drives its

revenue from licence fees and services associated with

spend management solutions.

Overview of the year to 30 June 2006

The Fraxion software is aimed at medium and large

organisations and has been deployed in divisions

of several prominent companies over the last year,

including JP Morgan, American Express, Truworths, Total,

Woolworths, Party Gaming (UK) and Hollard Insurance.

The company has also concluded several “White Label”

agreements, notably with MWeb and Compass Group plc,

which intend to resell the solution under their own brand

names.

A project to enhance and repackage the solution was

launched in September 2005. The enhanced product

(Version 3) was completed in June 2006, with the first

client shipments expected in August 2006.

The future

The year ahead will see the company growing its reseller

channel model in both South Africa and the United

Kingdom, with around 20 resellers expected to be

contracted by year-end. The UK operation is expected to

be in place in the second half of 2007 and will extend the

activities of Fraxion’s previous UK distributor.

FUNDAMO

Fundamo (Proprietary) Limited (Fundamo) is a leading

supplier of mobile payment software solutions. The

utilisation of mobile phones as electronic wallets or for

performing secure payments has migrated from leading-

edge innovation to mainstream technology as numerous

mobile banking/payment deployments are announced

on a monthly basis. Fundamo is among the few

suppliers of mobile payment technologies which has

navigated this emerging market successfully over the past

five years.

Overview of the year to 30 June 2006

Fundamo’s software now manages more than a million

mobile payment transactions every week. Its technology

is recognised as one of the most advanced by analysts

and competitors alike. The Fundamo reference customers

are often quoted in case studies and in the popular media,

including CNN. Recently, two authoritative publications

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acknowledged Fundamo as the leading supplier of mobile

banking solutions for developing economies. Fundamo

also won the prestigious Frost and Sullivan Award for

Technology Leadership, and was selected as a Top

Technology 100 company by the South African

Department of Science and Technology.

The future

During the next period, Fundamo will focus on developing

its strategy to unlock inherent value. The focus areas for

the year are:

· Expanding the sales capacity by hiring experienced

sales staff and by improving sales procedures and

infrastructure.

· Improving utilisation of the sales channel of tech-

nology partners. This will be achieved by packaging

products to be sold through these channels and

active promotion within these organisations.

· Partnering with suitable companies to deploy

Fundamo’s product on a risk-sharing basis. This

approach will lower upfront revenue, but will ensure

longer-term recurring revenue.

i to i

i to i technologies (Proprietary) Limited (i to i) offers

integrated solutions to safeguard assets, people and

information by protecting, monitoring, detecting and

responding. It serves this rapidly converging marketplace

by combining its ICT expertise with security and efficiency

solutions, thus offering an integrated technology-enabled

approach to strategic risk management.

i to i provides this capability in response to evolving

enterprise risk management needs, specialising in

electronic security, surveillance, loss prevention/

shrinkage control, health and safety and efficiency

optimisation. These integrated offerings are provided

across i to i’s own ICT infrastructure platform to meet

the client’s operational requirements. i to i further

provides ICT services to a selected clientele. Quality

drives every area of the i to i business. Solutions are

designed to add business value and to deliver on time

and within budget.

i to i invests heavily in industry sector-specific

knowledge, ensuring that it offers solutions with

longevity. With its clear understanding of the clients’

business requirements, i to i has built up a blue-chip

South African client base.

Overview of the year to 30 June 2006

2006 was a significant year, as it saw the merging

of four previously separate businesses, namely

Intervid, CommsCo, Cathexis Technologies and Detexis

Technologies, into i to i technologies. This merger

positioned the combined business to benefit from

convergence both in South Africa and internationally.

The operational integration has been a success and

aggregate revenues have grown substantially, with

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expectations of excellent growth into 2007 and beyond.

The launch of the group brand, encapsulating the

expertise and experience within the underlying brands,

has been successful.

BEE

i to i boasts a 45% ownership by black investment

companies Circle Capital Ventures, Ehlobo Holdings and

Imphandze Technologies.

The future

i to i believes it is well positioned for continued success

in 2007 and beyond. A sound strategy is backed by a

robust sales and delivery capability, which is enhanced by

partnerships with local and international vendors. i to i

plans to enhance clients’ access to real-time decision-

supporting risk management systems and processes on

an integrated basis.

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FUND INVESTMENTS

In order to strengthen its global network, VenFin made investments in a few equity funds. In
addition to providing VenFin shareholders with access to high-growth opportunities in markets
they otherwise would not have access to, these investments provide VenFin and its investee
companies with access to potential direct investment opportunities as well as to networks and
expertise in markets outside South Africa.

GEMS

General Enterprise Management Services Limited (GEMS)

is a private equity fund management group that manages

the GEMS Funds (GEMS I – 1998 vintage, GEMS II –

2001 vintage and GEMS III – 2005 vintage). These funds

make direct investments in the Asia Pacific Region.

Funds under management in the first two funds total over

USD500 million, representing capital commitments from

corporate clients and selected individual investors from

around the world.

VenFin has invested USD12.5 million in GEMS II,

USD5.4 million of which has been returned at year-end.

In 2005 VenFin also committed a further USD12.5 million

to GEMS III, a fund with a target size of USD200 million.

The fund has drawn USD7.5 million from VenFin

to date.

GEMS II originally made twelve investments, five of

which are fully exited and seven of which remain in

the portfolio.

GEMS III has made two investments to date, one in the

Thai property market and the other in a Singapore-based

insurance syndication company.

MILESTONE CHINA

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

China), a limited partnership, was initiated by Milestone

Capital Management Limited (MCM), a China-focused

private equity investment firm with offices in Shanghai

and Beijing. MCM is the general partner in this

USD47 million fund of 2003 vintage. To date VenFin has

invested USD3.6 million in Milestone China, with a

further USD1.4 million committed.

The principal objective of MCM is to achieve superior

medium-term capital appreciation in its funds through

direct investments in well-established, high-growth

companies seeking expansion or acquisition capital in

China. All the executive team members of MCM are

mainland Chinese, with extensive investment and

operational experience in both China and the USA.

The fund has made seven investments to date, two of

which it has already exited. The most recent investment

of USD10 million was in Trina Solar Limited, a solar

photovoltaic manufacturer in China. Milestone China

led an investor consortium which invested USD40 million

for a combined ownership of 34%.

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INVESTMENT REVIEW

FUND INVESTMENTS

Milestone China’s most successful investment to

date was in Focus Media Holding Limited, which

operates the largest out-of-home advertising network in

China using television displays. The company has a

presence in more than 10 000 commercial locations

in 52 cities throughout China. In July 2005, the

company was listed on the Nasdaq at USD17 per

share. Subsequent to year-end, Milestone China exited

this investment in full achieving 240% internal rate

of return over a two-year period. Other investments

still held comprise a Beijing-based distributor of

imported medical equipment, a xanthan gum producer

(xanthan gum is used as an emulsifier in food) and a

mobile phone handset design company.

Milestone has already returned USD1.3 million to VenFin

from investments exited or partly exited.

VERITAS

Veritas Fund II L.P. (VVP Fund II) is a venture capital fund

managed by Veritas Venture Partners (Cayman) L.P.

(Veritas), Israel’s oldest venture capital firm. The fund is

managed from the USA.

The investment broadens VenFin’s access to international

deal flow and networks. It has given VenFin exposure to

technology emanating from Israel and, to a lesser extent,

the southeast USA region, where the fund is primarily

invested in seed-stage technology companies. VVP II

focuses on enterprise software, network communications

and medical devices.

VenFin inherited, with pride, this sound corporate

governance system – a model for doing business ethically

– which does not need to be enforced but stems from

internal conviction.

One of the corner stones of our business model is the

belief that a company has three levels of responsibility:

shareholders, staff, and the community. The group’s

shareholders are served by sound business practices and

a continued quest for excellence which ensure that

profitable investments are being made. The group’s staff

and the community are served and supported as set out

in the sustainability report on page 38.

Therefore, it comes naturally to VenFin to endorse, and to

comply with the principles of the King Reports as it

corresponds to the way in which business has been

conducted in the group for more than 50 years.

In setting the parameters for this report, guidance was

taken from the Global Reporting Initiative (GRI) Boundary

Protocol. Disclosure is limited to those entities that could

generate significant impact to the Company’s sustainability

performance and where it exercises control over the

financial and operating policies of such entities, save

where those entities disclose the relevant information in

their own publicised annual reports.

CORPORATE STRUCTURE

The Company is an investment holding company.

Investments of the Company mainly comprise both listed

and unlisted investments which are not controlled by

VenFin but are, due to significant influence and board

representation, mostly associates.

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The Company’s activities are concentrated on the

management of investments and the provision of support,

rather than being involved in the day-to-day management

of business units of investees. The Company is a long-

term investor which forces strategic alliances on a

partnership basis, while endeavouring to add value.

The Company’s associates endorse the Code of Corporate

Practices and Conduct. The Company continues to

encourage full compliance within the investee portfolio,

where possible, and disclosure where not.

In accordance with the recommendations of King II, the

Board adopted a formal charter, as set out below.

BOARD CHARTER

A charter, read and endorsed by all directors of VenFin,

has been implemented to:

· identify, define and record the responsibilities,

functions and composition of the Board; and to

· serve as a reference to new directors.

The Board, having reflected on the following, is satisfied

that for the period under review, it executed the required

actions contained in the charter satisfactorily.

COMPOSITION OF THE BOARD

All directors of VenFin have access to the advice of the

company secretary and any relevant outside people when

required.

VenFin has a fully functional Board, comprising executive

and non-executive directors, which leads and controls the

group. Currently there are five directors of whom one

is independent. In this charter, executive directors are

collectively referred to as executive management.

CORPORATE GOVERNANCE

The King Reports on Code of Practices and Conduct echo principles deeply embedded in the
fabric of the group from which VenFin originated. The group is principle-driven and guided by
the philosophy of its founder, Dr Anton Rupert. The group was led by example from inception
and no formal codes of conduct were required.

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CORPORATE GOVERNANCE

It is a function of the Board to ensure that the collective

skills and experience of members are suitable to carry out

its responsibilities. Circumspection is exercised by the

Board in the selection and the orientation of directors.

The roles of the chairman and the chief executive officer

are separated. The chairman is a non-executive director

but is not independent.

Board members are listed on page 8.

ROLE AND RESPONSIBILITIES

The Board provides strategic direction by proposing,

discussing, questioning, evaluating, and approving plans

and strategies. In directing the group, the Board exercises

leadership, integrity and judgement, to achieve continuing

prosperity for the group.

After approving operational and investment plans and

strategies, the Board empowers executive management to

implement these and to provide timely, accurate and

relevant feedback on progress made.

However, the Board remains accountable for the overall

success of the approved strategies, based on values,

objectives and stakeholder requirements, and for the

process and policy which ensures the integrity of risk

management and internal controls. The Board is the focal

point of the group’s corporate governance and is also

responsible for ensuring that it complies with all relevant

laws, regulations and codes of best business practices.

The Board monitors the operational and investment

performance of the group, including relevant financial

and non-financial aspects. It also ensures that procedures

and practices are in place to protect the Company’s assets

and reputation.

VenFin’s Board established the following subcommittees

to assist it in discharging its duties and responsibilities:

The Remuneration and Nomination Committee, consisting of

two directors, advises the Board on remuneration and

terms of employment of all directors and members of

senior management and is responsible for succession

planning. The committee is also responsible for the

nomination of directors. Additionally, it participates

annually in evaluating the performance of directors.

Directors do not have long-term contracts or exceptional

benefits associated with the termination of services. The

chairman of the Board is chairman of this committee. The

chief executive officer attends meetings only by invitation.

The committee has a formal mandate and its effectiveness

is appraised by the Board accordingly.

The Audit and Risk Committee, consisting of three directors,

reviews the adequacy and effectiveness of the following:

financial reporting, the systems of internal control, the

management of financial, investment, technological and

operating risks, risk funding, the internal and external

audit processes, the Company’s procedures for monitoring

compliance with laws and regulations, its own code of

business conduct, as well as procedures implemented to

safeguard the Company’s assets.

This committee also reviews the level of disclosure in

the annual report and the appropriateness of policies

adopted by management.

The committee has a formal mandate and its

effectiveness is evaluated by the Board accordingly.

· The Management Committee, consisting of two directors

and six senior managers, meets regularly between

Board meetings to deal with issues delegated by the

Board.

· The Investment Committee, consisting of four directors

is responsible for the evaluation and approval of

investments according to the formal mandate given

by the Board.

The appointment and orientation of new directors are also

the responsibility of the Board. Non-executive directors are

selected for their broader knowledge and experience and

are expected to contribute effectively to decision-making

and the formulation of strategies and policy.

The Board identifies goals, provides direction, determines

the feasibility of proposed strategies and monitors

investments. Executive directors contribute their detailed

insight into day-to-day operations and are generally

responsible for operational decisions and their

implementation.

The Board annually reviews and assesses the mix of skills

and experience offered by its members to ensure that it is

adequately equipped to achieve the Company’s objectives

and to create value for shareholders over the long term.

MEETINGS AND QUORUM

The articles of association requires three directors to form

a quorum for Board meetings. A majority of members,

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preferably with significant representation of the non-

executive directors, is required to attend all committee

meetings.

The VenFin Board meets at least four times a year. The

Audit and Risk Committee meets at least three times a

year, and the Remuneration and Nomination Committee

at least once a year.

MATERIALITY AND APPROVAL
FRAMEWORK

Issues of material or strategic nature which might impact

on the reputation of the Company, are referred to the

Board. All other issues, as mandated by the Board, are

dealt with at executive management level.

The minutes of all the committee meetings are circulated

to the members of the Board. Issues that require

the Board’s attention or a Board resolution are

highlighted and included as agenda items for the next

Board meeting.

REMUNERATION PRINCIPLES

The Company’s policy regarding the remuneration of all

directors and senior management aims at:

· attracting and retaining directors and senior

management of high calibre;

· providing directors and senior management with

remuneration that is fair and just;

· ensuring that no discrimination occurs;

· recognising and encouraging exceptional and value-

added performance; and

· ensuring that short-term personal gain is not conflicted

with long-term sustainability.

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CORPORATE GOVERNANCE

In line with these objectives, the Remuneration Committee

annually reviews and evaluates the performance of the

executive directors and determines the annual salary

adjustments for each. For this purpose it refers to salary

surveys compiled by independent organisations and other

market information.

DUTIES OF THE DIRECTORS

According to the Companies Act, which does not

differentiate between executive and non-executive

directors, the Company directors:

· prepare the annual financial statements that should

represent fairly the Company’s state of affairs and its

profit or loss position for the period under review;

· select suitable accounting policies and apply them

consistently;

· state whether applicable accounting standards have

been followed; and

· endeavour to make judgements, valuations and

estimates that are reasonable and prudent.

They also have a duty to:

· set and maintain appropriate value systems;

· apply due care and skill in harnessing entrepreneurial

flair in maximising sustainable returns;

· keep proper accounting records;

· take steps to safeguard the assets of the Company;

· set the group’s risk appetite;

implement effective risk management processes and

internal controls and monitor its efficiency;

· ensure compliance with all relevant laws;

· disclose potential conflicts of interest; and

· disclose information truthfully and transparently.

The Board formulates the Company’s communication

policy and ensures that spokespeople adhere to it.

This responsibility includes transparent, balanced

and truthful communication to shareholders and

relevant stakeholders.

Having considered the above, the directors are of the

opinion that the Board and the subcommittees have

discharged all their responsibilities for the period being

reported on.

CONFLICTS OF INTEREST

Mechanisms have been put in place to recognise,

respond to and manage any potential conflicts of interest.

Directors sign, at least once a year, a declaration stating

that they are not aware of any conflicts of interest that

may exist due to their interest in or association with any

other company.

In addition, directors disclose their interest in contracts

that are significant to the Company’s business. Any potential

conflict of interest is disclosed as soon as it arises.

All information acquired by directors in the performance of

their duties, which is not disclosed publicly, is treated as

confidential. Directors may not use, or appear to use, such

information for personal advantage or for the advantage of

third parties.

Directors of the Company are required to comply with gifts

and donation policies and the prescriptions of the VenFin

Code of Conduct on inside information transactions and

disclosure of transactions.

COMPANY SECRETARY AND
PROFESSIONAL ADVICE

Directors are entitled to seek, at the Company’s expense,

independent professional advice concerning the affairs of

the group. They have unlimited access to the services

of the company secretary, who is responsible to the Board

to ensure that proper corporate governance principles

are adhered to. Board orientation or training is done

when appropriate.

GOING CONCERN

At least once a year the Board considers the going concern

status of the group with reference to the following:

· net available resources and the liquidity thereof;

· the group’s Residual Risk Profile;

· world economic events;

· the following year’s strategic/business plan, budgets

and cash flow models; and

·the group’s current financial position.

SERVICE COMPANY

An agreement was concluded with a service company, M&I

Management Services (Proprietary) Limited (M&I), to

render management and support services to VenFin.

VenFin pays fees to M&I which cover the overhead costs

of the management of VenFin. The fees for the past year

are disclosed in note 6 to the annual financial

statements.

RISK MANAGEMENT AND INTERNAL
CONTROL

In determining strategic objectives, the Board of Directors

has ensured its understanding of all the risks associated

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with the Company’s investment portfolio with a view to

maximising sustainable profits and growth.

These risks are measured continuously against the risks

the Board is prepared to assume in its endeavours to

optimise sustainable growth.

The risk management process is fundamentally based

on the skill and calibre of individuals employed, their

motivation and drive and the value systems they adhere to.

In addition, the investment portfolio serves to spread

investment risk.

The categories of risk identified can be broadly classified

as follows:

· Performance risk, including strategic risk, opportunity

risk, reputational risk, liquidity risk, and also risks

relating to corporate governance, social and environ-

mental responsibility and stakeholder relations.

· Investment risk inherent to existing investments. The

Board has delegated the responsibility for investment

risk management to the Management Committee.

These risks are furthermore managed at VenFin

by ensuring that future investments are subject

to rigorous due-diligence reviews. These reviews

include, inter alia, verification of intellectual property

rights, management competency, business plans,

market analyses, contractual rights and obligations,

product feasibility, cash flow and liquidity

requirements. Consideration is also given to ensure

that the investment is optimally structured, using

appropriate investment instruments.

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CORPORATE GOVERNANCE

Performance of operational management, measured

against budgets and other measurement criteria, is

regularly appraised for timely corrective action, when

deemed appropriate.

· Operational risk which includes operational effectiveness

and efficiency, safeguarding of assets, compliance with

relevant laws and regulations, reliability and integrity

of reporting, effective operational risk management,

human resource risk, technology risks, business

continuity and risk funding.

Operational risks are managed mainly by means

of internal control. This is a process designed to

provide reasonable assurance regarding the

achievement of organisational objectives and to

reduce the possibility of loss or misstatement to

within accepted levels. The effectiveness of risk

management is measured by the level of reduction

of the Company’s cost of risk.

Management structures have been established

to focus on certain key risk activities, including safety,

health, environment, security, tax and risk funding.

· Treasury risk VenFin uses the treasury services of

M&I and V&R Management Services AG to manage

interest rates, liquidity, compliance and currency

risks globally.

A treasury committee, in terms of a mandate from the

Board, constituted of nominated executive directors

and senior management, is responsible for determining

policy and procedures as well as clearly defined levels

of responsibility. Regular feedback is given to the

Board.

The Board has documented and implemented a compre-

hensive risk management system, which incorporates

continuous risk identification, assessment, evaluation,

and internal control embedment.

The Board influences the control environment by setting

ethical values and organisational culture while ensuring

that management styles, delegated authorities, business

plans and management competency are appropriate,

effective and efficient.

The Board also monitors the effectiveness of governance

structures implemented by the boards of those entities it

invests in.

Risk funding is focused strategically on a self insurance

methodology aimed at reducing the group’s cost of risk,

save for those risks which cannot be cost beneficially

controlled or have potential catastrophic exposures.

INTERNAL AUDIT

The Company has an internal audit function, which has

been outsourced to M&I’s Risk Management and Internal

Audit department. It is an effective independent appraisal

function and employs a risk-based audit approach,

formally defined in accordance with the Institute of

Internal Auditors’ definition of internal auditing and

documented in a charter approved by the Board. The

head of this department has direct access to the chairman

of the Audit and Risk Committee as well as to the

chairman of the Board.

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EXTERNAL AUDIT

The Company’s external auditors attend all Audit and Risk

Committee meetings and have direct access to the chairman

of the Audit and Risk Committee. Their audit coverage is

adequately integrated with the Internal Audit functions

without their scope being restricted.

Other services provided by the auditing firm mainly relate

to tax matters and are effected by a department

independent of the audit partners. Independence is

further assured by terms of appointment.

DEALINGS IN SECURITIES

The Company has adopted a code of conduct for insider

trading. During the closed period directors and designated

employees are prohibited from dealing in the

Company’s securities. During open periods directors

and personnel may only deal in the Company’s securities

with the approval of the chairman or the chief executive

officer. The closed period endures from the end of a

financial reporting period until the publication of

financial results for that period. Additional closed

periods may be declared from time to time if dictated

by special circumstances.

ACCESS TO INFORMATION

VenFin complies with the regulations of the Promotion of

Access to Information Act (Act 2 of 2000). The Act

ensures the constitutional right of access to information

required for the exercising or protection of rights.

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GROUP ETHICS

VenFin’s commitment to ethical behaviour is contained in

the following published documents:

· Code of ethics

· Internet policy

· Disciplinary code

· Gifts and donations policy

The Board was responsible for the establishment and

distribution of these documents with compliance being

monitored by means of management structures, internal

audit and the group’s central forensic function including

hotlines.

EMPLOYMENT EQUITY

M&I, the service company, in accordance with the

Employment Equity Act, strives to afford all staff the

opportunity to realise their full potential. M&I’s management

and personnel are continuously involved in determining

training and development needs and in the implementation

and monitoring of a labour plan. Special attention is given

to those groups which, because of historic reasons, might

be in a disadvantaged position. In accordance with the

requirements of the Employment Equity Act, M&I annually

submits a labour plan to the Department of Labour.

Because of the nature of its operations, to provide inter alia

core services to VenFin, M&I’s workforce is characterised by

the following:

· A high level of expertise within the top structure of the

organisation and in various specialised divisions

· A young employee profile, especially with regard to

management

· A low turnover rate of staff and, consequently, limited

opportunities for new appointments

M&I believes that the quality of its staff affords it an important

sustainable competitive advantage. Therefore it believes that

its success does not lie in the uniformity of its staff but in the

diversity and development of their collective talents. For these,

space and opportunity will always be created.

Human resource policies and procedures also address the

issues of non-discrimination, child labour, disciplinary

practices, human rights et al.

SAFETY AND ENVIRONMENT

The Company has a duly constituted safety and health

committee, required by the Occupational Health and

Safety Act. This committee assists the Board in ensuring

that the Company provides and maintains a safe and

healthy risk-free environment for staff and visitors by

identifying risks and ensuring that controls designed to

mitigate these risks are effective and complied with.

Most group companies, based on their core activities, are

deemed low-impact enterprises as regards environmental

exposure.

The Company benchmarks its current environmental

practices against the criteria stipulated in the Global

Reporting Initiative

(GRI) Framework, being:

· Materials

· Energy

· Water

· Biodiversity

· Emissions, effluents and waste

· Suppliers

· Products and services

· Compliance

· Transport

VenFin’s three levels of corporate social responsibility were mentioned earlier and its obligation
to shareholders was dealt with under Corporate Governance. In this section its responsibilities
towards the community (to be a worthy citizen grateful of the goodwill received from the public)
and to staff (to ensure that their work remains a meaningful and rewarding experience) receive
attention.

SUSTAINABILITY REPORT

Where deemed appropriate, usage and impact are being

quantified and measured against best practices.

HIV/AIDS POLICY

During February 2003, the GRI published a resource

document to serve as a reporting guideline on HIV/Aids.

Because the GRI chose South Africa as the development

area for this resource document, which will eventually

become a technical protocol, VenFin chose it as its

reporting standard on this matter.

From the perspective of an investment holding company,

the risk of HIV/Aids comprises two elements, namely:

Group risk

Given the potential impact of HIV/Aids on the markets, on

human capital cost of employment and on the operational

processes of the various businesses invested in, this risk is

managed within the governance structures of the various

companies.

VenFin monitors the progress of these policies and

strategies against best practice standards.

Company risk

VenFin and M&I have a formal HIV/Aids policy and are

committed to managing the pandemic and the business

risks associated with it actively. Its policy makes provision,

inter alia, for the following:

· Compliance with all legal requirements as far as

HIV/Aids is concerned

· No discrimination against employees or potential

employees based on their HIV status

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· Strict confidential treatment of information on the

HIV status of employees

style="color:#002c1a;">· General measures to prevent accidental infection

Remedi Medical Aid Scheme, of which most of M&I’s

staff are members, has a management plan for HIV/Aids

and employees can participate in it by choice.

PANDEMICS

As part of its awareness of community risk, the group

monitors pandemic risks and will take appropriate steps

as and when required.

COMMUNICATION TO STAKEHOLDERS

The Board places great emphasis on communication to

shareholders and other stakeholders to ensure that they are

kept appropriately informed on matters affecting the group.

The following are recognised as stakeholders in the

Company:

· Shareholders and lenders as providers of capital

· The State as policy-maker and regulator

· The investment community as interested party

· The community, through the creation of employment,

as part benefactor of taxes paid by profitable organi-

sations, and as a recipient of /social contributions

VenFin is committed to transparency and disclosure of

relevant and appropriate information in its Annual Report

and through other communication channels to ensure a

proper evaluation of the performance of the Company.

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SUSTAINABILITY REPORT

COMMUNITY SERVICE

As far as its business and community service programmes

are concerned, the Company strives to make a meaningful

contribution, adding value to all stakeholders. Donations

are usually made over a term to provide beneficiaries with

a measure of security and are not spread over such a

broad area that they become negligible.

In terms of this approach, the Company currently supports

the following initiatives:

Entrepreneurship and training

VenFin has agreed to support the Peace Parks Foundation

(PPF) and particularly the activities of the

SA College for

Tourism in Graaff-Reinet and the Southern African

Wildlife College near the border of the Kruger National

Park. Both colleges are involved in practical training and

job creation.

SA College for Tourism – had another successful

year in 2005 when 29 women from 10 Southern African

countries graduated from this college in Graaff-Reinet,

where especially young black women from previously

disadvantaged communities are trained for careers in the

hospitality industry. The Queen of Lesotho, in her

keynote address at the graduation ceremony, said the

College was the only training centre in the subregion

dedicated to training African women in management

skills for the guest house/lodge industry. She also

referred to the important role played by this industry in

alleviating poverty.

Besides subjects that are practically orientated, students

gain excellent experience during their study year through

banquets, conferences and other functions presented

by the Panorama Guest House in Graaff-Reinet.

Southern African Wildlife College – near Hoedspruit

provides unique opportunities for students from various

countries, cultures and backgrounds to share ideas on the

management and sustainable utilisation of resources in

the subregion. Transfrontier conservation areas remain

the primary focus of the College. The curriculum as well

as the training approach takes the specific needs of these

areas into account.

At last year’s promotion ceremony in October,

42 students from Malawi, Mozambique, South Africa,

Swaziland, Uganda, Zambia and Zimbabwe received

certificates and diplomas. Evident was the fellowship

that evolved among them. As the students are already

employed in the region’s wildlife sector, their tenure at

the College strengthens cross-border relations and

facilitates negotiations once they return to work in their

respective countries.

SciMathUS – is a post-matric programme presented by

the Institute for Mathematics and Science Teaching at

the University of Stellenbosch for talented students from

disadvantaged communities to improve their matric

results in mathematics, science and accountancy in order

to gain access to tertiary education.

At present the programme is in its sixth year and plays

an important role in reducing the enormous shortfall of

black graduates in the natural, applied, economic and

management sciences. Serious challenges faced include

the lack of basic skills for studying, reading and writing.

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Furthermore, many students come from extremely poor

and violent backgrounds and must also learn to cope with

the pressures of academic life.

The programme focuses mainly on higher grade mathematics,

physical science and accountancy as well as life skills,

computer literacy, engineering drawing and statistics. In

2005, all 62 students who wrote the National Senior

Certificate Examination gained access to tertiary education.

This year 75 students have joined the programme.

Paul Roos Academy – is an imaginative project that

aims at identifying leadership talent in disadvantaged

schools and, through additional teaching during school

holidays, assists these learners to realise their full

potential. In 2005, some 204 learners received tuition at

the Academy. Among them were 16 sponsored by farmers

from Grabouw, Vyeboom, Villiersdorp and Saron.

During school holidays the learners are not confined

merely to academic tasks, but are also exposed to sport

and other educational activities. Valuable support is

received from the Memory Institute and the Creative

Education Foundation, the latter being represented by six

Americans who participate on a voluntary basis.

Rally to Read – this literacy programme is in its ninth

year and since its inception more than R17 million

has been invested in quality education. When it started

in 1998, 25 off-road vehicles delivered books worth

R100 000 to 13 schools in KwaZulu-Natal. This year,

books valued at R2.5 million were delivered by 420

vehicles in eight provinces to some of the country’s

poorest schools. VenFin has been a sponsor of the

programme since 2003.

University of Stellenbosch – VenFin has committed

itself to making a contribution over three years to the US,

one of the oldest universities in the country, to assist in

processing its archive material.

Computer assistance – VenFin has committed itself

to become technically involved with teaching in the

Stellenbosch/Helderberg area by donating computers

to those schools whose development due to historical

reasons had lagged behind. VenFin believes that

access to advanced teaching methods can help the

children of these schools to bridge the gap to modern

information technology.

Equip – is a programme of the National Business

Initiative (NBI) aimed at improving through private sector

partnerships the quality of education and school

management systems. It started in 1995 in an attempt to

address the poor quality of education in many South

African schools. VenFin joined the programme in 2005 as

sponsor and is currently involved in a cluster of five

disadvantaged schools, comprising 4 000 learners and

some 140 teachers, in the Stellenbosch area. Countrywide

the Equip programme has already reached more than

2.5 million learners.

Equip aims at developing capacity for leadership,

management and governance in schools, at enhancing the

implementation of relevant school development plans and

at facilitating a participatory and sustainable approach to

teacher development and learner outcomes, especially in

mathematics, science, technology and English.

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Khanya – VenFin has committed itself over two years

to contribute to this computer literacy project of the

Western Cape Education Department which will enable a

thousand “super” teachers to obtain widely recognised

international certification.

The e-Citizen/Khanya project aims at ensuring that all

educators employed by the Western Cape Education

Department are computer literate by 2008, so that they

can use the available technology effectively in the

classroom. By empowering teachers in such a way, a

multiplying effect is achieved which can be regarded as

an excellent investment in the future and quality of

education in the Western Cape.

Environment

WWF-SA – is the channel through which VenFin

exercises its concern for our natural heritage. During the

past year, WWF-SA continued its broad-based approach

to environmental affairs by focusing especially on the

following:

The training of managers for South Africa’s Marine

Protected Areas which now cover almost 20% of the

country’s coastline.

The implementation of a Sustainable Seafood Initiative

which will guide seafood restaurants and retailers and

educate consumers to make informed choices to

reduce the consumption of declining fish species.

The introduction of 21 black rhino as a founder

population as part of the project to double the black

rhino population in KwaZulu-Natal from 500 to 1 000.

The acquisition of more land to establish the core of

the Knersvlakte nature reserve. At present 32 000 ha,

or 6% of the Knersvlakte biome within the Succulent

Karoo Ecoregion, is available for this reserve.

Assistance to the Minister of Environmental Affairs

and Tourism with the development of norms and

standards for the South African hunting industry, as

well as an elephant population management strategy

for Southern Africa.

Cultural development

Klein Karoo National Arts Festival (KKNK) – VenFin

is a sponsor of the KKNK and its contribution is focused

on the developmental side of the festival. A portion of the

VenFin sponsorship is used to further the careers of

budding artists. This year bursaries were awarded to two

matriculants from Riversdale and Oudtshoorn to obtain

qualifications in acting and directing, and in the film

industry.

During the twelve years of its existence, the KKNK has

developed into a display window of the shared experiences

of many South Africans. It also serves as an important

springboard for the careers of young as well as established

artists.

Stellenbosch Music Festival – VenFin is a regular

supporter of this cultural event in Stellenbosch. The

festival is held annually in September and is characterised

by excellent classical music events, a popular street

festival as well as community projects and workshops in

Kayamandi, Cloetesville and Idas Valley.

Field Band Foundation – the creativity and discipline

of music and movement are harnessed by the Field Band
Foundation to stimulate the self-esteem and development
of disadvantaged children and to cultivate leadership
qualities. An HIV/Aids awareness programme forms part
of the educational programme. The Foundation has been

SUSTAINABILITY REPORT

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modelled on various overseas examples where music and
dances are used for social development. The Foundation
started in 1997 with 600 children and five bands in four
provinces. In 2005 the numbers have increased to
24 bands and 3 626 youngsters from 257 schools and
133 townships.

Two highlights of the Foundation’s activities during the

past few years were the performances of its bands at all

Cricket World Cup matches in 2003 as well as the

participation of the national field band in Norway’s

centenary celebrations in 2005. VenFin has agreed to

be a co-sponsor for three years of the Stellenbosch project

of the Foundation, which serves the communities of

Cloetesville, Kayamandi and Guguletu. Approximately

43% of the parents of children participating in the project

are unemployed.

WAT – one of the functions of the Dictionary of the

Afrikaans Language (WAT) is to promote Afrikaans on

behalf of 5.7 million South Africans who regard it as

their home language. In its 80th year, WAT has announced

the establishment of a trust fund to finance operating

costs, development activities and the publication of

new WAT volumes. VenFin is contributing to the fund for

three years.

A reduction in the government’s contribution, which

also led to a reduction in staff, has necessitated the

establishment of such a trust fund. At present the WAT, in

co-operation with the Western Cape Education Department,

is looking at the possibility of making an electronic version

of the dictionary available to all learners in the province as

part of the Khanya project. The printing cost of a single

WAT volume currently amounts to R575 000. Eight still

need to be published.

Sport development

SA Golf Development Board (SAGDB) – has had a

particularly challenging year which saw the loss of one of

its bigger sponsors. The SAGDB had no option but to

restructure, reduce staff and to streamline administrative

and operational activities. This has resulted in a saving of

37% in administrative costs alone and the organisation

now appears far more streamlined and focused. During

the period VenFin has contributed R750 000 to assist the

SAGDB. With the emphasis increasingly on performance,

the SAGDB is more determined than ever to fulfil its

motto:

Grow the game. Build the nation.

Western Cape Cricket Academy – VenFin is a joint

sponsor of this Academy which aims to train young players

from the Western Province (WP) and the Boland in all

aspects of the game and to provide them with specific life

skills. Attention is also given to the development of

coaches, umpires and scorekeepers.

During the past year the Academy produced seven

players for the WP amateur team and one for the

WP/Boland Professional Franchise, while four players of

the Boland Academy played for the amateur team of the

province and three umpires were promoted to provincial

level. Besides the quota of local games, teams of the

Academy also played against the English counties Essex,

Nottinghamshire and Somerset as well as against the

academies of Warwickshire and Sussex.

Community development

Ikamva Labantu – is a “flagship” community project

that essentially mirrors VenFin’s philosophy of personal

empowerment

(help others to help themselves). This

welfare organisation attends to the basic needs of people

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in the townships and core services include health, capacity

building, land and buildings, and poverty alleviation.

Ikamva is not only involved in caring for children and

young people, but also in the development of their

potential through life skills, character building and

leadership development programmes as well as HIV/Aids

education. Together with the economic empowerment of

adults, the main focus of the organisation is on making

people of all ages participating members of society.

One of Ikamva’s more recent pilot projects, for which

VenFin is providing additional funding, focuses on the

extended support for vulnerable children and families

who, because of the HIV/Aids pandemic, encounter

difficulties in accessing much needed services and

community resources.

u Mephi Children Care Programme – which VenFin

has agreed to support for two years, was established in

1938 as a church-sponsored project to care for neglected

and abused children. Today more than 500 children are

taken care of daily around the country, an embodiment of

the true meaning of u Mephi, namely

to take away shame.

u Mephi functions more like a family than an institution.

It has more than 40 homes and other care centres where

the needs of schoolchildren, abused and abandoned

babies as well as terminally ill toddlers are provided for.

St Joseph’s Home – is a sanctuary of hope and healing

for underprivileged children in the Western and Eastern

Cape who suffer from cancer, Aids-degenerative

diseases, life-threatening conditions, diabetes, burns

and disability. VenFin has committed itself for three

years financially to the home which functions

simultaneously as a hospital, a care centre and a school

to provide in the medical, nursing and educational needs

of children.

Health care

Wits/Donald Gordon Medical Centre – one of

the main aims of this centre is to prevent some of the

country’s best medical brainpower being lost to

the profession in South Africa. World-class facilities are

provided to enable specialists to do private consultation

work while continuing with research and tuition. VenFin

committed itself for ten years to the centre.

In October 2005, Medi-Clinic obtained an interest of

49% in the centre as well as the management contract. It

is excited about the prospects of the establishment of the

first private academic hospital in the country. A number

of liver transplants have been performed since the

beginning of the year. The centre is certainly now one of

the most active in this particular field.

Organ Donor Foundation of SA – is an organisation

that gives hope to many people who need organ transplants

to carry on a normal life. During the past year organs

transported by the Group’s sponsored flights helped to

save the lives of eight people and to restore the sight of

four. In this regard, the support of Falconair’s staff

deserves mentioning.

SUSTAINABILITY REPORT

CONTENTS

Statement of responsibility by the Board of Directors

Statement by the Company Secretary

Report of the independent auditors

Report of the Board of Directors

Accounting policies

Balance sheets

Income statements

Statements of changes in equity

Cash ﬂow statements

Notes to the annual ﬁnancial statements

Annexure A – Principal subsidiary companies

Annexure B – Principal investments

Annexure C – Signiﬁcant associates

Analysis of shareholders

Dates of importance to shareholders

Administration

Notice to shareholders

Form of proxy

Attached

ANNUAL FINANCIAL STATEMENTS 06

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2006

The directors are responsible for the maintenance of adequate accounting records and the preparation

and integrity of the annual financial statements included in this Annual Report.

The annual financial statements are prepared, in accordance with International Financial Reporting

Standards (IFRS) and the requirements of the South African Companies Act, on the going concern

basis and incorporate full and responsible disclosure. The annual financial statements are based upon

appropriate accounting policies and supported by reasonable and prudent judgements and estimates.

The directors are satisfied that the information contained in the financial statements fairly represents

the results of operations for the period and the financial position of the group at year-end. The accuracy

of the other information included in the Annual Report was considered by the directors and they are

satisfied that it is consistent with the financial statements.

The directors are also responsible for the Company’s system of internal financial controls. The system

was developed to provide reasonable, but not absolute, assurance regarding the reliability of the

financial statements, the safeguarding of assets, and to prevent and detect misrepresentation and

losses.

The directors are of the opinion that the group will continue as a going concern in the future.

The financial statements were audited by independent auditors, PricewaterhouseCoopers Inc., to whom

unrestricted access was given to all financial records and related information. The directors are further

of the opinion that all statements that were made to the auditors during the course of the audit were

valid and relevant. The auditors’ report is presented on page 47.

Signed on behalf of the Board of Directors.

Johann Rupert

Jannie Durand

Chairman

Chief Executive Officer

Stellenbosch

4 September 2006

STATEMENT OF RESPONSIBILITY

BY THE BOARD OF DIRECTORS

STATEMENT BY THE COMPANY SECRETARY

I, Mariza Lubbe, being the Company Secretary of VenFin Limited, hereby certify that all returns required

of a public company have, in respect of the period under review, been lodged with the Registrar of

Companies and that all such returns are true, correct and up-to-date.

Mariza Lubbe

Secretary

Stellenbosch

4 September 2006

We have audited the annual financial statements and group annual financial statements of VenFin

Limited set out on pages 48 to 78 for the period ended 30 June 2006. These financial statements are

the responsibility of the Company’s directors. Our responsibility is to express an opinion on these

financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing. Those standards

require that we plan and perform the audit to obtain reasonable assurance that the financial statements

are free of material misstatement. An audit includes examining, on a test basis, evidence supporting

the amounts and disclosures included in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, and evaluating the overall

financial statement presentation. We believe that our audit provides a reasonable basis for our

opinion.

In our opinion, the financial statements fairly present, in all material respects, the financial position of

the Company and group at 30 June 2006 and the results of their operations, changes in equity and

cash flows for the period then ended in accordance with International Financial Reporting Standards,

and in the manner required by the Companies Act in South Africa.

Director: NH Döman

Registered Auditor

Cape Town

4 September 2006

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REPORT OF THE INDEPENDENT AUDITORS

TO THE MEMBERS OF VENFIN LIMITED

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2006

Dear Shareholder

The Board has pleasure in reporting on the activities and financial results of your group for the period
under review.

ACQUISITION OF SURPLUS ASSETS

On 1 December 2005, Vodafone Holdings (SA) (Proprietary) Limited (Vodafone) announced its firm
intention to make an offer to acquire all the VenFin Limited (former VenFin) ordinary shares of 1 cent
each held by shareholders, other than Vodafone and any subsidiaries of former VenFin for a cash
consideration of R47.25 per share, subject to certain conditions (the Offer).

It was further announced that Business Venture Investments No 951 Limited (VenFin), Vodafone, former
VenFin and the Rembrandt Trust (Proprietary) Limited entered into an agreement in terms of which
former VenFin would, subject to certain suspensive conditions, and after the completion of the Offer,
dispose of all surplus assets (all the net assets of former VenFin except the 15% interest in Vodacom
Group (Proprietary) Limited) to VenFin for a total purchase consideration of R5 billion in cash (Surplus
Assets Sale Agreement).

On 26 January 2006 Vodafone declared the Offer unconditional, which triggered the implementation
of the Surplus Assets Sale Agreement. On 2 February 2006** VenFin acquired the surplus assets for
a cash consideration of R5 billion.

Surplus assets

Cost* Market valuation

million

Investments – Associates

943

3 044

Investments – Other

1 278

Cash and cash equivalents

2 679

Other net assets

183

Total surplus assets acquired

5 083

7 184

Purchase consideration (including transaction cost)

(5 012)

Negative goodwill on acquisition

The total purchase consideration was allocated to the underlying assets as follows: cash, monetary
assets and investments at fair value; associates at market value less the discount on the total
market valuation. The cash consideration was funded by issuing shares and the acquired cash
resources. Net bridging finance of R2.4 billion resulted in finance cost of R42 million incurred
during the period.

For accounting purposes the acquisition date of the surplus assets was set at 1 January 2006.

NAME CHANGE

At a special general meeting of the shareholders of Business Venture Investments No 951 Limited,
a special resolution to change the name of the Company to VenFin Limited was approved.

The name of the Company was changed to VenFin Limited on 4 August 2006.

FINANCIAL PERIOD

VenFin was incorporated as a public company on 1 December 2004 with a share capital of R7 and a
financial year-end of 28 February. During the period under review the Company changed its financial
year-end to 30 June. Although the current financial year spans a period of 16 months to 30 June 2006,
no trading activities took place until the implementation of the Surplus Assets Sale Agreement.

ADOPTION OF IFRS

The Company has decided to voluntarily adopt IFRS with effect from 1 March 2005. However, as it had
no assets and liabilities at that date, the implementation of IFRS had no effect on the results or

REPORT OF THE BOARD OF DIRECTORS

FOR THE PERIOD ENDED 30 JUNE 2006

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financial position of the Company on that date. All subsidiary companies and associates acquired on
1 January 2006 were already IFRS compliant and, where necessary, changes had been made to bring
their results in line with the accounting policies of the group.

OPERATING ACTIVITIES

VenFin is an investment holding company. The group derives its income mainly from dividends and
equity accounted income of associates in which VenFin invested. Interest is also earned on cash
resources.

The investee companies’ operating activities are spread over a broad spectrum which include, but are
not limited to telecommunication, technology and media interests, and financial and risk services. The
biggest portion of the individual investments is in South Africa, but a substantial investment held
abroad is the 18.3% equity interest in Dimension Data plc.

FINANCIAL REVIEW

Operating results

Period ended 30 June:

2006

Normalised headline earnings * (R million)

126

Interest in net profit of associates (R million)

Net interest income and other profit (R million)

– per share (cents)

43.0

– diluted (cents)

42.0

Headline earnings (R million)

404

– per share (cents)

137.9

– diluted (cents)

136.9

Earnings – net profit for the period (R million)

240

– per share (cents)

81.9

– diluted (cents)

80.9

Dividends **
– ordinary – per share (cents)

25.0

– special – per share (cents)

25.0

* In determining normalised headline earnings, the headline earnings is adjusted for non-recurring items.

** The ordinary and special dividends were declared after the year-end and were therefore not provided for in the

annual financial statements.

Details of the operating results are set out in more detail in the general report on pages 10 to 13.

2006

Composition of normalised headline earnings

R million

Subsidiary companies

Profits

Losses

(28)

Associates

Profits

Losses

(2)

126

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INVESTMENTS

The most important changes in investments for the period under review, subsequent to the acquisition

of the surplus assets, were as follows:

Dimension Data plc (Didata)

During the period under review, VenFin converted its USD100 million Didata convertible bond into

188 121 978 ordinary Didata shares. In terms of the agreements governing the convertible bond,

Didata had the right to redeem the bond under certain share price conditions on or after 14 January 2006

if VenFin did not elect to convert. Given Didata’s share price performance, these conditions were met

after that date, and VenFin elected to convert the bond rather than accept redemption.

The additional shares amounted to 12.2% of the enlarged issued share capital of Didata.

On 30 June 2006, VenFin’s total interest in Didata, including the 7% acquired in January 2006, was

18.3%.

FrontRange Limited (FrontRange)

During the period under review, FrontRange disposed of all its material underlying assets, made a

distribution of R5.37 per share to its shareholders, and was subsequently delisted from the JSE.

The total proceeds received by VenFin amounted to R163 million. The shares in FrontRange were

subsequently disposed of for R0.2 million.

Repurchase of VenFin shares

VenFin’s wholly owned subsidiary, VenFin Funding Corporation (Proprietary) Limited, acquired 3.8 million

VenFin ordinary shares at an average price of R14.19 per share for R54 million. On 30 June 2006, these

shares in treasury represented 1.5% of the issued ordinary shares of 1 cent each.

GEMS Oriental and General Funds (GEMS III)

VenFin invested a further USD3.8 million in GEMS III. The total investment to 30 June 2006 amounted

to USD7.5 million, with a further USD5 million committed.

Johanna Solar Technology GbmH (Johanna)

VenFin invested €2.5 million in Johanna, a start-up company committed to building a solar cell plant

in Germany, which will use thin-film, silicon-free technology developed by the Johannesburg University.

On 30 June 2006, VenFin’s total interest in Johanna was 9.5%.

Trina Solar Technology Limited (Trina)

VenFin invested USD1.5 million in Trina, a leading integrated solar photovoltaics manufacturer, based

in China. This investment was made as part of a consortium, led by Milestone China, that invested

USD40 million for a 34% interest. On 30 June 2006, VenFin’s direct interest in Trina was 1.3%.

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

VenFin has invested a further USD1 million in Milestone China. At 30 June 2006, the fair value of the

investment amounted to USD2.6 million, with a further USD1.4 million committed.

Cash Axcess Corporation (Proprietary) Limited (Cash Axcess)

VenFin invested R4.5 million in Cash Axcess, which provides ATM-related products and services to the

African financial and retail markets. On 30 June 2006, VenFin’s interest in Cash Axcess was 50%.

REPORT OF THE BOARD OF DIRECTORS

FOR THE PERIOD ENDED 30 JUNE 2006

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VHF Technologies SA (VHF)

During the period VenFin converted its loan of CHF 3 million into 1 875 shares in VHF, representing

a 26.1% interest. VHF, based in Switzerland, manufactures flexible thin-film amorphous silicon

solar cells.

Subsequent to the year-end

Subsequent to the financial year-end, no events had a significant impact on the group’s reported

results or ongoing operations.

SHARE APPRECIATION RIGHT SCHEME

During the period under review the Board approved the implementation of the VenFin Equity Settled

Share Appreciation Right Scheme. Share Appreciation Rights (SAR) were offered to participants as

follows (refer to note 10):

Offer Number

price

SAR Number

Grant date

(Rand)

offered

participants

21 June 2006

11.24

6 410 175

21 June 2006

13.70

2 773 842

153

9 184 017

162

Participants will receive VenFin shares to the value of the appreciation of a specified number of VenFin

ordinary shares that must be exercised within a period of six years after the grant date. These share

appreciation rights are exercisable as follows:

· One-third after the third anniversary of the grant date;

· Two-thirds after the fourth; and

· All after the fifth anniversary of the said date.

PRINCIPAL SHAREHOLDERS

Business Venture Investments No 1040 (Proprietary) Limited, a wholly owned subsidiary of the Johann

Rupert Trust, holds 19 435 438 of the issued ordinary shares of the Company and 17 753 176 of

the issued B ordinary shares of the Company and is entitled to 32.36% of the total votes. Business

Venture Investments No 1027 (Proprietary) Limited, a wholly owned subsidiary of the Hanneli Rupert

Trust, holds 19 435 437 of the issued ordinary shares of the Company and 17 753 176 of the issued

B ordinary shares of the Company and is entitled to 32.36% of the total votes.

An analysis of the shareholders appears on page 79.

SUBSIDIARY COMPANIES AND INVESTMENTS

Particulars of subsidiary companies, associates and other investments are disclosed in Annexures A

and B.

DIRECTORS

Messrs J P Gouws and A de Lange resigned as directors of the Company on 13 February 2006.

The names of the directors appear on page 8.

In terms of the provisions of the articles of association, Messrs J J Durand, G T Ferreira, J Malherbe,
J P Rupert and N J Williams retire from the Board. These directors are eligible and offer themselves for
re-election.

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DIRECTORS’ INTERESTS

At 30 June 2006 the aggregate of the direct and indirect interests of the directors in the issued share
capital of the Company amounted to 12.7%.

An analysis of the directors’ interests in the issued share capital of the Company appears on page 80.

DIRECTORS’ FEES

The Board recommends that directors’ fees for services rendered as directors during the past financial
period be fixed at R206 667.

ACQUISITION OF SHARES OF THE COMPANY

It is recommended that a general authority is granted to the Board 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.

Special resolutions to this effect are incorporated in the notice of the annual general meeting that
appears on page 83.

SECRETARY

Mrs M Lubbe is the Company Secretary and her address appears on page 82.

AUDITORS

PricewaterhouseCoopers Incorporated will continue in office in accordance with section 270 (2) of the
Companies Act.

DIVIDENDS

Dividend No 1

An ordinary dividend of 25 cents per share has been declared for the financial period ended
30 June 2006 in respect of both the ordinary shares of one cent each and the B ordinary shares of ten
cents each.

Special dividend

A special dividend of 25 cents per share has been declared in respect of both the ordinary shares of
one cent each and the B ordinary shares of ten cents each.

Payment

The ordinary and special dividends are payable to shareholders of the Company registered at the close
of business on Friday, 13 October 2006.

On payment date, Monday, 16 October 2006, if so mandated, dividends will either be transferred
electronically to bank accounts, or alternatively, cheques will be posted.

APPROVAL

The annual financial statements set out on pages 48 to 78 have been approved by the Board.

Signed on behalf of the Board of Directors.

Johann Rupert

Jannie Durand

Chairman

Chief Executive Officer

Stellenbosch

4 September 2006

REPORT OF THE BOARD OF DIRECTORS

FOR THE PERIOD ENDED 30 JUNE 2006

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2006

The financial statements are prepared on the historical cost basis, unless otherwise indicated, in

accordance with International Financial Reporting Standards (IFRS) and the requirements of the South

African Companies Act, Act 61 of 1973, as amended.

The Company has decided to voluntarily adopt IFRS with effect from 1 March 2005. However, since it

had no assets and liabilities on that date, the implementation of IFRS had no effect on the results or

financial position of the Company. All subsidiary companies and associates acquired on 1 January

2006 were already IFRS compliant and, where necessary, changes had been made to bring their results

in line with the accounting policies of the group.

The preparation of the financial statements necessitates the use of estimates, assumptions and

judgements that affect the reported amounts in the balance sheet and income statement. Although

estimates are based on management’s best knowledge and judgements of current facts on the balance

sheet date, the actual outcome may differ from those estimates.

The most critical judgement exercised relates to the classification of investments as

associates rather

than investments

available-for-sale. There are some investments over which VenFin is believed to have

significant influence although it has an interest of less than 20% in these companies. However, as

VenFin has board representation and is one of the major shareholders of these companies, its influence

over their financial and operating policies is significant. Those investments are accordingly accounted

for as associates using the equity method. The fair value of associates is set out in note 2 to the

financial statements.

On 1 January 2006 VenFin acquired a number of assets and liabilities as part of a business combination.

This transaction required judgement and estimates in identifying and valuing the net assets acquired

as well as in allocating the discount resulting from the transaction to the underlying net assets (refer

note 15).

Other less significant estimates and assumptions relate to the determination of the impairment of

investments, the valuation of unlisted investments and the assumptions relating to share-based

payments. Details of these estimates and assumptions are set out in the relevant notes to the annual

financial statements.

The accounting policies that the group applied in the presentation of the financial statements are set

out below. No material assumptions were made in the application of these accounting policies that had

a material effect on any amount recognised in the financial statements.

(I)

CONSOLIDATION, PROPORTIONATE CONSOLIDATION AND EQUITY
ACCOUNTING

Consolidation – subsidiaries

All entities in which the group, directly or indirectly, has an interest of more than one half

of the voting rights, or otherwise has the power to exercise control over the operations, are

included in the consolidated financial statements in the accepted manner. The existence

and effect of potential voting rights that are currently exercisable or convertible are

considered when assessing whether the group controls another entity.

The purchase method of accounting is used to account for the acquisition of subsidiaries.

The cost of an acquisition is measured at the fair value of the assets given, equity instruments

issued and liabilities incurred or assumed at the date of exchange, plus costs directly

attributable to the acquisition.

ACCOUNTING POLICIES

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The results of subsidiaries acquired or disposed of during the year are included in the

consolidated income statement from or to the date on which effective control was acquired

or ceased.

Intergroup transactions, balances and unrealised gains are eliminated on consolidation.

Unrealised losses are also eliminated unless the transaction provides evidence of an

impairment of the asset transferred.

The accounting policies of subsidiaries conform to the policies adopted by the group.

Accounting policies between various industries have been aligned to the extent that it is

material and appropriate for the specific industry.

Special purpose entities are consolidated when the substance of the relationship between

the group and the special purpose entity indicates that the group effectively controls the

entity.

Proportionate consolidation – joint ventures

All jointly controlled ventures are accounted for according to the proportionate consolidation

method. In terms of this method the attributable share of assets, liabilities, income,

expenditure and cash flow is included in the consolidated financial statements.

Equity accounting – associates

Entities that are neither subsidiaries nor joint ventures, but in which a long-term interest is

held and over whose financial and operating policies a significant influence can be exercised,

are accounted for according to the equity method as associates. The results of associates,

acquired or disposed of, are included in the consolidated income statement from the date

on which effective significant influence begins or until it ceases. Unrealised gains on

transactions between the group and its associates are eliminated to the extent of the group’s

interest in the associate. Unrealised losses are also eliminated unless the transaction

provides evidence of an impairment of the asset transferred. The group’s share of retained

income is transferred to non-distributable reserves. The group’s share of other movements in

the reserves of associates is accounted for as changes in consolidated non-distributable

reserves. The carrying value of the group’s associates includes goodwill (net of any

accumulated impairment losses) identified at acquisition. When the group’s share of losses

in an associate equals or exceeds its interest in the associate, including any other unsecured

receivables, the group does not recognise further losses, unless it has incurred obligations

or made payments on behalf of the associate.

Dilutionary and anti-dilutionary effects of equity transactions by associates that VenFin is

not party to, are accounted for directly against reserves.

Certain associates have year-ends that differ from that of the company. In such circumstances

the results of listed and certain unlisted companies are accounted for from the latest

published information and management accounts as at year-end, respectively. The

accounting policies of associates have been changed where necessary to align them to those

of VenFin and its subsidiaries to the extent that it is material and appropriate for the specific

industry in which the associate operates.

Investments acquired and held exclusively with the view to dispose in the next twelve

months, are not accounted for using the equity method, but carried at the lower of its

carrying value or fair value less costs to sell and are classified as non-current assets held for

sale in terms of the requirements of IFRS 5.

ACCOUNTING POLICIES

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Impairment – subsidiaries, joint ventures and associates

The carrying amounts of subsidiaries, joint ventures and associates are reviewed annually

and written down for impairment where necessary.

(II) INTANGIBLE

ASSETS

Goodwill

– on the acquisition of an investment, fair values at the date of acquisition are

attributed to the identifiable assets, liabilities and contingent liabilities acquired.

Goodwill is the difference between the cost of the investments and the fair value of

attributable net assets of the subsidiaries, joint ventures and associates at the acquisition

dates. Goodwill is reported in the balance sheet as non-current assets, is tested annually for

possible impairments and is carried at cost less accumulated impairment losses.

Goodwill attributable to associates is included in the carrying value of these companies and

is consequently reported under “investments – associates”.

Where, at the date of acquisition, the net assets of subsidiaries, joint ventures and associates

exceed the cost of the investments, the difference is immediately accounted for in the

income statement.

(III)

FINANCIAL ASSETS

Subsidiaries

– are stated at cost. In the consolidated annual financial statements these

companies are consolidated in the accepted manner.

Associates

– are stated at cost. In the consolidated annual financial statements the share

of post-acquisition reserves and retained income, accounted for according to the equity

method, is included in the carrying value.

Loans and receivables

– are initially recognised at fair value and subsequently measured

at amortised cost using the effective interest method, less accumulated provisions for

impairment losses. A provision for impairment losses is established when objective evidence

exists that the group will not be able to collect all amounts due according to the original

terms of receivables.

Investments held-to-maturity

– investments with fixed maturity that the group has the

intent and ability to hold to maturity are classified as investments held-to-maturity and are

included within non-current assets. These investments are carried at amortised cost using

the effective interest rate method.

Investments at fair value through profit and loss

– these investments, consisting of

financial assets held-for-trading and those designated at fair value through profit and loss at

inception, are carried at fair value. Realised and unrealised gains and losses, resulting from

changes in the fair value of these investments, are recognised in the income statement in

the period in which they arise.

A financial asset is classified in this category if acquired principally for the purpose of

selling in the short term or if so designated by management. Derivatives are also classified

as held-for-trading unless they are designated as hedges.

Investments available-for-sale

– other long-term investments are classified as available-

for-sale and are included within non-current assets. These investments are carried at fair

value. Unrealised gains and losses arising from changes in the fair value of available-for-sale

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investments are recognised in equity during the period in which they arise. When available-

for-sale investments are either derecognised or impaired, the accumulated fair value

adjustments are realised and included in income.

Cash and cash equivalents

– comprise cash on hand, deposits held at call with banks,

and investments in money market instruments, net of bank overdrafts. In the balance sheet,

bank overdrafts are included in short-term interest-bearing loans.

(IV) TAXATION

Deferred taxation is provided for at current rates using the balance sheet liability method.

Full provision is made for all temporary differences between the taxation base of an asset or

liability and its balance sheet carrying amount. No deferred tax liability is recognised in

those circumstances where the initial recognition of an asset or liability has no impact on

accounting profit or taxable income. Assets are not raised in respect of deferred taxation,

unless it is probable that future taxable profits will be available against which the deferred

taxation asset can be realised in the foreseeable future.

Secondary taxation on companies is provided for in respect of dividend payments, net of

dividends received or receivable and is recognised as a taxation charge for the year.

(V) FOREIGN

CURRENCIES

Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured

using the currency of the primary economic environment in which the entity operates

(functional currency). VenFin group’s company and consolidated functional and presentation

currency is rand and all amounts, unless otherwise indicated, are stated in millions.

Transactions and balances

Foreign currency transactions are translated to the functional currency using the exchange

rates prevailing at the date of the transactions. Foreign exchange gains and losses resulting

from the settlement of such transactions and from the translation at year-end exchange rates

of monetary assets and liabilities denominated in foreign currencies are recognised in the

income statement except when deferred in equity as qualifying cash flow hedges and

qualifying net investment hedges. Exchange differences on non-monetary items are

accounted for based on the classification of the underlying items. Foreign exchange gains

and losses on equities classified as available-for-sale financial assets are included in the

available-for-sale reserve in equity whereas the exchange differences on equities held at fair

value through profit or loss are reported as part of the fair value gain or loss.

Group entities

The results and financial position of all foreign operations (excluding those in hyperinflationary

economies) that have a functional currency different from the group’s presentation currency

are translated into the presentation currency as follows:

· Assets and liabilities are translated at the closing rate on the balance sheet date.

· Income and expenses for each income statement are translated at average exchange

rates for the year, to the extent that such average rates approximate actual rates.

· All resulting exchange differences are recognised as a separate component of equity.

On consolidation exchange differences arising from the translation of the net investment in

foreign operations, and of borrowings and other currency instruments designated as hedges

of such investments, are taken directly to a separate component of equity. On disposal of

foreign operations, such exchange differences are recognised in the income statement as

part of the profit or loss on disposal. Goodwill and fair value adjustments arising on the

ACCOUNTING POLICIES

E N

I N A N N U A L R E P O R T

2006

acquisition of foreign operations are treated as assets and liabilities of the foreign operation

and translated at closing rates at balance sheet date.

(VI) FINANCIAL

INSTRUMENTS

Financial instruments include cash and cash equivalents, investments, derivative

instruments, debtors and short-term loans, trade and other payables and borrowings.

Financial instruments are initially recognised when the group becomes party to the

contractual terms of the instruments and are measured at fair value, including transaction

costs, which is the value of the consideration given (financial asset) or received (financial

liability). With the initial recognition of financial instruments held at fair value through profit

and loss, the transaction costs are accounted for in the income statement. Subsequent to

initial recognition, these instruments are measured as set out in the applicable accounting

policies.

Financial assets (or a portion thereof) are derecognised when the group realises the rights to

the benefits specified in the contract, the rights expire or the group surrenders or otherwise

loses control of the contractual rights that comprise the financial asset. On derecognition,

the difference between the carrying amount of the financial asset and proceeds receivable

and any prior adjustments to reflect fair value that had been recognised in equity are

included in the income statement.

Financial liabilities (or a portion thereof) are derecognised when the obligation specified in

the contract is discharged, cancelled or expired. On derecognition, the difference between

the carrying amount of the financial liability, including related unamortised costs, and the

amount paid for it is included in the income statement.

All purchases and sales of investments are recognised at the trade date.

Any derivatives embedded in financial instruments are separated from the host contract when

their economic characteristics are not closely related to those of the host contract and the host

contract is not carried at fair value. Gains and losses are reported in the income statement.

The fair value of financial instruments traded in an organised financial market is measured

at the applicable quoted prices. The fair value of the financial instruments not traded in an

organised financial market, is determined using a variety of methods and assumptions that

are based on market conditions and risk existing at balance sheet date, including independent

appraisals and discounted cash flow methods. Fair values represent an approximation of

possible value, which may differ from the value that will finally be realised.

There are group companies that are parties to derivative financial instruments that reduce

exposure to financial risks. These instruments mainly comprise forward contracts. Changes

in the fair value of these and other derivative instruments are recognised in the income

statement in the period in which they arise.

Where currently a legally enforceable right of set-off exists for recognised financial assets

and financial liabilities, and there is an intention to settle the liability and realise the asset

simultaneously, or to settle on a net basis, all related financial effects are offset.

(VII)

IMPAIRMENT OF ASSETS

An assets is impaired if its carrying amount is greater than its estimated recoverable amount.

Financial assets carried at amortised cost

The group assesses whether there is objective evidence that a financial asset is impaired at

E N

I N A N N U A L R E P O R T

2006

each balance sheet date. A financial asset is impaired and impairment losses are incurred only

if there is objective evidence of impairment as a result of one or more events that have occurred

after the initial recognition of the asset (a ‘loss event’) and that loss event has an impact on

the estimated future cash flows of the financial asset that can be reliably estimated.

If there is objective evidence that an impairment loss has been incurred on loans and

receivables or held-to-maturity investments carried at amortised cost, the amount of the loss is

measured as the difference between the asset’s carrying amount and the present value of

estimated future cash flows discounted at the financial asset’s original effective interest rate.

The carrying amount of the asset is reduced and the amount of the loss is recognised in the

income statement. If a held-to-maturity investment or a loan has a variable interest rate, the

discount rate for measuring any impairment loss is the current effective interest rate determined

under contract. As a practical expedient, the group may measure impairment on the basis of

an instrument’s fair value using an observable market price.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can

be related objectively to an event occurring after the impairment was recognised, such as

improved credit rating, the previously recognised impairment loss is reversed and is recognised

in the income statement.

Financial assets carried at fair value

The group assesses whether there is objective evidence that a financial asset carried at fair

value is impaired at each balance sheet date. If any objective evidence of impairment exists for

available-for-sale financial assets, the cumulative loss, measured as the difference between the

acquisition cost and current fair value, less any impairment loss on the financial asset previously

recognised in profit or loss is removed from equity and recognised in the income statement.

Impairment losses recognised in the income statement on equity instruments are not

subsequently reversed through the income statement.

Goodwill

Goodwill is assessed annually for impairment. For purposes of impairment testing, goodwill is

allocated to cash-generating units, being the lowest component of the business measured in the

management accounts, which is expected to generate cash flows that are largely independent of

another business component. Each of those cash-generating units represents a grouping of assets

no higher than a primary business. Impairment losses relating to goodwill are not reversed.

(VIII) BORROWINGS

Borrowings are recognised initially at fair value, net of transaction costs incurred and are

subsequently measured at amortised cost. Any difference between the proceeds, net of

transaction costs, and the redemption value is recognised in the income statement over the

period of the borrowings using the effective interest method.

(IX)

REVENUE RECOGNITION

Revenue arising from services is recognised when the service is rendered. Interest is

recognised on a time proportion basis (taking into account the principal outstanding, the

effective rate and the period), unless collectability is in doubt. Dividends are recognised

when the right to receive payment is established.

(X)

EQUITY COMPENSATION PLANS

The VenFin group operates an equity settled share-based compensation plan. All offers granted

after 7 November 2002 are accounted for as share-based payment transactions. The fair value

ACCOUNTING POLICIES

E N

I N A N N U A L R E P O R T

2006

of offers is determined on the grant date and is accounted for as an employee services expense

over the vesting period of the share offers, with a corresponding increase in equity, based on

the group’s estimate of rights that will eventually vest. Fair value is determined using a

binomial model. The expected contract life used in the model has been adjusted based on

management’s best estimate of the effects of non-transferability, exercise restrictions and

behavioural considerations.

Any profits or losses that realise from shares being delivered to participants of the VenFin

Share Appreciation Right Scheme are recognised directly in equity.

(XI) TREASURY

SHARES

Shares in the company held by group companies are classified as treasury shares and are

held at cost. These shares are treated as a deduction from the issued number of shares and

taken into account in the calculation of the weighted average number of shares. The cost

price of the shares is deducted from the group’s equity.

(XII)

CURRENT/NON-CURRENT DISTINCTION

Items are classified as current when it is expected to be realised, consumed or settled within

twelve months after the balance sheet date or being traded, or the group does not have an

unconditional right to defer settlement for at least twelve months after the balance sheet date.

(XIII) NEW ACCOUNTING POLICIES AND INTERPRETATIONS

Management considered all new accounting standards, interpretations and amendments to

IFRS, that were issued prior to 30 June 2006, but not yet effective on that date. The standards

that are applicable to the group, but that were not implemented early, are the following:

· IFRS 6: Exploration for and evaluation of mineral resources

· IFRS 7: Financial instruments: disclosures

· IFRIC 4: Determining whether an arrangement contains a lease

· IFRIC 5: Rights to interests arising from decommissioning, restoration and environmental

rehabilitation funds

· IFRIC 6: Liabilities from participation in a specific market – waste electrical and

electronic equipment

· IFRIC 7: Applying the restatement approach under IAS 29: financial reporting in

hyperinflationary economies

· IFRIC 8: Scope of IFRS 2

· IFRIC 9: Reassessment of embedded derivatives

· Amendment to IFRS 1: First-time adoption of international financial reporting Standards

pertaining to IFRS 6: Liabilities from participation in a specific market – waste electrical

and electronic equipment

· Amendment to IFRS 4: Insurance contracts pertaining to financial guarantee contracts

· Amendment to IAS 1: Presentation of financial statements pertaining to capital

disclosures

· Amendment to IAS 19: Employee benefits pertaining to actuarial gains and losses

· Amendment to IAS 21: The effects of changes in foreign exchange rates pertaining to

net investments in foreign operations

· Amendments to IAS 39: Financial instruments: recognition and measurements pertaining

to cash flow hedge accounting of forecast intergroup transactions, the fair value option

and financial guarantee contracts

The application of the standards and interpretations mentioned above in future financial

reporting periods is not expected to have a significant effect on the group’s financial results,

financial position and cash flow.

E N

I N A N N U A L R E P O R T

2006

ASSETS
Non-current assets
Investments – Associates

2 219

–

– Other

313

1 012

Deferred taxation

143

–

2 675

1 012

Current assets

1 293

2 387

Short-term loans

–

2 303

Debtors

Taxation

–

Cash and cash equivalents

1 254

Total assets

3 968

3 399

EQUITY AND LIABILITIES
Capital and reserves
Issued capital

Share premium

3 281

Reserves

585

112

Treasury shares

(54)

–

Total shareholders’ equity

3 818

3 399

Current liabilities

150

–

Trade and other payables

117

–

Derivative instruments

–

Taxation

–

Total equity and liabilities

3 968

3 399

No comparatives are presented as the Company commenced operations during the current financial
period.

BALANCE SHEETS

AT 30 JUNE 2006

Consolidated The Company

R million

Notes

2006

E N

I N A N N U A L R E P O R T

2006

Dividends received

150

Interest received

Finance costs

(42)

Other net operating expenses

(21)

–

Fair value adjustments

298

–

Net impairment of investments and loans

(247)

–

Negative goodwill arising on acquisitions

–

Profit on sale of investments

–

Consolidated profit before tax

128

112

Share of after-tax profit of associates

–

Profit before tax

226

112

Taxation

–

Net profit for the period

240

112

ARNINGS PER SHARE

Cents

– Basic

81.9

– Diluted

80.9

SSOCIATES

R million

Share of after-tax profit of associates
Profit before taking into account the following

107

Profit on the sale of property, plant and equipment

Amortisation of intangibles identified on acquisition

(10)

INCOME STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2006

Consolidated The Company

R million

Notes

2006

E N

I N A N N U A L R E P O R T

2006

Consolidated

30 June 2006
Balances at 1 March 2005

–

Issue of shares

293

Share issue expenses

(6)

Total income accounted for

251

(9)

240

482

Exchange rate adjustments

251

Net fair value adjustments

(9)

Income accounted for
directly in equity

251

(9)

242

Net profit for the period

240

Change in reserves of associates

103

Income of associates transferred

(98)

–

Shares acquired by wholly owned
subsidiary (treasury shares)

(54)

Balances at 30 June 2006

3 287

(54)

201

251

(9)

142

3 818

R million

2006

The Company

Balance at 1 March 2005

–

Issue of shares

3 293

Share issue expenses

(6)

Net profit for the period

112

Balance at 30 June 2006

3 399

STATEMENTS OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2006

Issued

Trans-

capital

lation

Fair

and share Treasury

Equity

adjust-

value Retained

R million

premium

shares reserves

ments

reserve earnings

Total

E N

I N A N N U A L R E P O R T

2006

Cash flow – operating activities
Net operating profit before taxation

226

112

Adjustments

8.1

(246)

(112)

Operating loss before working capital changes

(20)

–

Working capital changes

8.2

186

–

Cash generated from operations

166

–

Net interest paid

(2)

(38)

Dividends received

8.3

–

150

Taxation paid

8.4

(7)

–

Net cash inflow from operating activities

157

112

Cash flow – investment activities

(2 136)

(5 012)

Additions to investments

(64)

–

Proceeds on disposal of investments

222

–

Acquisition of subsidiaries

8.5

(2 331)

(5 012)

Loans repaid

–

Cash flow – financing activities

3 233

4 983

Decrease in intergroup loans

–

1 696

Repurchase of shares

(54)

–

Issue of shares

3 293

Share issue expenses

(6)

Net increase in cash and cash equivalents

1 254

Cash and cash equivalents at the beginning of the period

–

Cash and cash equivalents at the end of the period

1 254

CASH FLOW STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2006

Consolidated The Company

R million

Notes

2006

E N

I N A N N U A L R E P O R T

2006

1. EARNINGS

HEADLINE EARNINGS RECONCILIATION

Net profit for the period

240

Adjusted for:
– Net impairment of investments

261

– Profit on sale of investments

(25)

– Negative goodwill arising on acquisitions

(71)

– Net surplus, after tax on disposal of property, plant and equipment

(1)

Headline earnings

404

NORMALISED HEADLINE EARNINGS RECONCILIATION

Headline earnings for the period

404

Adjusted for:
– Fair value adjustment – Dimension Data Bond

(295)

– Finance cost relating to the acquisition of surplus assets

– Foreign exchange loss relating to repatriation of offshore cash

– Reversal of impairment of loans

(14)

– Deferred taxation raised on STC credits

(16)

Normalised headline earnings

126

EARNINGS PER SHARE

Cents

Normalised headline earnings
– Basic

43.0

– Diluted

42.0

Headline earnings

– Basic

137.9

– Diluted

136.9

Earnings

– Basic

81.9

– Diluted

80.9

Number

of shares

Weighted shares in issue

292 918 450

Earnings per share

In determining the earnings per share, the weighted number of shares in issue was taken into
account, after the deduction of the treasury shares.

Diluted earnings per share
In determining the diluted earnings per share the weighted number of shares in issue was
adjusted for the deemed dilutive effect of the shares accepted by participants by the VenFin
Equity Settled Share Appreciation Right Scheme but not yet delivered.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2006

2006

million

E N

I N A N N U A L R E P O R T

2006

1. EARNINGS

(continued)

The delivery of scheme shares to participants will be regarded as an issue of shares. As the market
value (fair value) of the shares at date of delivery will differ from the offer value, the number of
shares represented by the difference will be regarded as an issue of ordinary shares for no
consideration. These imputed shares will be added to the weighted number of shares to determine
the dilutive effect. As the impact of the Scheme was non-dilutive, no adjustment was made to the
weighted number of shares for the period under review.

Some associates have similar management incentive schemes as well as other instruments that
can dilute these companies’ earnings in the future. To calculate VenFin’s diluted earnings per
share, R3 million was offset against earnings to account for the potential diluted effect.

INVESTMENTS – ASSOCIATES
(Annexures B & C)

2006

Listed

Unlisted

Total

R million

Cost

1 681

313

1 994

Equity adjustment

164

203

Carrying value

1 845

352

2 197

Long-term loans

–

1 845

374

2 219

Market values of listed investments

3 072

Directors’ valuation of unlisted
investments

1 443

Market values and directors’ valuation

3 072

1 443

4 515

Excess of market values and directors’

valuation over the carrying value of
investments:

– attributable to own members

2 296

2006

Reconciliation of carrying value at the beginning and end of the period

million

Carrying value at the beginning of the period

–

Acquisition of surplus assets on 1 January 2006

943

Share of net profit of associates

Exchange rate differences on translation between average rate
and year-end rates

Equity-accounted movements on reserves

103

Exchange rate differences accounted for directly on reserves

206

Additions to investments

Investment available-for-sale reclassified as associate

1 131

Long-term loan reclassified as associate

Repayment of loans

(41)

Capital distributions

(10)

Impairments

(294)

Carrying value at the end of the period

2 219

E N

I N A N N U A L R E P O R T

2006

INVESTMENTS – ASSOCIATES

(continued)

Portion of the share in net profit retained by associates

that has been accounted for from unaudited
interim reports and management reports

Portion of the share of accumulated losses of associates

not equity-accounted
– current year

– cumulative

Contingent liabilities of associates

Guarantees to third parties – Performance guarantees and
letters of credit of various associates

Claims – There are a number of legal or potential claims against

various associates, the outcome of which cannot be foreseen,
but are not regarded as material, neither individually nor cumulatively.

INVESTMENTS – SUBSIDIARY COMPANIES AND OTHER
(Annexures A & B)
3.1 The Company

Unlisted subsidiary companies

1 012

3.2 Consolidated

Other unlisted investments:

Available-for-sale

141

Long-term loans *

172

313

Directors’ valuation of unlisted investments and loans

313

2006

Investments

available- Long-term

Reconciliation of carrying value at the

for-sale

loans Total

beginning and the end of the period

R million

Acquisition of surplus assets on

1 January 2006

1 118

151

1 269

Additions

Exchange rate adjustments

(13)

(12)

Fair value adjustments for the period

291

294

– per income statement

295

298

– equity

(4)

Reversal of impairments of loans

Reclassifications

(1 131)

(17)

(1 148)

Capital distributions/Disposals

(183)

(9)

(192)

Balance at the end of the period

141

172

313

* Consists mainly of interest-bearing investments in preference shares.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2006

2006

million

E N

I N A N N U A L R E P O R T

2006

SHARE CAPITAL

Authorised

512 493 650 Ordinary shares of 1 cent each

5.1

40 506 352 B ordinary shares of 10 cents each

4.1

9.2

Issued

257 443 997 Ordinary shares of 1 cent each

2.6

35 506 352 B ordinary shares of 10 cents each

3.5

6.1

Each ordinary share has one vote.

Each B ordinary share has ten votes.

Number

of shares

Shares in issue
– Ordinary shares of 1 cent each

257 443 997

– B ordinary shares of 10 cents each

35 506 352

Total number of shares in issue

292 950 349

– Shares held in treasury (ordinary shares

of 1 cent each) (1.47%)

(3 773 651)

289 176 698

Movement in the number of ordinary shares of 1 cent each
for the period:
Total number of shares issued at 1 March 2005

Subdivided 100:1

693

Shares issued during the period

257 443 297

Total number of shares at 30 June 2006

257 443 997

Movement in the number of B ordinary shares of 10 cents each
for the period:
Shares issued during the period

35 506 352

At present the entire authorised but unissued share capital of the Company, comprising
255 049 653 ordinary shares of 1 cent each and 5 000 000 B ordinary shares of 10 cents
each are under the control of the Board of Directors of the Company as a general authority in
terms of section 221(2) of the Companies Act, 1973 (Act 61 of 1973), as amended (the Act),
subject to the provisions of the Act until the next annual general meeting of the Company, for
allotment and issue to such persons on such conditions as the directors may deem fit.

Treasury shares

During the year under review VenFin’s wholly owned subsidiary, VenFin Funding Corporation
(Proprietary) Limited acquired a net number of 3 773 651 ordinary shares of VenFin for a
total amount of R54 million. On 30 June 2006, 3 773 651 treasury shares were held.

2006

R million

E N

I N A N N U A L R E P O R T

2006

RESERVES
(Also refer to the Statements of Changes in Equity on page 62)

Composition of reserves

The Company:
Retained earnings

112

Subsidiary companies

270

Translation adjustments

249

Fair value reserve

(9)

Retained earnings

Associates

203

Equity reserves

201

Translation adjustments

585

PROFIT
Profit is stated after taking the following into account:

6.1 The Company

Income

Dividend income – unlisted investments

150

Interest received

6.2 Consolidated

Income

Dividend income – unlisted investments

Fair value adjustments

298

Dimension Data Bond

295

Other financial instruments

Interest received

Unlisted investments and deposits

Dividends on preference shares

Exchange rate differences

Expenses

Administration and management fees – net corporate costs

Paid to M&I Management Services (Proprietary) Limited
in respect of costs

Less: Fees received

(2)

Administration fees – other

Auditors’ remuneration – audit services

Staff costs

Donations

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2006

2006

R million

E N

I N A N N U A L R E P O R T

2006

TAXATION
7.1

Taxation in income statement

Current – current year – South African normal taxation

–

– Taxation on capital gain

(2)

Secondary taxation on companies – deferred

2006

million

7.2

Reconciliation of effective tax rate with standard rate

Effective tax rate

(14)

(10.9)

Reduction/(increase) in standard rate as a result of:

Exempt dividend income

29.0

Non-taxable capital profit

7.0

Secondary tax on companies

12.5

Non-taxable expenses

(11)

(8.6)

Standard rate

29.0

2006

R million

7.3

Deferred tax asset

STC credits

143

The movement between balances of deferred taxation at the

beginning and end of the period can be analysed as follows:

Beginning of the period

–

Acquisition of surplus assets on 1 January 2006

127

Charged to the income statement

143

No deferred tax is provided on temporary differences relating to
investments in subsidiary companies as VenFin controls the dividend
policy of these companies and consequently also controls the reversal
of the temporary differences.

The carrying values of investments in associates and joint ventures
are mainly recovered through dividends. As no taxable temporary
differences exist, no deferred tax is provided.

7.4 Tax losses

Estimated tax losses available for set-off against future taxable income

7.5

Secondary taxation on companies (STC)

The STC credits on 30 June, which could be set off
against future dividend payments, amount to

1 146

– The Company

150

– Wholly owned subsidiary companies

996

Utilised to create deferred tax asset

(1 146)

Unutilised STC credits

–

2006

million

E N

I N A N N U A L R E P O R T

2006

CASH FLOW INFORMATION
8.1 Adjustments

Net impairment of investments and loans

247

–

Fair value adjustments

(298)

–

Net interest paid

Dividends received

(2)

(150)

Share of after-tax profit of associates

(98)

–

Profit on sale of investments

(27)

–

Negative goodwill arising on acquisition

(71)

–

Other

–

(246)

(112)

8.2

Movement in working capital

Decrease in trade and other receivables

142

–

Increase in trade and other payables

–

186

–

8.3

Reconciliation of dividends received

Per income statement

150

Acquisition of subsidiaries

–

Receivable at the end of the period

(4)

–

Cash received

–

150

8.4

Taxation paid is reconciled with the amount disclosed
in the income statement

Charged to the income statement

(2)

–

Acquisition of subsidiaries

(14)

–

Unpaid at the end of the period

–

Paid in advance at the end of the period

(1)

–

Cash paid

(7)

–

8.5

Acquisition of subsidiaries

Cash and cash equivalents

(2 681)

–

Investments in associates

(943)

–

Other investments and loans

(1 269)

(4 000)

Deferred tax asset

(127)

–

Investments in subsidiaries

–

(1 012)

Trade and other receivables

(182)

–

Trade and other payables

118

–

Net assets acquired

(5 084)

(5 012)

Negative goodwill

–

Purchase consideration

(5 013)

(5 012)

Purchase consideration due

–

Cash in subsidiary acquired

2 681

–

Cash outflow on acquisition

(2 331)

(5 012)

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2006

Consolidated

The Company

2006

R million

E N

I N A N N U A L R E P O R T

2006

DIRECTORS’ EMOLUMENTS
Fees

207

Salaries

1 768

Retirement fund contributions *

418

Short-term bonus

210

Medical contributions

Car allowance

Total

2 694

Salaries

Fees

and

other

Total

R’000

Paid by:
The Company

–

Management company

165

2 487

2 652

207

2 487

2 694

* All VenFin’s staff belong to the M&I retirement fund, the costs of which are charged to VenFin by way of

an administration fee.

10.

VENFIN EQUITY SETTLED SHARE APPRECIATION RIGHT SCHEME

The share-based payments that are accounted for in the financial statements are in respect of the
VenFin Equity Settled Share Appreciation Right Scheme (the “Scheme”). Participants are offered
shares to the value of the appreciation of a specified number of VenFin ordinary shares that must
be exercised within a period of six years after the grant date. These share appreciation rights are
exercisable as follows:

·   One-third after the third anniversary of the grant date;
·   Two-thirds after the fourth; and
·   All after the fifth anniversary of the said date.

The valuation of the Scheme was performed using an actuarial model. This model was developed
by an independent third party from the standard binomial option pricing model in order to address
the unique nature of the Scheme, especially with regard to early exercise of rights.

The expected contract lifetimes are estimated by considering separately each of the tranches
within that grant. The risk-free rate was estimated by using the implied yield on a SA zero-coupon
government bond and the yield curve over the expected contract lifetimes of 3, 4 and 5 years from
the grant date.

Share price volatility of ordinary shares in VenFin was determined with reference to movements
in the share price since 4 April 2006, that being the date from which VenFin commenced
trading on the over the counter market.

Dividend yield was assumed to be 3% as VenFin has no dividend record.

2006

R’000

E N

I N A N N U A L R E P O R T

2006

10.

VENFIN EQUITY SETTLED SHARE APPRECIATION RIGHT SCHEME

(continued)

Fair value of rights offered during the period

107 836

Share-based payment cost included in the income
statement (in accordance with IFRS 2)

236

Portion attributable to directors

131

Number of weighted average exercise prices of all rights offered to participants of the Scheme:

2006

Number

rights

Rand

Total at 30 June (offered in current financial period)

9 184 017

110 052 002

Exercisable at the end of the period

–

Weighted

average

Number

remaining

rights

contract

outstanding

lifetime

Exercise prices of all rights:

at year-end

in years

R11.24

6 410 175

R13.70

2 773 842

The following assumptions were used in the binomial model to value rights offered:

2006

Weighted average VenFin share price for the period (R)

13.99

Exercise price (R)

11.24 – 13.70

Average expected exercise period (years)

4 – 6

Price volatility (%)

Risk-free rate (%)

7.87 – 7.88

Expected dividend yield (%)

2006

R million

11.

COMMITMENTS
Capital expenditure authorised, but not yet contracted

The above-mentioned commitments will be financed by internal sources and borrowed funds.

12.

BORROWING POWERS

There are no limitations on the borrowing powers of the Company and its subsidiaries in respect
of loans and guaranteed debts.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2006

2006

R million

E N

I N A N N U A L R E P O R T

2006

13. FINANCIAL INSTRUMENTS

13.1 Financial instruments and risk management

Various financial risks have an impact on the financial statements: Market risk (including
price and foreign exchange risk), credit risk, liquidity risk and interest rate risk. The
Company and its subsidiary companies’ risk management programmes, of which key
aspects are explained below, acknowledge the unpredictability of financial markets and
are aimed to minimise any negative effect thereof. Derivative instruments are used to
hedge against certain financial risk exposures.

Financial instruments include investments, loans receivable, debtors, cash, creditors,
long-term loans and derivative instruments. Details of the nature, extent and terms of
these instruments are explained in the notes to the relevant items. Relevant financial
risks and programmes that limit these risks are summarised as follows:

Market risk

Price risk

Exposure to share price risk is due to investments in shares. “Investments available-
for-sale” consists mainly of the investment in private equity funds and convertible
preference shares that are included at market value under “Investments – Other” in the
balance sheet. The executive committee monitors all investments continuously and make
recommendations to the Board of Directors in this regard.

Foreign exchange risk

The Company and its subsidiary companies operate internationally and are therefore
exposed to foreign currency risk due to commercial transactions denominated in foreign
currency. These risks are limited using foreign exchange contracts when deemed
necessary.

Net assets of investments in foreign operations are exposed to foreign exchange translation
risk. The most prominent of these are the investments in Dimension Data and cash.

Credit risk

The group has no significant concentrations of credit risk.

Derivative instrument and cash transactions are limited to financial institutions with good
credit ratings. The treasury committee approves these institutions and determines limits
for credit exposure in each entity.

Liquidity risk

The Company and its subsidiary companies have substantial cash balances at their
disposal and limit their liquidity risk by minimising long-term debt. Nevertheless it is
ensured that adequate credit facilities are available to maintain flexibility in the funding
of transactions.

Interest rate risk

Due to significant cash investments, movements in market interest rates influence
income. At year-end cash and cash equivalents earned interest at effective interest rates
that vary between 7.0% and 7.4% per annum at local financial institutions and between
2.8% and 5.3% per annum in foreign countries.

E N

I N A N N U A L R E P O R T

2006

13. FINANCIAL INSTRUMENTS (continued)

13.2 The following material derivative instruments existed at 30 June:

Liabilities

Put option (at fair value through profit and loss)

13.3 Fair value

On 30 June 2006 the fair value of financial instruments, excluding investments in
associates, equals their carrying value.

14.

RELATED PARTY INFORMATION

Subsidiaries

Details of income from and investments in subsidiaries are disclosed in note 3 and in
Annexure A respectively.

Associates

Details of investments in and income from associates are disclosed in note 2 as well as in
Annexures B and C.

Key management personnel

VenFin’s directors and executive committee are key management personnel. Information on
directors’ emoluments and their shareholding in the Company appears in notes 9 and 10 as well
as in the Report of the Board of Directors.

Shareholders

Details of the principal shareholders appear in the Report of the Board of Directors. A detailed
analysis of shareholders appears on page 79 of the Annual Report.

2006

Related party transactions

R million

ONSOLIDATED

Transactions of VenFin Limited and its subsidiary companies with:
Associates
Administration fees paid

Administration fees received

Key management personnel
Short-term benefits

Post-retirement benefits

Loans to related parties
Associates

OMPANY

Transactions of VenFin Limited with:
Subsidiaries
Dividends received

150

No security is given for any outstanding balances. No provisions for bad debts against outstanding
balances with related parties have been made and no bad debt of related parties has been
written off during the period.

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2006

2006

R million

E N

I N A N N U A L R E P O R T

2006

15. BUSINESSES

ACQUIRED

(Analysis of the fair values of net assets of businesses acquired)

2006

Acquisition of

Intervid

surplus

assets

(1)

International AG

(2)

Total

R million

Investments – Associates

943

–

943

– Other

1 269

–

1 269

Deferred tax asset

127

–

127

Cash resources

2 679

2 681

Trade and other receivables

182

–

182

Trade and other payables

(117)

(1)

(118)

Net assets acquired

5 083

5 084

Less: Negative goodwill

(71)

–

(71)

Less: Cash due

–

(1)

Cash paid

5 012

–

5 012

(1) On 2 February 2006 VenFin Limited acquired 100% of RPII Holdings Limited, VenFin

Media Investments (Proprietary) Limited, VenFin Group Finance (Proprietary) Limited,
VenFin Shareholding (Proprietary) Limited, VenFin Risk Services Investments (Proprietary)
Limited and VenFin Technology (Proprietary) Limited. For accounting purposes the
acquisition date of the surplus assets was set at 1 January 2006. Refer to the Report of the
Board of Directors for further information regarding the acquisition of surplus assets.

(2) On 30 June 2006 RFS Finance Limited, a wholly owned subsidiary of VenFin Limited,

acquired 100% of Intervid International AG.

E N

I N A N N U A L R E P O R T

2006

UNLISTED

Industrial Electronic Investments Limited

1 000

100

RPII Holdings Limited

8 600 000

100

933 273 860

1 209

Tracking and Signal Distribution

Technologies (Pty) Limited

21 412

100

VenFin Finance Corporation (Pty) Limited

100

VenFin Financial Investments Limited

5 000

100

VenFin Funding Corporation (Pty) Limited

100

VenFin Group Finance (Pty) Limited

100

14 559 957

1 094

VenFin Holdings Limited – Jersey

(€)

352 179 775

100

VenFin Investments (Pty) Limited

100

VenFin Media Investments (Pty) Limited

100

VenFin Risk Services Investments (Pty) Limited

100

VenFin Shareholding (Pty) Limited

100

VenFin Securities (Pty) Limited

100

VenFin Technology (Pty) Limited

200

100

64 554 557

1 012 388 448

2 303

(€) euro

Details of sundry subsidiary companies, which are not material to the evaluation of the business of the group, are not shown.

ANNEXURE A

PRINCIPAL SUBSIDIARY COMPANIES AT 30 JUNE 2006

NAME OF COMPANY

ISSUED

EFFECTIVE

HELD BY COMPANY

CAPITAL INTEREST SHARES

LOAN

Incorporated in South Africa

R (unless other-

2006

unless otherwise stated

wise stated)

R million

E N

I N A N N U A L R E P O R T

2006

Alexander Forbes Limited

(1)

115 900 000

26.4

Dimension Data Holdings plc

(1)

282 092 463

18.3

Sabido Investments (Pty) Limited

(1)

17 730 594

31.5

Tracker Investment Holdings

(Pty) Limited

(2)

24 543

33.7

Psitek (Pty) Limited

(2)

620 612

33.2

SAIL Group Limited

(2)

81 392 413

38.1

SAIL preference shares

(4)

144 788 321

100.0

Idion Technology Holdings (Pty) Limited

(2)

39 679 640

35.3

VHF Technologies SA

1 875

26.1

Johanna Solar Technology GbmH

(4)

9.5

Trina Solar Limited

(4)

1.3

Cash Axcess Corporation (Pty) Limited

200

50.0

Cueincident (Pty) Limited

(1)

989

12.4

Destiny Corporation Holdings (Pty) Limited

(1)

20.0

Fraxion (Pty) Limited

(2)

3 000 000

33.3

Fundamo (Pty) Limited

(3)

149 805

43.1

i to i technologies (Pty) Limited

(3)

45 069 905

48.5

Equity Fund Investments

Carrying value

USD

million

GEMS II

(4)

5.5

GEMS III

(4)

6.2

Milestone China

(4)

2.6

Veritas

(4)

0.6

Notes:

(1) Equity accounted for three months to 31 March 2006

(2) Equity accounted for six months to 30 June 2006

(3) No losses equity-accounted

(4) Not associates and/or their results are not accounted for according to the equity method.

The effective interest represents VenFin’s shareholding after taking into account treasury shares.

Details of investments, which are not material to the evaluation of the business of the group, are not shown.

ANNEXURE B

PRINCIPAL INVESTMENTS AT 30 JUNE 2006

NAME OF COMPANY LISTED

UNLISTED

2006

Effective

Incorporated in South Africa

Shares

interest Shares

interest

unless otherwise stated

held

E N

I N A N N U A L R E P O R T

2006

Effective interest

26.4%

18.3%

31.5%

R million

Carrying value of investments

506

1 322

143

Share of retained equity income
– Current year

113

Income

Amortisation of intangibles identified
on acquisition

(7)

–

Other changes in reserves and
exchange rates

–

– Cumulative

113

Summarised financial information:

Per

Annual Report

Interim Report

Annual Report

31/03/2006

BALANCE SHEET
Assets
Property, plant and equipment

251

1 622

127

Intangible assets

2 139

681

–

Investments and loans

166

Other assets

124 258

253

254

Current assets

4 394

8 946

379

Cash

2 803

2 477

Other

1 591

6 469

339

131 110

11 668

767

Equity and liabilities
Shareholders’ funds

1 531

2 423

455

Minority interest

746

–

Non-current liabilities

124 959

2 226

–

Current liabilities

4 538

6 273

312

131 110

11 668

767

3 months ended 31/03/2006

INCOME STATEMENT
Revenue

1 668

4 663

168

Headline earnings

221

205

Net profit for the year

226

205

The investments above represent 89% of the total carrying value of associates.

ANNEXURE C

SIGNIFICANT ASSOCIATES – ADDITIONAL INFORMATION

Alexander

Dimension

Forbes

Data Sabido

(e.tv)

2006

E N

I N A N N U A L R E P O R T

2006

MAJOR BENEFICIAL SHAREHOLDERS
Ordinary shares
Sanlam

19.74

50 830 679

Business Venture Investments No 1040 (Proprietary) Limited

7.55

19 435 438

Business Venture Investments No 1027 (Proprietary) Limited

7.55

19 435 437

Ms&Co Eq Client account

5.73

14 747 064

VenFin Manco (Proprietary) Limited

5.67

14 590 745

Other

53.76

138 404 634

100.00

257 443 997

B ordinary shares
Business Venture Investments No 1040 (Proprietary) Limited

50.00

17 753 176

Business Venture Investments No 1027 (Proprietary) Limited

50.00

17 753 176

100.00

35 506 352

Total

292 950 349

No other shareholder held an interest of more than 5% in the Company on 30 June 2006.

DISTRIBUTION OF SHAREHOLDERS

2006

Number of shares in issue
– Ordinary shares of 1 cent each

257 443 997

– B ordinary shares of 10 cents each

35 506 352

Total number of shares in issue

292 950 349

Ordinary shares repurchased and held in treasury

(3 773 651)

289 176 698

Weighted number of shares

292 918 450

ANALYSIS OF SHAREHOLDERS

AT 30 JUNE 2006

2006

Number

shares

E N

I N A N N U A L R E P O R T

2006

INTEREST OF THE DIRECTORS IN THE ISSUED SHARE CAPITAL OF THE COMPANY
Ordinary shares

Direct

Indirect

Non-

% of shares

Beneficial

beneficial Beneficial

beneficial

Total

issued

30 June 2006

Jannie Durand

–

3 549 822

–

3 549 822

1.38

G T Ferreira

–

558 625

–

558 625

0.22

Josua Malherbe

–

8 896 797

3.45

Johann Rupert

–

19 435 438

7.55

Neville Williams

–

249 110

–

249 110

0.10

–

4 357 557

28 332 235

32 689 792

12.70

B ordinary shares
Business Venture Investments No 1040 (Proprietary) Limited, a wholly owned subsidiary of the Johann
Rupert Trust, holds 17 753 176 (50%) of the issued B ordinary shares of the Company. Business
Venture Investments No 1027 (Proprietary) Limited, a wholly owned subsidiary of the Hanneli Rupert
Trust, holds 17 753 176 (50%) of the issued B ordinary shares of the Company.

Since the end of the financial year to the date of this report the interest of the directors remained
unchanged.

ANALYSIS OF SHAREHOLDERS

AT 30 JUNE 2006

E N

I N A N N U A L R E P O R T

2006

Financial year-end

30 June

Annual general meeting

Wednesday, 25 October 2006

Financial reports

Announcement of interim results

March

Interim report

March

Announcement of annual results

September

Annual financial statements

September

Dividends

Ordinary dividend
– declared

September

– paid

October

Ordinary Dividend No 1 and Special Dividend

Ordinary dividend per share

25 cents

Special dividend per share

25 cents

Last day to trade in order to participate in the ordinary and
special dividend

Friday, 6 October 2006

Trading on or after this date will be ex the ordinary and
special dividend

Monday, 9 October 2006

Record date

Friday, 13 October 2006

Payment date

Monday, 16 October 2006

DATES OF IMPORTANCE TO SHAREHOLDERS

E N

I N A N N U A L R E P O R T

2006

ADMINISTRATION

SECRETARY
Mariza Lubbe

BUSINESS ADDRESS AND REGISTERED OFFICE
Carpe Diem Office Park
Quantum Street
Techno Park
Stellenbosch
7600

PO Box 456
Stellenbosch
7599

AUDITORS
PricewaterhouseCoopers Inc.
Cape Town

TRANSFER SECRETARIES
BJM Private Client Services (Proprietary) Limited
5 Sturdee Avenue
Rosebank
2196
South Africa

PO Box 3359
Parklands
2121
South Africa

WEBSITE
www.venfin.com

E N

I N A N N U A L R E P O R T

2006

The 2006 Annual General Meeting of the Company will be held on Wednesday, 25 October 2006, at

15:30 in Magnifica 3, Protea Hotel Stellenbosch, Techno Avenue, Techno Park, Stellenbosch, 7600

to, if approved, pass the following resolutions with or without modification (“the annual general

meeting”):

1. APPROVAL OF ANNUAL FINANCIAL STATEMENTS

Ordinary Resolution Number 1

Resolved that the audited annual financial statements of the Company and the group for the

period ended 30 June 2006 be accepted and approved.

APPROVAL OF DIRECTORS’ REMUNERATION

Ordinary Resolution Number 2

Resolved that the directors’ fees for services rendered as directors during the past financial

period be fixed at R206 667.

3. ELECTION OF DIRECTOR

Ordinary Resolution Number 3

Resolved that Mr J J Durand who retires in terms of clause 25.9.1 of the Company’s Articles of

Association and who has offered himself for re-election, be hereby re-elected as a director of the

Company.

ELECTION OF DIRECTOR

Ordinary Resolution Number 4

Resolved that Mr G T Ferreira who retires in terms of clause 25.9.1 of the Company’s Articles of

Association and who has offered himself for re-election, be hereby re-elected as a director of the

Company.

5. ELECTION OF DIRECTOR

Ordinary Resolution Number 5

Resolved that Mr J Malherbe who retires in terms of clause 25.9.1 of the Company’s Articles of

Association and who has offered himself for re-election, be hereby re-elected as a director of the

Company.

6. ELECTION OF DIRECTOR

Ordinary Resolution Number 6

Resolved that Mr J P Rupert who retires in terms of clause 25.9.1 of the Company’s Articles of

Association and who has offered himself for re-election, be hereby re-elected as a director of the

Company.

7. ELECTION OF DIRECTOR

Ordinary Resolution Number 7

Resolved that Mr N J Williams who retires in terms of clause 25.9.1 of the Company’s Articles

of Association and who has offered himself for re-election, be hereby re-elected as a director of

the Company.

Biographical details of all directors of the Company are set out on page 8 of the Annual

Report.

8. AUTHORITY TO PLACE SHARES UNDER CONTROL OF THE DIRECTORS

Ordinary Resolution Number 8

Resolved that 10%, namely 25 504 965 ordinary shares of one cent each and 500 000

B ordinary shares of ten cents each, of the authorised but unissued share capital of the Company

NOTICE TO SHAREHOLDERS

E N

I N A N N U A L R E P O R T

2006

be and are hereby placed under the control of the Board of Directors of the Company as a general

authority in terms of section 221(2) of the Companies Act (Act 61 of 1973), as amended (“the

Companies Act”), subject to the provisions of the Companies Act and the Company’s Articles of

Association until the next annual general meeting, for allotment and issue to such persons and

on such conditions as the Board of Directors may deem fit.

9. AUTHORITY TO ACQUIRE OWN SHARES

Special Resolution Number 1

Resolved that the Board of Directors of the Company be hereby authorised, by way of a renewable

general authority, to approve the acquisition of its own ordinary shares by the Company or to

approve the acquisition of ordinary shares in the Company by any subsidiary of the Company,

subject to the provisions of sections 85 – 89 of the Companies Act.

It is the intention of the Board of Directors that they may use such general authority should

prevailing circumstances (including the tax dispensation and market conditions), in their

opinion, warrant it.

The Company’s directors undertake that they will not make any payment to acquire any share

issued by the Company while this general authority is valid, if there are reasonable grounds for

believing that:

· the Company is, or would after the payment be, unable to pay its debts as they become due

in the ordinary course of business; or

· the consolidated assets of the Company fairly valued would after the payment be less than

the consolidated liabilities of the Company.

Reason for and effect of the Special Resolution Number 1

The reason for and the effect of the special resolution is to grant the Company’s directors a

general authority to approve the acquisition by the Company of its own shares and to permit

a subsidiary of the Company to acquire shares in the Company.

And to transact any other business that may be transacted at an annual general meeting.

By order of the Board of Directors

Mariza Lubbe

Secretary

Stellenbosch

4 September 2006

FORM OF PROXY

For use by shareholders of the Company (“member”) at the 2006 Annual General Meeting of the

Company to be held on Wednesday, 25 October 2006 at 15:30 in Magnifica 3, Protea Hotel

Stellenbosch, Techno Avenue, Techno Park, Stellenbosch 7600 (“the annual general meeting”).

I/We

___________________________________________________________________________________

being the holder/s of

ordinary shares in the Company, hereby appoint

(see instruction 1 overleaf)

_____________________________________________________________________

or failing him/her,

_____________________________________________________________________

or failing him/her,

3. the chairman of the meeting,

as my/our proxy to vote for me/us and on my/our behalf or to abstain from voting at the annual general

meeting of the Company and at any adjournment thereof, as follows: (Please read note 2 and

instruction 2 overleaf)

Insert an “X” or the number of votes exercisable

(one vote per ordinary share)

In favour of

Against

Abstain

Ordinary resolutions

1. Approval of annual financial statements

2. Determination of directors’ remuneration

3. Election of director – J J Durand

4. Election of director – G T Ferreira

5. Election of director – J Malherbe

6. Election of director – J P Rupert

7. Election of director – N J Williams

8. Authority to place shares under control

of the directors

Special resolution

9. Authority to acquire own shares

Signed at

__________________________________

____________________________________

2006

Signature/s

______________________________________________________________________________

Assisted by me

__________________________________________________________________________

(where applicable)

Please read the notes and instructions overleaf.

(Incorporated in the Republic of South Africa)

(Registration number 2004/034954/06)

(ISIN: ZAU000000028)

(“the Company”)

Notes:

A member entitled to attend and vote at the annual general meeting is entitled to appoint a proxy

to attend, speak and vote in his/her stead and such proxy need not also be a member of the

Company.

Every member present in person or by proxy and entitled to vote at the annual general meeting

of the Company shall, on a show of hands, have one vote only, irrespective of the number of

shares such member holds, but in the event of a poll, every member shall be entitled to that

proportion of the total votes in the Company which the aggregate amount of the nominal value

of the shares held by him/her bears to the aggregate amount of the nominal value of all the

shares issued by the Company.

Instructions on signing and lodging the form of proxy:

A member may insert the name of a proxy or the names of two alternative proxies of the member’s

choice in the space/s provided overleaf, with or without deleting “the chairman of the meeting”,

but any such deletion must be initialled by the member. Should this space be left blank, the

proxy will be exercised by the chairman of the annual general meeting. The person whose name

appears first on the form of proxy and who is present at the annual general meeting will be

entitled to act as proxy to the exclusion of those whose names follow.

A member’s voting instructions to the proxy must be indicated by the insertion of an “X”, or, the

number of votes exercisable by that member in the appropriate spaces provided overleaf. Failure

to do so will be deemed to authorise the proxy to vote or to abstain from voting at the annual

general meeting, as he/she thinks fit in respect of all the member’s exercisable votes. A member

or his/her proxy is not obliged to use all the votes exercisable by him/her or by his/her proxy, but

the total number of votes cast, or those in respect of which abstention is recorded, may not

exceed the total number of votes exercisable by the member or by his/her proxy.

A minor must be assisted by his/her parent or guardian unless the relevant documents establishing

his/her legal capacity are produced or have been registered by the transfer secretaries.

To be valid, either the original or a notarially certified copy of the completed form of proxy must be

lodged with the transfer secretaries of the Company, BJM Private Client Services (Proprietary)

Limited at 5 Sturdee Avenue, Rosebank or posted to the transfer secretaries at PO Box 3359,

Parklands, 2121 South Africa, to be received by them not later than Monday, 23 October 2006

at 15:30 (South African time).

Documentary evidence establishing the authority of a person signing this form of proxy in a

representative capacity must be attached to this form of proxy unless previously recorded by the

transfer secretaries or waived by the chairman of the annual general meeting.

The completion and lodging of this form of proxy will not preclude the relevant member from

attending the annual general meeting and speaking and voting in person thereat to the exclusion

of any proxy appointed in terms hereof, should such member wish to do so.

The completion of any blank spaces overleaf need not be initialled. Any alterations or corrections

to this form of proxy must be initialled by the signatory/ies.

The chairman of the annual general meeting may accept any form of proxy which is completed

other than in accordance with these instructions, provided that he is satisfied as to the manner

in which a member wishes to vote.

ANNUAL REPORT

www.venfin.com

COMPRESS PB2867

ANNUAL REPORT

CONTENTS

Investment philosophy

Group investments

Group profile

Financial highlights

Share statistics

Directors and Board committees

Executive management

General report

Net asset value

Investment review

Corporate governance

Sustainability report

Annual financial statements

Analysis of shareholders

Dates of importance to shareholders

Administration

Notice to shareholders

Form of proxy

Attached

Incorporated in the Republic of South Africa

Registration number 2004/034954/06

ISIN ZAU000005308

www.venﬁn.com

ANNUAL REPORT 2007

E N

I N A N N U A L R E P O R T

2007

VenFin is not a passive portfolio investor, we seek to manage our

investments actively

through shareholders’ agreements, regular

dialogue with other shareholders, directors and management of investee

companies and by providing strategic input through board, audit and

other committee representation.

VenFin adds value to its investments through its close relationships with

the broader group, as well as through its networks, which include formal

and informal alliances with venture capitalists in major global markets.

These global venture capital networks, in addition to broadening our

deal ﬂow, provide both our shareholders and investee companies with

access to important markets which would otherwise be difﬁcult to access

directly. VenFin also provides support facilities and ﬁnancial and risk

management services on a voluntary participation basis to its investee

companies.

is an active investment holding company,

focusing on high-growth investment opportunities where potential

returns will exceed our cost of capital.

VenFin’s experience lies in

the telecommunication, media and technology as well as financial

and risk services sectors and while we continue to seek attractive

opportunities in these sectors, we will not limit our investment scope

to these sectors.

E N

I N A N N U A L R E P O R T

2007

INVESTMENT PHILOSOPHY

VenFin is a medium to long-term investor looking

to make investments in businesses that:

possess proprietary intellectual property that provides barriers to entry;

have the potential for internationalisation;

have a strong and committed management team with a proven track record;

VenFin understands and where its team of investment professionals can

add value; and

represents an opportunity that has the size, or has the potential to grow

to a size, sufﬁcient to have a meaningful impact on VenFin’s net asset

value while exceeding our cost of capital.

E N

I N A N N U A L R E P O R T

2007

GROUP INVESTMENTS

AT 30 JUNE 2007

EQUITY INVESTMENTS

Interest

(1)

Dimension Data

18.2%

Sabido (e.tv)

31.5%

Tracker

31.0%

Psitek

33.4%

SAIL

36.6%

Trina Solar

0.7%

Kalahari Energy

9.8%

CDMTV

4.6%

Johanna Solar

8.2%

VHF Technologies SA

15.6%

Mosmart *

20.0%

Cash Axcess

50.0%

Fundamo

28.9%

Cueincident

19.5%

Fynbos Media

20.0%

Destiny Corporation

20.0%

Fraxion

31.4%

i to i technologies

46.0%

Alexander Forbes (sold subsequent to year-end)

24.5%

* Loan to be converted to equity

FUND INVESTMENTS

Carrying value

GEMS II

USD4.0 million

GEMS III

(2)

USD9.2 million

Milestone China I

(3)

USD8.4 million

Milestone China II

(4)

USD1.3 million

Veritas

(5)

USD0.7 million

CORPORATE

VenFin Finance Corporation

100%

Short-term investments of surplus cash in South Africa

VenFin Financial Investments

100%

Provides corporate services to the VenFin group and investee companies

VenFin Holdings

100%

Short-term investments of offshore surplus cash

(1) Percentages represent the VenFin group’s holding in the total issued shares of each investee company.

(2) Outstanding commitment of USD5 million

(3) Outstanding commitment of USD0.7 million

(4) Outstanding commitment of USD23.6 million

(5) Outstanding commitment of USD0.5 million

(6) Annexures A and B provide further information of subsidiary companies and investments.

E N

I N A N N U A L R E P O R T

2007

GROUP PROFILE

INFORMATION ON THE COMPANIES IN WHICH INVESTMENTS ARE HELD

DIMENSION DATA is a leading global technology company that provides solutions

and services, which optimise and manage the performance of IT infrastructure.

www.dimensiondata.com

TRACKER’ s core business is the sale and installation of vehicle tracking systems and

the tracking and recovery of stolen vehicles in South Africa.

www.tracker.co.za

PSITEK has established itself as a leader in providing products in the fixed-line and

mobile telecommunication arenas in South Africa and internationally.

www.psitek.com

SAIL provides professional services to the sporting and entertainment industry in

South Africa. SAIL also has investments in sports brands.

www.sail.co.za

VHF TECHNOLOGIES SA, based in Switzerland, develops and manufactures thin-film

amorphous silicon solar cells on a plastic substrate.

www.flexcell.com

MOSMART is involved in biodiesel production across Africa as well as the production

of an organic medium for the absorption of pollutants in various applications.

JOHANNA SOLAR is a new company committed to build a solar cell plant in Germany,

using a CIGSSe-based silicon-free technology.

www.johanna-solar.com

TRINA SOLAR, based in China, is an integrated solar photovoltaics manufacturer,

differentiated by a vertical integration strategy and the ability to use recycled silicon.

www.trinasolar.com

CDMTV, based in China, supplies advertising space on digital mobile television

channels.

www.cdmg.cn

KALAHARI ENERGY, through its wholly owned subsidiary, Sekaname (Pty) Limited,

possesses leases for coal-bed methane exploration in Botswana.

www.kalaharigas.com

e.tv

is the only independent free-to-air television broadcaster in South Africa.

www.etv.co.za

E N

I N A N N U A L R E P O R T

2007

FRING,

a Tel Aviv-based company, enables mobile calls through Wi-Fi Internet access

or GPRS, EDGE or 3G Internet data plans.

www.fring.com

FYNBOS MEDIA is an early-stage black-controlled investing holding company that

makes equity investments with a view to long-term capital appreciation.

www.fynbosmedia.co.za

i to i technologies offers integrated solutions to safeguard assets, people and

information by protecting, monitoring, detecting and responding.

www.itoitechnologies.com

FUNDAMO is a leading global supplier of enterprise software products for mobile

payment and mobile banking solutions.

www.fundamo.com

CASH AXCESS provides ATM-related products and services to the South African

corporate and retail markets.

www.cashaxcess.com

CUEINCIDENT provides command control centres with high-technology surveillance

devices and cameras for the monitoring of entire areas in South Africa.

www.cueincident.com

DESTINY CORPORATION a South African black economic empowered investment

company, makes equity investments with a long-term capital appreciation outlook.

www.destinycorporation.co.za

FRAXION

develops advanced spend management software that enables companies to

control, manage and analyse spending behaviour in real time.

www.fraxion.co.za

VERITAS is Israel’s oldest venture capital ﬁrm and primarily invests in seed-stage

technology companies.

www.veritasvc.com

MILESTONE CAPITAL , based in mainland China, is a China-focused private equity

investment firm

www.mcmchina.com

GEMS, based in Hong Kong, is a private equity fund management group that makes

investments in the Asia Pacific Region.

www.gems.com.hk

FUND INVESTMENTS

E N

I N A N N U A L R E P O R T

2007

FINANCIAL HIGHLIGHTS

2007

2006

Normalised headline earnings *

R233 million R142 million

Share of net profit of associates

R155 million R97 million

Net interest income and other profit

R78 million R45 million

Headline earnings

R233 million R404 million

Earnings – net profit for the year

R617 million R240 million

Normalised headline earnings per share

83.0c

48.5c

Headline earnings per share

83.0c

137.9c

Earnings per share

219.5c

81.9c

Dividend per share

– ordinary

30.0c

25.0c

– special

50.0c

25.0c

Net asset value (NAV) per share

– at book value

R16.31

R13.20

– at market value of listed investments and directors’

valuation of unlisted investments

R29.78

R21.14

Closing price per share at 30 June (over-the-counter market)

R23.25

R14.20

* In determining normalised headline earnings, the headline earnings is adjusted as set out in note 1 on page 64.

NET ASSET VALUE

2007

2006

million

R million

2 272

28%

Dimension Data (DD)

1 322

22%

1 988

25%

Alexander Forbes (AF)

1 692

28%

1 261

16% Sabido (e.tv)

712

12%

594

Tracker

606

10%

884

11%

Other net assets (ONA)

528

1 096

13% Cash

254

20%

8 095

100%

Total

6 114

100%

2007

2006

E N

I N A N N U A L R E P O R T

2007

2006

Weighted number of VenFin ordinary shares in issue (’000)

245 487

257 412

– excluding B ordinary shares

Market capitalisation at 30 June (R million)

– ordinary shares only

5 986

3 656

– inclusive of B ordinary shares

6 811

4 160

Information on shares traded through the VenFin over-the-counter market:

Price (cents per share)

– 30 June

2 325

1 420

– Highest

2 400

1 500

– Lowest

1 410

1 350

Number of shares traded (’000)

15 132

9 359

Value of shares traded (R million)

274

131

Shares traded/weighted number of ordinary shares (%)

6.2

3.2

Number of transactions

1 434

425

SHARE STATISTICS

VENFIN SHARE PRICE

Monthly closing price

Jul 06

Aug 06

Sept 06

Oct 06

Nov 06

Dec 06

Jan 07

Feb 07

Mar 07

Apr 07

May 07

Jun 07

1 100

1 200

1 300

1 400

1 500

1 600

1 700

1 800

1 900

2 000

2 100

2 200

2 300

2 400

•

1 435

•

1 490

•

1 670

•

1 730

1 830

•

1 800

2 060

•

2 260

•

2 350

•

2 325

•

1 960

2 030

•

Cents per share

E N

I N A N N U A L R E P O R T

2007

DIRECTORS

APPOINTED 2006

Johann Rupert (57)

Chairman

Dillie Malherbe (51)

Deputy Chairman

G T Ferreira (59)

Jannie Durand (40)

Chief Executive Officer

Neville Williams (43)

Financial Director

Audit and Risk Committee

Dillie Malherbe (Chairman)

Jannie Durand

Neville Williams

Remuneration and Nomination Committee

Johann Rupert (Chairman)

G T Ferreira

Investment Committee

Dillie Malherbe (Chairman)

Jannie Durand

G T Ferreira

Neville Williams

Management Committee

Jannie Durand (Chairman)

Neville Williams

Hein Carse

Stefan de Villiers

Bhavnesh Gopal (Seconded from M&I Group Services Limited)

Anniel Lambrechts (Seconded to M&I Group Services Limited)

Peter Liddiard

Gregory Roberts-Baxter

Chris van den Heever

BOARD COMMITTEES

COMPOSITION AT 30 JUNE 2007

E N

I N A N N U A L R E P O R T

2007

EXECUTIVE MANAGEMENT

COMPOSITION AT 30 JUNE 2007

Jannie Durand (40)

Qualifications

BAcc (University of Stellenbosch)

Hons BAcc (University of Stellenbosch)

CA(SA)

MPhil Management Studies (Oxford University)

Neville Williams (43)

Qualifications

BComm (University of Western Cape)

Hons BComm (University of Western Cape)

CA(SA)

Hein Carse (45)

Qualifications

BEng (Electronic) (University of Stellenbosch)

MEng (Electronic) (University of Stellenbosch)

MBA (University of Pretoria)

Stefan de Villiers (46)

Qualifications

BSc Aeronautical Engineering (University of the Witwatersrand)

Bhavnesh Gopal (34) *

Qualifications

BComm (University of Cape Town)

PDA (University of Cape Town)

CA(SA)

* Seconded from M&I Group Services Limited

Anniel Lambrechts (35) *

Qualifications

BAcc (University of Stellenbosch)

Hons BCompt (University of South Africa)

CA(SA)

* Seconded to M&I Group Services Limited

Peter Liddiard (42)

Qualifications

BComm (University of Port Elizabeth)

PDA (University of Port Elizabeth)

CA(SA)

Gregory Roberts-Baxter (34)

Qualifications

BSc Electrical Engineering (University of the Witwatersrand)

MSc Electrical Engineering (University of the Witwatersrand)

MBA (University of Cape Town)

Chris van den Heever (42)

Qualifications

BSc Chemical Engineering (University of Stellenbosch)

MBA (University of Stellenbosch)

E N

I N A N N U A L R E P O R T

2007

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.

GENERAL REPORT

E N

I N A N N U A L R E P O R T

2007

Composition of headline earnings

Twelve months

Six months

ended

ended

30 June 2007

30 June 2006

R million

R million

Associates

Sabido

(1)

Alexander Forbes

(2)

Dimension Data

(1)

Tracker

(3)

Psitek

(3)

SAIL

(3)

Other

(11)

(2)

Amortisation of intangibles raised on acquisition

(54)

(10)

Subsidiaries

Interest and other net income

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

–

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-on-

year, 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).

E N

I N A N N U A L R E P O R T

2007

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

GENERAL REPORT

continued

E N

I N A N N U A L R E P O R T

2007

Composition of net asset value (R million)

30 June 2007

30 June 2006

Book value

Valuations

Book value

Valuations

Listed

(1)

2 227

4 313

1 845

3 072

Dimension Data

1 568

2 272

1 322

Alexander Forbes

606

1 988

506

1 692

Trina Solar

–

Idion

–

Unlisted

(2)

1 112

2 686

719

1 788

Sabido – equity

149

1 261

143

691

– loans

–

Tracker

237

594

120

606

Psitek

Fund investments

168

107

SAIL – equity

– preference shares

Kalahari Energy

–

CDMTV

–

VHF Technologies SA

Johanna Solar

Fundamo

–

Other net assets

274

160

Cash – local

539

925

– offshore

557

329

Total net asset value (before CGT)

4 435

8 095

3 818

6 114

Net asset value per share (Rand)

16.31

29.78

13.20

21.14

Share price (Rand)

23.25

14.20

Discount to net asset value

21.9%

32.8%

Potential CGT liability (R million)

(3)

(497)

(213)

Net asset value (after CGT)

per share (Rand)

27.95

20.40

(1) Market value

(2) Directors’ valuation

(3) The potential capital gains tax (CGT) liability, which is unaudited, is calculated at an effective rate of 14.5%. No

provision was made for the effect of potential capital losses.

NET ASSET VALUE

INVESTMENT REVIEW

E N

I N A N N U A L R E P O R T

2007

EQUITY INVESTMENTS

VenFin has signiﬁcant minority interests in the following investments and provides

strategic guidance to these companies through board and subcommittee

representation. We are a medium to long-term investor in these companies with

the intention of realising returns that meet or exceed our cost of capital.

DIMENSION DATA 18.2%

Dimension Data Holdings plc (Dimension Data) is a leading

global technology company that provides solutions and services

that enable businesses to plan, build, support, optimise and

manage their IT infrastructures. The company is listed on the

London Stock Exchange (LSE) and has a secondary listing on

the JSE Limited.

Dimension Data’s expertise lies in the technology areas of networking, security, Data Centres and Storage

(DCS), contact centres and Microsoft environments. The company applies its skills in consulting, integration

and managed services to create customised client solutions. It is a global leader in the field of simplifying

and consolidating IT infrastructures through Internet Protocol (IP) convergence.

With expected revenues in excess of US$3.5 billion in the current financial year and close to 10 000

employees in over 35 countries, Dimension Data has a global footprint that supports highly personalised

regional execution, while leveraging the domain experience and depth of a global business.

In December 2002, R&V Technology Holdings Limited (R&V), a wholly owned subsidiary of VenFin,

subscribed to a US$100 million seven-year convertible bond issued by Dimension Data. RFS Finance

Limited, a wholly owned subsidiary of VenFin, subsequently acquired 93 970 485 shares in the open

market, representing a shareholding of 7% in Dimension Data. In April 2006, R&V elected to convert the

US$100 million convertible bond into 188 121 978 ordinary Dimension Data shares. On conversion, the

additional shares amounted to 12.2% of the enlarged issued share capital of Dimension Data, bringing

VenFin’s total equity interest in Dimension Data to 18.2%.

Overview of the six months to 31 March 2007

Dimension Data reported another period of excellent progress in the first half of 2007. Revenue growth was

robust at 22% and returns improved significantly, with operating profit up by 50% to US$55 million.

Earnings per share doubled to 1.8c. The company’s growth in revenue was fuelled by solid demand and

performance across all its lines of business.

In Dimension Data’s most significant line of business, Network Integration (46% of group revenues),

revenue growth of 21% was supported by a strong demand for core network upgrades, particularly among

the multinational and global accounts.

E N

I N A N N U A L R E P O R T

2007

Strong performances were also reported from the other global lines of business: Converged Communications,

Security, Customer Interactive Solutions (CIS), DCS and Microsoft Solutions. The Solutions business now

accounts for 32% of revenue, up from 30% in the comparative period, and provides exposure to high-

growth markets where Dimension Data is well positioned to compete. The 64% growth in Converged

Communications was driven by continued strong demand for IP Telephony solutions. Security convergence

onto the network underpinned a 16% increase in Security revenues and good progress was made in the

DCS businesses, where revenues increased by 19%.

Growth of 25% in Dimension Data’s regional lines of business (22% of revenues) was underpinned by an

exceptionally strong demand for the group’s pan-African mobile infrastructure services and a good

performance from Internet Solutions, following strong growth in its Virtual Private Network offerings, pan-

African networking and hosting services.

Dimension Data enjoyed solid growth in both services and product turnover. Momentum in product revenue

growth was aided by enhanced product delivery, which remains a key component of its integrated solution

offering. Growth in Services revenues accelerated during the period, with an enhanced ability to attach

services to product sales and the Global Services Alliance, with Cisco helping to drive growth.

Good double-digit growth was achieved in four of the five regions in which the company operates, with

particularly strong growth reported from Africa (48%), Europe (22%) and Australia (18%). Operating

margins improved in all regions and a pleasing turnaround was reported from Europe. A slightly stronger

gross margin, reflecting firmer product margins and stable service margins, combined with an ongoing

focus on costs, improved the operating margin to 3.1% from 2.5% in the prior period.

Good progress was made in reducing the company’s effective tax rate further; down to 29% from 36% in

the first half of 2006.

Group cash and cash equivalents totalled US$352 million at the end of the reporting period

(2006: US$342 million), reflecting business growth as well as improved working capital management.

BEE

The black economic empowerment equity transaction concluded by Dimension Data’s South African

subsidiary in 2004 continues to deliver pleasing results and a further 4.9% was vested for the year to

September 2006, which brought the total amount vested to 9.2%.

The future

Dimension Data’s strategy of investing in both its lines of business and services is delivering results. The

group will continue to invest to ensure that they capture the market opportunity early on and thereafter

build returns through scale and efficiency gains as markets move to maturity. The group plans to continue

to invest in service offerings, systems and processes to drive operational excellence and standardisation.

Whilst the growth strategy remains primarily organic, they will make selective acquisitions to secure future

growth from important new markets.

Dimension Data remains ideally positioned to benefit from significant market trends, including the

continued adoption of IP-based infrastructure and the implementation of the converged network. There will

be a continued focus on driving improved profitability ratios through efficiency and scale benefits, which

will be combined with a close focus on the overhead base. Dimension Data remains optimistic about its

ability to deliver long-term value to our shareholders.

INVESTMENT REVIEW EQUITY INVESTMENTS

continued

E N

I N A N N U A L R E P O R T

2007

SABIDO (including e.tv) 31.5%

Sabido Investments (Proprietary) Limited (Sabido) has a range

of media interests, the most significant of which is e.tv. During

the year under review, Sabido invested in new media initiatives

which will build on e.tv’s growing focus on the production,

aggregation and distribution of content across multiple

platforms in South Africa and abroad.

Overview of the year to 31 March 2007

· e.tv

e.tv maintained its position as the largest English-medium television channel in South Africa and the

second most watched channel overall. During the period under review, the channel averaged a 24-hour

market share of 21.9% and a prime time (18:00-22:00) market share of 18.6%. e.tv has continued

to grow its market share among the black middle class, particularly among the celebrated ‘Black

Diamond’ group.

Programming costs remained stable. Prime-time news, films, wrestling and the daily local drama

Scandal command the highest audience ratings. Television advertising spending continued to grow

significantly and e.tv reflected a 30.4% growth in revenue year-on-year. e.tv’s eight-year broadcasting

licence was renewed at the end of 2006. In pursuing its strategy to become a multi-channel business,

e.tv has been involved actively in the development of a national policy for the introduction of digital

terrestrial television in 2008.

· Other Sabido projects

Sabido pursued potential investments in free-to-air television and radio broadcasters in various African

countries and acquired interests in other media platforms within South Africa. Sabido has a 39.6%

shareholding in Cape Town’s Dreamworld Film Studios development and is in the process of investing

in several entities complementary to its core business.

BEE

e.tv is a fully black empowered company in both ownership and employment, and has exceeded its

employment equity objectives. 74% of its employees are black, 46% are women and 5% are disabled. e.tv

spends in excess of 5% of its salary bill on training and has established in-house training programmes for

historically disadvantaged individuals in middle-management positions.

The future

Sabido’s vision is to leverage e.tv’s market position to develop a compelling content production and

distribution business with a pan-African focus.

E N

I N A N N U A L R E P O R T

2007

TRACKER 31.0%

As a leading player in the South African stolen vehicle recovery

industry, Tracker Network (Proprietary) Limited (Tracker) has a

strong monthly subscription-based income stream. Its core

business is the sale and installation of vehicle tracking systems

and the tracking and recovery of stolen vehicles.

Tracker’s contract partnership with the South African Police Service (SAPS), in terms of which Tracker’s

technology is used to track and recover stolen vehicles throughout South Africa, has proved highly successful.

Since its inception in 1996, more than 34 000 stolen vehicles have been recovered, 6 500 criminals arrested

and 280 chop shops and vehicle syndicates exposed through the usage of Tracker technology.

The product range currently comprises three products, namely Tracker Retrieve (stolen vehicle recovery

system), Tracker Alert (Retrieve plus an early alert enhancement) and, as from 1 June 2007, Skytrax

(internet-based fleet monitoring system with stolen vehicle recovery capabilities).

Overview of the year to 30 June 2007

Tracker had a successful year with 19% growth in operating profit, 24% growth in net subscribers and

strong cash flow. During the year Tracker installed almost 100 000 units, while its subscriber base

increased to 420 000 vehicles.

During May 2007, Tracker acquired 100% of Mobile Data, a vehicle monitoring and telematics company,

previously 50% owned by WesBank, and offering a product range known as Skytrax. Tracker also acquired

the technological expertise and intellectual property relating to the Skytrax technology.

As a result of the transaction WesBank holds a 32.5% stake in Tracker, with VenFin owning 31% and the

Mineworkers Investment Company (MIC) increasing its shareholding to 26.5%. The remaining 10% of the

equity is held by a private investment consortium.

This transaction has the potential to make Tracker the leader in vehicle communication in South Africa

through stolen vehicle recovery, vehicle monitoring and telematics. The Mobile Data acquisition will increase

Tracker’s database by some 49 000 to 469 000 vehicles, making it the largest vehicle communications

company in South Africa. Tracker now offers a fully comprehensive service catering to the needs of individual

vehicle owners, small businesses and fleet operators. Furthermore, Tracker is in a position to offer further

value to certain business intermediaries, such as vehicle manufacturers, dealerships and insurance

companies, by being able to provide them with vehicle information to improve their service offerings.

The Mobile Data acquisition brings advanced GSM/GPRS vehicle monitoring technology and telematics to

Tracker, and will strengthen Tracker from an intellectual capital perspective. The transaction will see 130

Mobile Data staff joining Tracker, making the company a direct employer of over 1 100 staff countrywide.

BEE

MIC has been an investor in Tracker since 2000 and, prior to the Mobile Data transaction, held a 25%

interest. MIC has increased its shareholding to 26.5% through the purchase of some shares previously held

by the private investment consortium.

The future

Tracker operates in a highly competitive market. As insurers increasingly insist on the installation of stolen

vehicle recovery devices as a requirement for vehicle insurance, the pressure on service providers to offer

lower-priced solutions is increasing. Tracker’s management is responding to this challenge by driving down

input costs, while still investing in its systems to maintain the highest possible recovery rates as well as

excellent customer support services. The transaction with Mobile Data provides Tracker with a complete

vehicle communications suite, broadening its potential customer base.

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Additionally, Psitek’s strategy of creating independent, strong and visible product and service brands has

resulted in a number of preferred brands in the supervised payphone segment and the fixed wireless

terminal segment. New service brands were recently launched for service centre support and for providing

access to content and data services. Psitek has a strong product development capability. The company

distributes and supports its products around the world and has a wholly owned manufacturing facility.

Overview of the year to 30 June 2007

Psitek recorded improved financial results for the period under review due to the implementation of various

strategic initiatives to improve market penetration and profitability. The consolidated turnover for the

period was R316.5 million (2006: R249.8 million).

The company operates in a number of foreign regions and has established a physical representation in a

number of countries, including Mexico, Algeria, DRC, Nigeria and Kenya. The regions are managed from

the Cape Town head office by regional heads who are responsible for driving market activity and setting up

support structures in their regions. Partnerships and strategic relationships with clients continue to be key

focus areas of the marketing and sales teams.

At the product creation end of the business, innovation and product development remain key factors

that will allow the company to grow market share in existing markets and to create market opportunities in

new areas. A great deal of development effort is spent on lower-cost, higher-specification products for

existing markets. This should provide clear and sustainable product differentiation and allow the regional

sales teams to compete well against lower-cost imported products with a lower functionality. At the same

time, a number of development teams have been developing new product lines to drive new revenues and

to support strategies for generating revenues from value-added services deployed across the product

base.

BEE

Psitek was restructured during the prior financial year to cater for envisaged international and local

partnership requirements. Two empowerment deals were concluded within its South African interests

during this period.

In the first empowerment deal, 25% of the shares in Elprom, Psitek’s electronic goods manufacturing

facility in Stellenbosch in the Western Cape, were made available to employees in a broad-based BEE

initiative. This transaction significantly raised the BEE profile of the company and the group. The second

deal relates to Psitek South Africa, where 20% of the company was sold to Regiments Capital under the

leadership of Litha Nyhonyha.

The future

The outlook for the new financial year is moderate, with management balancing the need for financial

performance against certain long-term initiatives which are only expected to bear fruit in future periods.

Psitek will have a strong focus on creating new growth revenue streams from annuity-generating business

models. Growth is also expected in the traditional channels with existing and new products and solutions.

PSITEK 33.4%

Psitek (Proprietary) Limited (Psitek) creates communication products

and solutions for the emerging markets’ specific needs and problems.

With 17 years’ experience in this challenging market, the brand is

recognised and valued by partners and clients around the globe.

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SSE creates brand value for its corporate clients through conceptualising, implementing and managing

sponsorships and events on behalf of clients. The business unit also sources branded and promotional

items for its clients.

Circa focuses on commercialising hospitality rights to sport and entertainment events, and the provision of

hospitality-related infrastructure and equipment rental services.

Navitute focuses on owning events, player management, commercialising events and properties, and

providing consulting services and outsourced management services within the sport, leisure and

entertainment industries.

Investments include Blue Bulls Rugby (Proprietary) Limited (50%), Western Province Rugby (Proprietary)

Limited (24.9%) and Silverton Travel (Proprietary) Limited (Edusport Travel) (25.1%).

Overview of the period to 30 June 2007

SAIL continued to produce growth in revenue and earnings from its core businesses. The group acquired

the rights to the Vodacom Challenge soccer tournament and secured the appearance of Manchester United

in the 2006 tournament.

SSE was appointed by the Gauteng government to manage its sports sponsorship for two years. The Blue

Bulls’ success on the field translated into positive growth in earnings. Edusport Travel continues to achieve

significant growth in revenue from incentive travel to international sporting events.

In line with its strategy to disinvest from its non-core businesses, the group disposed of its investment

in Eagles Rugby (Proprietary) Limited, Eastern Province Rugby (Proprietary) Limited and Border Rugby

(Proprietary) Limited.

BEE

The Competition Commission sanctioned the sale of SACTWU’s equity interest in SAIL to Vuwa Investments

(Proprietary) Limited during December 2006. The new equity partner, headed by Bulelani Ngcuka, has

made a positive contribution to SAIL from a strategic, alliance and networking perspective and, consolidated

its relationship with other stakeholders of SAIL. Vuwa owns 36.1% of SAIL.

The future

SAIL continues to benefit from extended opportunities among its existing clients. SAIL obtained additional

partners for the Vodacom Challenge soccer tournament and secured the appearance of Tottenham Hotspur

in the 2007 tournament. The tournament will extend for a further three years and SAIL has secured the

appearance of Manchester United in the 2008 tournament.

SAIL 36.6%

SAIL Group Limited (SAIL) provides professional services to

the sport, leisure and entertainment industries and holds

investments in sports brands. SAIL operates four business

units: SAIL Sport & Entertainment (SSE), Circa Hospitality

(Circa), Navitute and Investments.

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KALAHARI ENERGY 9.8%

Kalahari Energy Limited (KE) is a British Virgin Islands (BVI)

company that wholly owns Sekaname (Proprietary) Limited,

a Botswana company that holds prospecting licences for coal-

bed methane (CBM) exploration for extensive areas in that

country. KE has acquired significant levels of specialised

equipment, expertise, experience and data associated with

CBM exploration. VenFin owns 10% of KE and has an option

to increase its shareholding in the future.

Independent resource projections show that large quantities of CBM are available in Botswana for

exploitation, which could impact significantly on the energy sector in Southern Africa.

Overview of the year to 30 June 2007

The results from the KE trial wells that monitor gas yield trends exceeded expectations. The year culminated

in a transaction with Saber Energy Corporation (part of the Canadian-based Tau Capital Group), who will

develop gas well fields for the purpose of electric power generation (power to be supplied into the South

African power grid) on a number of selected licence areas.

The future

A number of ‘farm-in’ transactions are being negotiated with various multinational resource companies

to ensure that the licence areas under KE’s care are exploited optimally. These agreements are expected

to be concluded by the end of 2007. In addition, KE is pursuing a number of energy-related projects of

its own accord. It is anticipated that the first commercial well field will be operational within three to

five years.

CDMTV 4.6%

In March 2007, VenFin co-invested in a B preference round of

US$40 million in CDMTV Holding Company (CDMTV) in China

for a 30.8% equity stake. The round was led by Milestone

China II. VenFin’s total commitment is US$10 million,

of which US$5 million was invested in March 2007

and US$5 million in July 2007.

CDMTV supplies advertising space on digital mobile television channels. The ad time is sourced from its

network of state-owned city and provincial broadcasters, each of which enjoys a local monopoly on digital

mobile broadcasting. The ad time is supplied to a wide range of vendors of consumer goods and services,

either directly or through their advertising agencies. The TV channels are broadcast to LCD screens,

principally located in buses.

In China the standards for the digital mobile TV industry have only recently been set by the government.

Each city in China has been granted one frequency to broadcast mobile TV programming. While digital

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mobile media is a relatively new channel of advertising, its wireless real-time broadcasting feature and

captive viewing environment (e.g. in buses) have been increasingly attracting attention from advertisers.

Currently TV and outdoor media combined account for over 84% of the total advertisement spending in

China. It is expected that digital mobile media, being a hybrid of the two forms, will take market share away

from both traditional TV and traditional outdoor media.

The future

CDMTV is at a start-up stage, but has the potential to become the largest digital mobile media advertising

network operator in China. Currently its network reaches 26 cities in China, including Beijing, where the

Olympic Games will be held in 2008.

The VHF product is a flexible photovoltaic (PV) solar cell, as opposed to the well-established rigid crystalline

silicon solar panels on a glass substrate, which currently comprise 90% of the PV market. Owing to its

highly flexible substrates, VHF is able to deliver innovative solar consumer products (e.g. rollable battery

chargers) and to provide integration solutions for the building industry and industrial OEM markets.

VenFin invested CHF3.2 million in VHF, which is still in a product development phase. The investment in

VHF is one of three that VenFin has made to date in the solar industry.

Overview of the year to 30 June 2007

In June 2006, Q-Cells AG from Germany, the second largest manufacturer of crystalline silicon-based solar

cells in the world, made an investment of CHF10.8 million in VHF. In addition to the expansion of its core

business of crystalline silicone cell manufacturing, Q-Cells has made five investments in thin-film PV

technologies, one of which is VHF. In February 2007, Q-Cells exercised its option to increase its shareholding

in VHF to 51%. The new capital injection will enable VHF to increase its production capacity in Yverdon

from 100 kW to 5 MW. This increased capacity will be focused on the consumer market.

In May 2007, Q-Cells and VenFin agreed to invest in a 30 MW factory to be built in Thalheim, Germany.

VenFin’s commitment to this project is €9 million, which will result in a small increase in its VHF

shareholding to 16.7%.

The future

The upgrade to 5 MW in Yverdon is expected to be completed by March 2008, which will allow VHF to start

servicing the pent-up demand for consumer-type PV products in 2008. The 30 MW factory in Thalheim is

dependent on the approval of government incentives and will take approximately 18 months to construct.

The VHF product’s main competitive advantages are, firstly, the fact that the product is lightweight and

flexible, allowing for total integration on building elements of various shapes and enabling roll-to-roll

manufacturing; and secondly, the cheaper plastic substrate that is used, which should provide a substantial

reduction in the cost compared to glass substrate panels.

VHF 15.6%

VHF Technologies SA (VHF), based in Yverdon in Switzerland,

develops and manufactures thin-film solar cells, using its

proprietary very-high-frequency plasma technology to deposit

thin layers of amorphous silicon onto plastic substrates.

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TRINA SOLAR 0.7%

Based in Jiangsu Province, China, Trina Solar Limited (Trina

Solar) is an integrated solar photovoltaics (PV) manufacturer,

differentiated by a vertical integration strategy and the ability to

use recycled silicon. Since its inception in 1998, the company

has changed from a solar systems integrator to a company

covering most of the PV crystalline silicon value chain, from

silicon ingots, wafers and modules to system integration.

In May 2006, VenFin invested $1.5 million for a 1.3% direct shareholding in Trina Solar as part of a

consortium led by the Milestone China I Fund that invested a total of $40 million for a 34% shareholding.

These proceeds, together with cash raised during a very successful initial public offer (IPO) on the NYSE in

December 2006, are being used for establishing cell manufacturing capacity and working capital.

In June 2007, VenFin sold 14% of its direct shareholding in Trina Solar at an effective price of US$43 per

American Depository Receipt (ADR), compared to the US$7 per ADR paid in May 2006. The ADRs traded

at US$54 at the end of June 2007, which translated into a US$1.4 billion market capitalisation for Trina

Solar.

Trina Solar currently sells its products to customers in Europe, Taiwan and China.

JOHANNA SOLAR 8.2%

In May 2006, VenFin invested €3.17 million in Johanna Solar

Technology GbmH (Johanna Solar), a new company committed

to building a 30 MW solar cell plant in Germany. The factory is

currently being built in the federal state of Brandenburg, which

offers lucrative financial incentives and subsidies from the

local government and a strong solar research and development

environment. The commissioning of the factory is planned for

September 2007.

Johanna Solar will use a CIGSSe (copper indium gallium sulphide selenium)-based silicon-free technology,

developed by the Johannesburg University and Professor Vivian Alberts. Johanna Solar has entered into a

global (excluding Africa) manufacturing licence agreement with the university, allowing the company to sell

sublicences outside Africa.

The benefits for the CIGSSe technology are similar to other thin-film technologies. The licensor of Johanna

Solar believes it has a higher conversion efficiency of sunlight to electricity compared to most other thin-

film technologies.

VenFin is also one of three promoters of a current feasibility study for a PV manufacturing facility in South

Africa based on the same technology used by Johanna Solar. Should this study prove successful, construction

of such a plant may commence in 2008.

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MOSMART 20.0%

Mosmart Investments (Proprietary) Limited (Mosmart) has two

main activities: the cultivation of feedstock and the associated

biodiesel production across Africa; as well as the development

and exploitation of selected products and intellectual

properties. To date VenFin, who is in the process of acquiring

20% of the company, has been assisting Mosmart financially

with loans.

Overview of the year to 30 June 2007

Mosmart commenced the management of a palm oil plantation in Guinea during the last year and upgraded

and expanded the production facilities. A biodiesel production facility will be commissioned during the

third quarter of 2007. The preceding twelve months saw significant progress in the development of an

organic medium for the absorption of pollutants, concurrent with discussions with a multinational enterprise

for utilisation in a specific application. Mosmart’s current focus is on the protection of the intellectual

property.

The future

Mosmart will be split into two independent entities, with biodiesel activities moving offshore and products

relating to intellectual property remaining in a South African vehicle. Business plans to expand the biodiesel

activities to two other African countries within the next year are already being developed. Significant off-take

agreements regarding proprietary products are anticipated to be concluded within the next 12 months.

CASH AXCESS 50.0%

Cash Axcess provides automated teller machine (ATM)-related

products and services to the South African corporate and retail

markets. The company has developed a fully integrated platform

providing for two complementary business units – the sale,

distribution and maintenance of ATMs, and a complete outsourced

ATM transaction processing service. These services are focused

on lower transaction volume ATMs and markets. Cash Axcess

also facilitates the provision of cost-effective banking facilities

to previously neglected areas, such as rural communities.

Cash Axcess is an authorised distributor in South Africa of the Tidel 3000 series of ATMs. The company

uses a number of innovative techniques to reduce the total cost of ownership of its ATMs, such as GPRS

communications, retailer cashing and the recycling of cash from drop safes.

Cash Axcess is an early-stage company. The company entered into an acquiring relationship with Mercantile

Bank in January 2005 and took its first ATM live in March 2005. In July 2005, Cash Axcess started

deploying ATMs nationally and entered into an acquiring relationship with Capitec Bank in March 2006.

Overview of the year to 30 June 2007

During the past financial year, COIN Security acquired a 50% stake in Cash Axcess, while VenFin holds the

remaining 50%. The company focused on expanding its ATM footprint and its client base during the year.

In July 2006, Cash Axcess piloted the recycling of cash from drop safes via its ATMs through a contract

with COIN Security. This unique service is now offered to the Cash Axcess clients, and the company is

currently preparing to deploy ATMs using this model with a number of banks in South Africa.

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BEE

COIN Security Group has a 50% shareholding in Cash Axcess. COIN Security is a wholly owned subsidiary

of Mvelaphanda Group Limited, a pre-eminent broad-based, black controlled, owned and managed group

in which historically disadvantaged persons have a 57.6% total effective shareholding.

The future

Cash Axcess seeks to conclude additional bank acquiring agreements in South Africa to increase its existing

ATM base. It is committed to continually improve the quality of service provided by its ATMs. The company

believes that there are significant opportunities in the market to deploy lower transaction volume machines

in previously underserved areas.

FUNDAMO 28.9%

Fundamo (Proprietary) Limited (Fundamo) is a leading supplier

of mobile banking and payment software solutions. Fundamo is

among the few suppliers of mobile payment technologies which

have navigated this emerging market successfully over the past

five years.

Based on the rate of adoption, analysts’ predictions and the sheer demand for mobile banking and payment

services, this industry migrated from entrepreneurial fringes to the corporate mainstream.

Overview of the year to 30 June 2007

During the past year, a number of important announcements catapulted the mobile banking industry into

the spotlight. During February the GSM Association, in collaboration with MasterCard, announced support

for international money transfer by making use of mobile phones. Mobile payment volumes started

increasing significantly in countries like Japan, South Korea and the Philippines.

In Africa initiatives like MTN banking and Celpay (DRC) received big media exposure. The USA market

started picking up momentum too with various announcements.

Both MTN banking and Celpay reported good growth in subscriber numbers and volumes of transactions.

Celpay (Zambia) reported a growth in revenue to a point where 2% of the country’s GNP is now being

managed on the Fundamo system deployed in Lusaka. MTN banking made some adjustments in its business

model and distribution strategy and is now growing rapidly. During the period, Fundamo also sold licences

to clients in the Middle East and North America and expects to increase market share in these markets next

year. On the back of this increased activity, Fundamo’s turnover grew as expected.

During the year, Fundamo raised R36 million (US$5 million) from Mark Shuttleworth’s venture fund (HBD)

for product and market expansion. Fundamo also won a number of awards during the past period, amongst

others the Frost and Sullivan technology leadership award as well as qualifying as one of South Africa’s Top

Technology 100 companies for the sixth year in a row.

The future

In the new year, Fundamo’s management will implement strategies to ensure sustained growth. The

delivery capacity will be extended as many more deployments of the technology are envisaged in the new

financial year. Fundamo will also extend the product features to stay competitive and will also review new

commercial models.

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CUEINCIDENT 19.5%

Cueincident (Proprietary) Limited (Cueincident) provides

command control centres with high-technology surveillance

devices and cameras for the monitoring of entire areas such as

cities, roads, railways, harbours and airports.

Overview of the year to March 2007

During the year ended March 2007, the company responded to a number of opportunities in both the

private and public sector. Cueincident had better success in terms of the private and corporate sectors and

mixed success in the public sector. On the corporate front the company has secured contracts with

significant industry players, including Transtel and MTN, for ongoing fibre-optic installations. Cueincident

also installed – and now operates and maintains – a residential surveillance security system at the Mooikloof

Estate in Pretoria. Although currently small, these recurring contracts have growth potential.

Uninet and Cueincident have entered into a memorandum of understanding to roll out a wireless system in

Johannesburg, which will interface with Cueincident’s fibre-optic network. This would allow for the

independent roll out of commercial broadband services in Johannesburg. Furthermore, it will make it

possible to fully exploit the demand for wireless surveillance systems. These systems have been requested

by some of the companies in the City of Johannesburg, for example the Johannesburg Development Agency

(JDA) and retailers such as the JD Group. Cueincident has progressed to the second phase of the three-

phase City of Johannesburg broadband project, the value of which exceeds R60 million.

BEE

Mvelaphanda Capital (Proprietary) Limited and Circle Capital Technologies (Proprietary) Limited are

Cueincident’s BEE shareholders, with see-through BEE ownership of 44.5%.

The future

A lot of effort has gone into repositioning Cueincident for future growth prospects. The potential positive

outcome of any of the major opportunities being pursued will have a major impact on the company’s

financial viability and future prospects.

Partnerships such as the one with Uninet are now starting to bear fruit, making it possible to offer potential

clients a complete solution – from access control to CCTV surveillance systems. Recent co-operation

agreements with companies like Reunert/SACO Systems enabled the two companies to jointly tender for a

Uranium mine proposal.

FRING

Tel Aviv-based fring is a technology product company that has

developed a free mobile VoIP software client that allows users

to talk and live chat (Instant Messaging) using their mobile

handset’s Internet connection instead of mobile airtime (GSM)

minutes at a significant cost saving. fring enables mobile calls

through Wi-Fi Internet access or GPRS, EDGE or 3G Internet

data plans.

fring offers its clients easy communication with all their fring, Skype®, MSN® Messenger, Google Talk™,

Twitter and regular phone contacts from a single integrated contact list. fring supports SkypeOut and

hundreds of SIP-based services, enabling cheap local and international VoIP calls to contacts’ PCs, mobile

phones and landlines. fring is also enhanced with real-time contact availability (presence) so users can see

who is available before dialling.

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fring roams between Wi-Fi and 3G networks while bypassing traditional mobile voice and SMS messaging

services, mobile-to-mobile calls, mobile-to-landline calls, and mobile-to-PC calls, including integration

into Skype, MSN Messenger and Google Talk. The patent-pending peer-to-peer mobile VoIP technology

delivers full-duplex voice quality with rich internet functionality and maximum network efficiency.

Overview of the year to 30 June 2007

During the financial year, VenFin participated in extending a convertible bridging loan to fring alongside,

among others, Veritas Venture Partners (Veritas), a founding shareholder in fring.

FYNBOS MEDIA 20.0%

Fynbos Media (Proprietary) Limited (Fynbos Media) is an early

stage black controlled Cape Town-based investment holding

company whose primary business is making equity investments

with a view to long-term capital appreciation. VenFin, who

owns 20% of Fynbos Media, is involved on a strategic level.

VenFin has committed an initial R5 million to the company,

R1.5 million of which has been drawn, and will consider

co-investing with the company on an ad hoc basis.

Overview of the year to 30 June 2007

During its first year of operations, Fynbos Media acquired a 25% shareholding in The Grape Company, an

exporter of table grapes. In October 2006, the company applied for shares in the empowerment transactions

initiated by Naspers Limited involving two of its unlisted subsidiaries, MultiChoice Africa and Media24.

Fynbos Media was eventually successful in acquiring 10 684 shares in Phuthuma Nathi (an empowerment

vehicle with a 15% equity holding in MultiChoice Africa) at a cost of R106 840 and 800 000 shares in

Phuthuma Nathi 2 (the empowerment vehicle with a 7.5% equity holding in MultiChoice Africa) at a cost

of R8 million.

BEE

Fynbos Media is a black controlled business with 68% of the shares held directly or indirectly by four black

individuals. The company will continue to evaluate investment opportunities with the aim of establishing

BEE partnerships.

DESTINY 20.0%

Destiny Corporation (Proprietary) Limited (Destiny) is a black

economic empowered Johannesburg-based company whose

primary business is making equity investments with a view to

long-term capital appreciation. VenFin owns 20% of Destiny,

which is now in its second year of operation.

Overview of the year to 30 June 2007

The year under review saw a significant increase in business activity, with Destiny concluding the following

transactions:

· a 57% interest in Thermaweld Industries (Proprietary) Limited, a supplier of welding equipment and

associated gases

· a 33% interest in Specpharm Holdings (Proprietary) Limited, a manufacturer and distributor of

pharmaceuticals

· a 75% interest in Koenigsegg Automotive, an importer and distributor of the Koenigsegg supercar.

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FRAXION 31.4%

Fraxion Holdings (Proprietary) Limited (Fraxion) develops

advanced spend management software that enables companies

to control, manage and analyse spending behaviour in real

time. The solution, which integrates into most mid-range

ERP platforms, has 15 000 users in Southern Africa

and Europe.

BEE

Destiny is a black controlled business that was started by a group of young black professionals with

investment banking experience.

The future

Destiny intends to continue with the expansion of its investment portfolio through a number of high-value

transactions under consideration.

The company operates from South Africa and the United Kingdom and generates revenue from licence fees

and services associated with its spend management software solutions.

Overview of the year to 30 June 2007

The Fraxion software is aimed at medium and large organisations and has been deployed in divisions of

several prominent companies over the last year, including Mr Price, African Alliance, Perishable Products

Export Control Board (PPECB), Woolworths, ATKV and Standard Chartered Bank.

The company concluded a ‘White label’ agreement with Compass Group plc, which secured Chevron,

De Beers and Siemens as clients. This ‘White Label’ solution is the only facilities management focused

solution in the world.

Fraxion Version 3.1, released in March 2007, includes multi-currency and tax functions to support the

company’s international expansion. Support for deeper integration into target ERP platforms is due late in

2007 through to mid-2008.

Fraxion received several awards over the past year, including a Department of Trade and Industry’s grant

(SPII) and a Department of Science and Technology award for the most innovative emerging company in

South Africa.

BEE

Fraxion has actively partnered with several BEE organisations. As part of its enterprise development

programme, Fraxion sponsored the African Information and Communication Technologies (ICT) Achievers

Award and the Institute for Local Government Managers with software donations. Fraxion will consider BEE

ownership once the company has reached a more mature stage of development.

The future

As the Version 3.1 solution enhanced significantly the functionality of prior versions, Fraxion is expanding

its direct sales capacity in both South Africa and the United Kingdom. Shareholder funding for this

expansion has been secured and DTI grant funding (Innovation Scheme) has been secured for research and

development activities. In the longer term, Fraxion will look to build a reseller-orientated sales strategy.

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i to i 46.0%

i to i technologies (Proprietary) Limited (i to i) delivers

integrated electronic risk, safety and security services geared

towards managing and minimising physical business risk

exposure.

Overview of the year 30 June 2007

The focus during the financial year was in two areas. Firstly, time was spent on the further consolidation of

the underlying merged businesses, resulting in reduced duplication of functions and improved operational

efficiency. In the second instance, progress was made in the standardisation and tighter control around

core offerings coupled with investments into new industry growth areas.

BEE

i to i technologies has a 45% ownership by black investment companies Circle Capital Ventures, Ehlobo

Holdings and Imphandze Technologies.

The future

i to i plans to grow its market position by focusing its sales and operational capacity on specific pre-

selected market segments. Value to customers will further be enhanced by partnering with local and

international vendors.

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VenFin has invested US$12.5 million in GEMS II, US$5.37 million of which has been returned to date. In

2005, VenFin committed a further US$12.5 million to GEMS III, and the fund has drawn US$7.5 million to

date.

GEMS II originally made eleven investments – four are fully exited and seven remain in the portfolio. These

investments comprise a Personal Digital Assistant (PDA) manufacturer, two semi-conductor manufacturers, a

mobile software application provider, a supermarket chain, an oil reserve development company and a retailer.

GEMS III has made three investments to date – one in a listed property developer in Thailand, one in a

Singapore-based insurance syndication company and one in a GSM network operator in New Zealand.

The future

Going forward, management will focus its efforts on the realisation of the remaining seven investments in

GEMS II as well as making further investments through GEMS III.

To date VenFin has invested US$4.3 million in Milestone China I and the fund has already returned

US$3.3 million to VenFin from investments exited or partly exited. The principal objective of MCM is to achieve

superior medium-term capital appreciation in its funds through direct investments in well-established, high-

growth companies seeking expansion or acquisition capital in China. All the executive team members of MCM

are mainland Chinese with extensive investment and operational experience in both China and the USA.

Overview of the year to 30 June 2007

Milestone China I’s commitment period ended in May 2007, hence MCM does not foresee any further

investments to be made by this fund. Seven investments have been made to date, three of which have been

FUND INVESTMENTS

In order to strengthen its global network, VenFin made investments in a few equity
funds. In addition to providing VenFin shareholders with access to high-growth
opportunities in markets they otherwise would not have access to, these investments
provide VenFin and its investee companies with access to potential direct investment
opportunities as well as to networks and expertise in markets outside South Africa.

GEMS II AND III

General Enterprise Management Services Limited (GEMS) is

a private equity fund management group that manages the

GEMS Funds (GEMS I – 1998 vintage, GEMS II – 2001

vintage and GEMS III – 2005 vintage). These funds make

direct investments in the Asia Pacific Region. Funds under

management in GEMS II total US$248 million and in

GEMS III they total US$173 million, representing capital

commitments from corporate clients and selected individual

investors from around the world.

MILESTONE CHINA I AND II

In September 2003, VenFin committed US$5 million to the

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

a limited partnership, which is managed by Milestone Capital

Management Limited (MCM), a China-focused private equity

investment firm with offices in Shanghai and Beijing. MCM is

the general partner in this US$47 million fund of 2003 vintage.

In March 2007, VenFin committed US$25 million to Milestone

China II, a second fund to be managed by the same team that

manages the first fund.

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exited. The most recent investment of US$10 million was in Trina Solar, a solar photovoltaic manufacturer

in China, listed on the NYSE in December 2006 at US$17 per share. At the end of June 2007, the share

traded at US$54. VenFin has also invested US$1.5 million directly alongside the fund in addition to its

exposure in Trina Solar via Milestone China I.

In the period under review the fund exited its very successful investment in Focus Media Holding Limited,

which operates the largest out-of-home advertising network in China using television displays. Apart from

Trina Solar, the three remaining investments comprise a Beijing-based distributor of imported medical

equipment, a xanthan gum producer (xanthan gum is used as an emulsifier in food) and a mobile phone

handset design company.

To date Milestone China II has received commitments of US$247 million from investors. Milestone China II’s

first investment of US$15 million was in CDMTV, the largest digital mobile television advertising network

operator in China. VenFin also made a direct investment of US$10 million in CDMTV.

The future

MCM will focus its future efforts on the realisation of the remaining four investments in Milestone China I

as well as making new investments through the second fund.

The investment broadens VenFin’s access to international deal flow and networks. It has given VenFin

exposure to Israel and, to a lesser extent, the southeast USA region, where the Fund is primarily invested

in seed-stage technology companies.

Overview of the year to 30 June 2007

By June 2007, VVP Fund II L.P. had made thirteen investments in the following sectors: enterprise

software (3), communications (5), medical devices (2), homeland security (1), semiconductors (1) and

logistics (1).

During the year under review, follow-on investments were made in ten of these companies, namely Asankya,

Bamboo, CableMatrix, ClickFox, CytoDome, Escape, Fringland (fring), Guardium, Sirica, and WebLayers.

VenFin made a direct co-investment in fring, which provides a mobile communications service based on

VoIP technology that allows mobile subscribers to communicate at zero or very low incremental costs per

call by means of a software application installed on their existing cellular handsets.

The future

In Israel, approximately US$626 million was invested in 161 VC-backed start-ups in the first half of 2007.

These numbers are slightly higher than those for the comparative period in 2006, with foreign VCs holding

an investment market share of around 50%. Communications and networking-related investments continue

to dominate with a 42% share, followed by software at 24%, life sciences at 16% and semiconductors at

8%. Seed and start-up companies represent about 18% of this amount.

The Fund is expected to make another one or two fresh investments in the coming months, which it will

focus on making follow-on investments in its existing portfolio companies.

VERITAS

Veritas Fund II L.P. (VVP Fund II) is a venture capital fund

managed by Veritas Venture Partners (Cayman) L.P. (Veritas),

Israel’s oldest venture capital firm. VenFin is a limited partner

of the fund, with a maximum exposure of US$1.5 million,

which represents an interest of 4%. Veritas has drawn

US$1.05 million of this commitment.

INVESTMENT REVIEW EQUITY INVESTMENTS

continued

CORPORATE GOVERNANCE

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The King Reports on Code of Practices and Conduct echo principles deeply embedded in the fabric of the

group from which VenFin originated. The group is principle-driven and guided by the philosophy of its

founder, Dr Anton Rupert. The group was led by example from inception and no formal codes of conduct

were required.

VenFin inherited, with pride, this sound corporate governance system – a model for doing business ethically

– which does not need to be enforced but stems from internal conviction.

One of the cornerstones of our business model is the belief that a company has three levels of responsibility:

shareholders, staff and the community. The group’s shareholders are served by sound business practices

and a continued quest for excellence which ensure that profitable investments are being made. The group’s

staff and the community are served and supported as set out in the sustainability report on page 37.

Therefore, it comes naturally to VenFin to endorse, and to comply with the principles of the King Reports

as it corresponds to the way in which business has been conducted in the group for more than 50 years.

In setting the parameters for this report, guidance was taken from the Global Reporting Initiative (GRI)

Boundary Protocol. Disclosure is limited to those entities that could generate significant impact to the

Company’s sustainability performance and where it exercises control over the financial and operating

policies of such entities, save where those entities disclose the relevant information in their own publicised

annual reports.

CORPORATE STRUCTURE

The Company is an investment holding company.

Investments of the Company mainly comprise both listed and unlisted investments which are not controlled

by VenFin but are, due to significant influence and board representation, mostly associates.

The Company manages its investments actively and provides strategic input through board, audit and other

committee representation. The Company is a medium to long-term investor which forces strategic alliances

on a partnership basis, while endeavouring to add value.

The Company’s associates endorse the Code of Corporate Practices and Conduct. The Company continues

to encourage full compliance within the investee portfolio, where possible, and disclosure where not.

In accordance with the recommendations of King II, the Board adopted a formal charter, as set out

below.

BOARD CHARTER

A charter, read and endorsed by all directors of VenFin, has been implemented to:

· identify, define and record the responsibilities, functions and composition of the Board; and to

· serve as a reference to new directors.

The Board, having reflected on the following, is satisfied that for the reporting year, it executed the required

actions contained in the charter satisfactorily.

COMPOSITION OF THE BOARD

VenFin has a fully functional Board, comprising executive and non-executive directors, which leads and

controls the group. Currently there are five directors of whom one is independent. In this charter, executive

directors are collectively referred to as executive management.

It is a function of the Board to ensure that its size and the collective skills and experience of members are

suitable to carry out its responsibilities. Circumspection is exercised by the Board in the selection and the

orientation of directors.

CORPORATE GOVERNANCE

continued

The roles of the chairman and the chief executive officer are separated. The chairman is a non-executive

director but is not independent.

All directors of VenFin have access to the advice of the company secretary and any relevant outside people

when required.

Board members are listed on page 8.

ROLE AND RESPONSIBILITIES

The Board provides strategic direction by proposing, discussing, questioning, evaluating, and approving

plans and strategies. In directing the group, the Board exercises leadership, integrity and judgement, to

achieve continuing prosperity for the group.

After approving operational and investment plans and strategies, the Board empowers executive management

to implement these and to provide timely, accurate and relevant feedback on progress made.

However, the Board remains accountable for the overall success of the approved strategies, based on

values, objectives and stakeholder requirements, and for the process and policy which ensures the integrity

of risk management and internal controls. The Board is the focal point of the group’s corporate governance

and is also responsible for ensuring that it complies with all relevant laws, regulations and codes of best

business practices.

The Board monitors the operational and investment performance of the group, including relevant financial

and non-financial aspects. It also ensures that procedures and practices are in place to protect the

Company’s assets and reputation.

VenFin’s Board established the following subcommittees to assist it in discharging its duties and

responsibilities:

· The Remuneration and Nomination Committee , consisting of two directors, advises the Board on remuneration

and terms of employment of all directors and members of senior management and is responsible for

succession planning. The committee is also responsible for the nomination of directors. Additionally, it

participates annually in evaluating the performance of directors. Directors do not have long-term contracts

or exceptional benefits associated with the termination of services. The chairman of the Board is chairman

of this committee. The chief executive officer attends meetings only by invitation.

The committee has a formal mandate and its effectiveness is appraised by the Board accordingly.

· The Audit and Risk Committee , consisting of three directors, reviews the adequacy and effectiveness of

the following: financial reporting; the system of internal control; the management of financial,

investment, technological and operating risks; risk funding; the internal and external audit processes;

the Company’s procedures for monitoring compliance with laws and regulations; its own code of

business conduct; and procedures implemented to safeguard the Company’s assets. The deputy

chairman of the Board is the chairman of this committee.

This committee also reviews the level of disclosure in the annual report and the appropriateness of

policies adopted by management.

The committee has a formal mandate and its effectiveness is evaluated by the Board accordingly.

· The Management Committee , consisting of two directors and six senior managers, meets regularly

between Board meetings to deal with issues delegated by the Board.

· The Investment Committee , consisting of four directors, is responsible for the evaluation and approval of

investments according to the formal mandate given by the Board.

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The appointment and orientation of new directors are also the responsibility of the Board. Non-executive

directors are selected for their broader knowledge and experience and are expected to contribute effectively

to decision-making and the formulation of strategies and policy.

The Board identifies goals, provides direction, determines the feasibility of proposed strategies and

monitors investments. Executive directors contribute their detailed insight into day-to-day operations and

are generally responsible for operational decisions and their implementation.

The Board reviews and assesses annually the mix of skills and experience offered by its members to ensure

that it is adequately equipped to achieve the Company’s objectives and to create value for shareholders over

the long term.

MEETINGS AND QUORUM

The articles of association requires three directors to form a quorum for Board meetings. A majority of

members, preferably with significant representation of the non-executive directors, is required to attend all

committee meetings.

The VenFin Board meets at least four times a year. The Audit and Risk Committee meets at least three

times a year, and the Remuneration and Nomination Committee at least once a year.

ATTENDANCE AT MEETINGS

Remuneration

Audit and Risk

and Nomination

Investment

Board

Committee

Meetings held

Directors

J P Rupert

J Malherbe

J J Durand

G T Ferreira

N J Williams

MATERIALITY AND APPROVAL FRAMEWORK

Issues of material or strategic nature which might impact on the reputation of the Company, are referred to

the Board. All other issues, as mandated by the Board, are dealt with at executive management level.

The minutes of all the committee meetings are circulated to the members of the Board. Issues that require the

Board’s attention or a Board resolution are highlighted and included as agenda items for the next Board meeting.

REMUNERATION PRINCIPLES

The Company’s policy regarding the remuneration of all directors and senior management aims at:

· attracting and retaining directors and senior management of high calibre;

· providing directors and senior management with remuneration that is fair and just;

· ensuring that no discrimination occurs;

· recognising and encouraging exceptional and value-added performance; and

· ensuring that short-term personal gain does not conflict with long-term sustainability.

In line with these objectives, the Remuneration and Nomination Committee annually reviews and evaluates

the performance of the executive directors and determines the annual salary adjustments for each. For this

purpose it refers to salary surveys compiled by independent organisations and other market information.

DUTIES OF THE DIRECTORS

According to the Companies Act, which does not differentiate between executive and non-executive

directors, the Company directors:

· prepare the annual financial statements that should represent fairly the Company’s state of affairs and

its profit or loss position for the period under review;

· select suitable accounting policies and apply them consistently;

· state whether applicable accounting standards have been followed; and

· endeavour to make judgements, valuations and estimates that are reasonable and prudent.

They also have a duty to:

· set and maintain appropriate value systems;

· apply due care and skill in harnessing entrepreneurial flair in maximising sustainable returns;

· keep proper accounting records;

· take steps to safeguard the assets of the Company;

· set the group’s risk appetite;

· implement effective risk management processes and internal controls, and monitor their efficiency;

· ensure compliance with all relevant laws;

· disclose potential conflicts of interest; and

· disclose information truthfully and transparently.

The Board formulates the Company’s communication policy and ensures that spokespeople adhere to it.

This responsibility includes transparent, balanced and truthful communication to shareholders and relevant

stakeholders.

Having considered the above, the directors are of the opinion that the Board and the subcommittees have

discharged all their responsibilities for the period being reported on.

CONFLICTS OF INTEREST

Mechanisms have been put in place to recognise, respond to and manage any potential conflicts of interest.

Directors sign, at least once a year, a declaration stating that they are not aware of any conflicts of

interest that may exist due to their interest in or association with any other company.

In addition, directors disclose their interest in contracts that are significant to the Company’s business. Any

potential conflict of interest is disclosed as soon as it arises.

All information acquired by directors in the performance of their duties, which is not disclosed publicly, is

treated as confidential. Directors may not use, or appear to use, such information for personal advantage

or for the advantage of third parties.

Directors of the Company are required to comply with gifts and donation policies and the prescriptions of

the VenFin Code of Conduct on inside information transactions and disclosure of transactions.

COMPANY SECRETARY AND PROFESSIONAL ADVICE

Directors are entitled to seek, at the Company’s expense, independent professional advice concerning the

affairs of the group. They have unlimited access to the services of the company secretary, who is responsible

to the Board to ensure that proper corporate governance principles are adhered to. Board orientation or

training is done when appropriate.

GOING CONCERN

At least once a year the Board considers the going concern status of the group with reference to the

following:

· Net available resources and the liquidity thereof

· The group’s Residual Risk Profile

· World economic events

· The following year’s strategic/business plan, budgets and cash flow models

· The group’s current financial position

SERVICE COMPANY

During the previous financial year, M&I Management Services (Proprietary) Limited has rendered

management and support services to VenFin.

CORPORATE GOVERNANCE continued

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During the current financial year a subsidiary of Remgro Limited, M&I Group Services Limited (M&I), has

acquired the business of M&I Management Services (Pty) Limited. An agreement has been negotiated with

M&I to provide certain support and administrative services to VenFin at a fee determined annually. Any

further reference to M&I refers to M&I Group Services Limited for the period 1 October 2006 to

30 June 2007.

The fees for the past year are disclosed in note 7 to the annual financial statements.

RISK MANAGEMENT AND INTERNAL CONTROL

In determining strategic objectives, the Board of Directors has ensured its understanding of all the risks

associated with the Company’s investment portfolio with a view to maximising sustainable profits and growth.

These risks are measured continuously against the risk appetite defined by the Board.

The risk management process is fundamentally based on the skill and calibre of individuals employed, their

motivation and drive and the value systems they adhere to. In addition, the investment portfolio serves to

spread investment risk.

The categories of risk identified can be broadly classified as follows:

· Performance risk , including strategic risk, opportunity risk, reputational risk, liquidity risk, and also risks

relating to corporate governance, social and environmental responsibility and stakeholder relations.

· Investment risk inherent to existing investments. The Board has delegated the responsibility for

investment risk management to the Management Committee.

These risks are furthermore managed at VenFin by ensuring that future investments are subject

to rigorous due-diligence reviews. These reviews include, inter alia, verification of intellectual property

rights, management com petency, business plans, market analyses, contractual rights and obligations,

product feasibility, cash flow and liquidity requirements. Consideration is also given to ensure that the

investment is optimally structured, using appropriate investment instruments.

Performance of operational management, measured against budgets and other measurement criteria,

is regularly appraised for timely corrective action, when deemed appropriate.

· Operational risk which includes operational effectiveness and efficiency, safeguarding of assets,

compliance with relevant laws and regulations, reliability and integrity of reporting, effective operational

risk management, human resource risk, technology risks, business continuity and risk funding.

Operational risks are managed mainly by means of internal control. This is a process designed to

provide reasonable assurance regarding the achievement of organisational objectives and to reduce the

possibility of loss or misstatement to within accepted levels. The effectiveness of risk management is

measured by the level of reduction of the Company’s cost of risk.

Management structures have been established to focus on certain key risk activities, including safety,

health, environment, security, tax and risk funding.

·Treasury risk . VenFin uses the treasury services of M&I and V&R Management Services AG to manage

interest rates, liquidity, compliance and currency risks globally.

A treasury committee, in terms of a mandate from the Board, constituted of nominated executive

directors and senior management, is responsible for determining policy and procedures as well as

clearly defined levels of responsibility. Regular feedback is given to the Board.

The Board has documented and implemented a comprehensive risk management system, which incorporates

continuous risk identification, assessment, evaluation, and internal control embedment.

The Board influences the control environment by setting ethical values and organisational culture while

ensuring that management styles, delegated authorities, business plans and management competency are

appropriate, effective and efficient.

The Board also monitors the effectiveness of governance structures implemented by the boards of those

entities it invests in.

Risk funding is focused strategically on a self-insurance methodology aimed at reducing the group’s cost

of risk, save for those risks which cannot be cost beneficially controlled or have potential catastrophic

exposures.

INTERNAL AUDIT

The Company has an internal audit function, which has been outsourced to M&I’s Risk Management and

Internal Audit department. It is an effective independent appraisal function and employs a risk-based audit

approach, compliant with the Institute of Internal Auditors’ (IIA) definition of internal auditing and

documented in a charter approved by the Board. The head of this department has direct access to the

chairman of the Audit and Risk Committee as well as to the chairman of the Board.

EXTERNAL AUDIT

The Company’s external auditors attend all Audit and Risk Committee meetings and have direct access

to the chairman of the Audit and Risk Committee. Their audit coverage is adequately integrated with the

Internal Audit functions without their scope being restricted.

Other services provided by the auditing firm mainly relate to tax matters and are effected by a department

independent of the audit partners. Independence is further assured by terms of appointment.

DEALINGS IN SECURITIES

The Company has adopted a code of conduct to prevent insider trading. During the closed period, directors

and designated employees are prohibited from dealing in the Company’s securities. During open periods

directors and personnel may only deal in the Company’s securities with the approval of the chairman,

deputy chairman or the chief executive officer. The closed period endures from the end of a financial

reporting period until the publication of financial results for that period. Additional closed periods may be

declared from time to time if dictated by special circumstances.

ACCESS TO INFORMATION

VenFin complies with the regulations of the Promotion of Access to Information Act (Act 2 of 2000).

The Act ensures the constitutional right of access to information required for exercising or protection

of rights.

CORPORATE GOVERNANCE continued

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VenFin’s three levels of corporate social responsibility were mentioned earlier and its obligation to

shareholders was dealt with under Corporate Governance. In this section its responsibilities towards the

community (to be a worthy citizen grateful of the goodwill received from the public) and to staff (to ensure

that their work remains a meaningful and rewarding experience) receive attention.

GROUP ETHICS

VenFin’s commitment to ethical behaviour is contained in the following published documents:

· Code of ethics

· Internet policy

· Disciplinary code

· Gifts and donations policy

The Board was responsible for the establishment and distribution of these documents with compliance

being monitored by means of management structures, internal audit and the group’s central forensic

function.

EMPLOYMENT EQUITY

M&I, in accordance with the Employment Equity Act, strives to afford all staff the opportunity to realise

their full potential. M&I’s management and personnel are continuously involved in determining training

and development needs and in the implementation and monitoring of a labour plan. Special attention is

given to those groups which, because of historic reasons, might be in a disadvantaged position. In

accordance with the requirements of the Employment Equity Act, M&I annually submits a labour plan to

the Department of Labour.

Because of the nature of its operations, to provide, inter alia, core services to VenFin, M&I’s workforce is

characterised by the following:

· A high level of expertise within the top structure of the organisation and in various specialised

divisions

· A young employee profile, especially with regard to management

· A low turnover rate of staff and, consequently, limited opportunities for new appointments

M&I believes that the quality of its staff affords it an important sustainable competitive advantage.

Therefore it believes that its success does not lie in the uniformity of its staff but in the diversity and

development of their collective talents. For these, space and opportunity will always be created.

Human resource policies and procedures also address the issues of non-discrimination, child labour,

disciplinary practices, human rights et al.

SAFETY AND ENVIRONMENT

The Company has a duly constituted safety and health committee, required by the Occupational Health and

Safety Act. This committee assists the Board in ensuring that the Company provides and maintains a safe

and healthy risk-free environment for staff and visitors by identifying risks and ensuring that controls

designed to mitigate these risks are effective and complied with.

HIV/AIDS POLICY

From the perspective of an investment holding company, the risk of HIV/Aids comprises two elements,

namely:

Group risk

Given the potential impact of HIV/Aids on the markets, on human capital cost of employment and on the

operational processes of the various businesses invested in, this risk is managed within the governance

structures of the various companies.

VenFin monitors the progress of these policies and strategies against best practice standards.

SUSTAINABILITY REPORT

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Company risk

VenFin and M&I have a formal HIV/Aids policy and are committed to managing the pandemic and the

business risks associated with it actively. Its policy makes provision, inter alia, for the following:

Compliance with all legal requirements as far as HIV/Aids is concerned

No discrimination against employees or potential employees based on their HIV status

Strict confidential treatment of information on the HIV status of employees

General measures to prevent accidental infection

Remedi Medical Aid Scheme, of which most of M&I’s staff are members, has a management plan for

HIV/Aids and employees can participate in it by choice.

COMMUNICATION TO STAKEHOLDERS

The Board places great emphasis on communication to shareholders and other stakeholders to ensure that

they are kept appropriately informed on matters affecting the group.

The following are recognised as stakeholders in the Company:

Shareholders and lenders as providers of capital

The State as policy-maker and regulator

The investment community as interested party

The community, through the creation of employment, as part benefactor of taxes paid by profitable

organisations, and as a recipient of social contributions

VenFin is committed to transparency and disclosure of relevant and appropriate information in its Annual

Report and through other communication channels to ensure a proper evaluation of the performance of

the Company.

CORPORATE SOCIAL INVESTMENT

Corporate citizenship, namely the commitment of business to contribute to sustainable economic

development, endorses the principle that no business exists in isolation but is undeniably an integral part

of the environment in which operations take place. In its relations with all stakeholders (clients, personnel

and the community), VenFin strives to be a value partner.

The focus of the Company’s donation programme is primarily on the development of young people from

disadvantaged communities as well as to assisting people in need, knowing that social investment brings

dignity and a sense of hope.

Donations to deserving institutions are usually made over specific periods and although they cover quite a

wide range, there is one noticeable exception: political parties. Although the Company respects the

individual’s right of choice to get involved with these organisations, it does not exercise a choice itself.

During the past year, the Company has been involved in the following projects and institutions:

Entrepreneurship and training

SA College for Tourism (SACT) – the demand for the services of this College, where especially young black

women from previously disadvantaged communities are trained for careers in the hospitality industry, has

increased to the extent that 90 students from eight Southern African countries were enrolled this year –

50% more than the previous year. To make provision for this intake, some structural changes had to be

made to the Panorama Guesthouse in Graaff-Reinet, a subsidiary of the SACT.

Besides following courses in culinary arts, food and beverage studies, room and front-of-house services and

guesthouse management, the students gain excellent practical experience from exposure to public events

– during the past year these have included eleven wedding receptions, four large banquets and

22 conferences, while a restaurant was run during a large Eastern Cape golf tournament.

The excellent work of the College has been acclaimed by two recent audits: one by Educor, South Africa’s

largest private education institution, and the other by THETA (the Tourism, Hospitality and Sport Education

SUSTAINABILITY REPORT

continued

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and Training Authority) during an unannounced on-site visit. The SACT received three perfect ratings from

THETA, the only training provider who could achieve this rating thus far, while Educor in its report

commended the quality of the training team and the practical nature of the course.

Southern African Wildlife College – since 1997 this College, on the western boundary of the Kruger National

Park, has trained and empowered people from Africa to manage and conserve some of the world’s most

biologically diverse areas. This training has proved to be extremely valuable to transfrontier conservation

areas in Angola, Botswana, Malawi, Mozambique, South Africa, Uganda, Zambia and Zimbabwe.

Besides training in the management and conservation of natural resources, courses are also presented in

personnel management skills and community conservation strategies, while field trips provide students

with sound practical experience.

SciMathUS – after six years this post-matric programme of the University of Stellenbosch, which gives

talented black students from disadvantaged communities the opportunity to gain access to mainstream

higher education, is well under way. The success of the programme is evident from the number of students

involved in it since 2001 who are now following degree courses, with mathematics, science and accounting

as major subjects.

Many students come from very low income families and some of them travel from places as far afield as

Wellington and Mitchell’s Plain by train, car or taxi to attend classes starting at 08:00 in the morning. The

most needy students are offered accommodation in Stellenbosch. These expenses are afforded from the

budget of SciMathUS.

At the end of 2006, 47 students from the Western, the Eastern and the Northern Cape as well as Gauteng

and the Free State completed the National Senior Certificate examination, with a significant improvement

in their mathematics, science and accounting results. Most of these students are currently studying at the

University of Stellenbosch.

Paul Roos Academy – has almost come full circle with the first intake of Gr. 7 learners in 2003. This group,

now in Gr. 11, will receive their last holiday tuition during this year and will write matric in 2008. For the

Academy this examination will provide an excellent value test of the investment made in these learners over

five years.

However, academic achievement is only one side of the coin of this project, which also focuses on identifying

leadership talent in disadvantaged schools and on assisting these learners by providing additional tuition

to realise their full potential. The growth in self-confidence, visible at an early stage, as well as the

development of other skills, ensures that these learners are just so much better prepared to face the

future.

In 2006, a total of 237 learners from Gr. 7-10 received tuition from the Academy. During school holidays

they are accommodated in the hostels of Paul Roos Gymnasium and Rhenish and also take part in sport

and other educational activities.

Rally to Read – celebrates its tenth year with a proud record. Since this literacy programme got under way

in 1998, R21.5 million has been invested by Rally to Read in the quality of literacy training in some of the

most remote areas of the country. This year an additional R4.3 million will be spent at the 135 schools

participating in the programme.

Annually in May, convoys of off-road vehicles depart from various centres to deliver books and other

educational material to some of the country’s most neglected schools. This year a total of 425 vehicles

visited nine areas in eight provinces. VenFin is one of approximately 100 sponsors of the project.

Equip – is a school development programme of the National Business Initiative which focuses on leadership

and the quality of education at historically disadvantaged schools. VenFin’s co-sponsorship of this project

is evident at two secondary and three primary schools in the Stellenbosch region.

SUSTAINABILITY REPORT

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Good progress has been made at two of the schools, while unfortunately conflict and disputes in one of the

school management teams and a lack of strong leadership by principals at other schools have hampered

progress. As far as teacher development is concerned, more than fifteen teachers from five schools have

been invited to register for an advanced certificate in education at the Cape Peninsula University of

Technology.

Beyers Naudé School Development Programme (BNSDP) – this programme is managed by Kagiso Trust, which

has dedicated itself over more than 20 years to social justice in some of the poorest rural areas in the

country. The programme concentrates on the sustainable development of rural schools in the former

homeland Venda, which is plagued by poverty, a shortage of facilities and resources, poor teaching standards

and dismal results.

Wherever the BNSDP is implemented, the morale and the functioning of school communities improve,

absenteeism and vandalism are reduced, more learners enter for the matric examination and the pass rate

increases. In one of the schools taking part in the programme the pass rate increased from 44% to 79.8%

over two years. A total of 766 children from nine BNSDP schools wrote matric in 2005, 170 of whom passed

with exemption, while 34 distinctions were attained. Six of the schools achieved a pass rate higher than the

national average.

The BNSDP was launched in 2004 as a living legacy to the values and principles practised by Dr Beyers

Naudé, founder of the Kagiso Trust. VenFin is a co-sponsor of this project.

Africa Genome Education Institute – a once-off contribution was made to support the Institute’s Teaching

Biology Project, an initiative designed to develop appropriate content for the teaching of new scientific

material in schools as well as providing training opportunities to science educators. The project is in line

with the Ministry of Education’s revised National Curriculum Statements (NCS) and, with a total of

362 598 educators affected by the NCS, there is a great demand for in-service training.

Environment

WWF South Africa (WWF-SA) – is a conservation organisation and the channel through which VenFin exercises

its concern for the natural environment. During the past year WWF-SA has sharpened its focus on the

interplay between biodiversity and the impact of human activities. This focus comprises the following three

initiatives:

The Marine Programme, which looks at the sustainability of seafood

The Freshwater Programme, which places emphasis on internationally traded water-intensive crops

such as sugar

The Biodiversity and Wine Initiative (BWI), a partnership between WWF-SA, The Green Trust, numerous

members in the conservation sector and the South African wine industry

Good progress has been made with all three initiatives. Some 800 officials have been trained for Marine

Protected Areas, while a major breakthrough was achieved for the Freshwater Programme by the signing of

a memorandum of understanding with the sugar industry. As far as the BWI is concerned, more than 70

wine farms could be involved in an attempt to bring a better balance between conservation and agriculture

in the highly sensitive Cape Floral Region.

Cultural development

Klein Karoo National Arts Festival (KKNK) – this year the VenFin/Remgro bursary will be brought to the notice

of young people in the Eden District Municipality as part of the Absa KKNK on Tour, after which applications

will be invited and a winner be selected by an expert panel before the end of the year.

VenFin’s contribution to the festival in 2007 has also been used to co-sponsor the artistic programme

which includes several dramas, amongst which were three translated into Afrikaans. One of the dramas, ’n

Ander Tongval (Another Dialect), is based on the book with the same title by Antjie Krog. It has been

compiled with a European tour in mind.

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2007

Field Band Foundation (FBF) – music is a catalyst for many of the solutions to the problems encountered by

the country’s youth. This is how the FBF, which celebrates its tenth anniversary in 2007, approaches its

role. With 30 bands at its disposal and a membership of 4 000, the Foundation harnesses music to

improve the skills and career opportunities of young people who could perhaps have landed on the street.

An awareness of the dangers of HIV/Aids forms an integral part of the project. A recent survey on the

prevalence of the disease amongst members between ages 16 and 26 has shown figures considerably lower

than the national average. Regular exposure to international musicians and role models also reiterates the

message to young people that there are a lot of reasons to protect themselves against HIV infection.

Last year, for the first time, the Foundation was able to send one of its members to university. This year two

are receiving tertiary education, while many more are doing a bridging course which will enable them to

follow suit. VenFin’s investment in the FBF can be seen as a contribution to help change the “risk profile”

of our youth.

WAT – the Dictionary of the Afrikaans Language (WAT) is 80 years old and is still in the forefront of

renewing the language and making it as supple and as user-friendly as possible. Testimony of the relevance

of its efforts is the fact that during the past two years six large South African universities, amongst which

are Unisa and the US, have purchased the internet version of the WAT as an electronic source.

Besides collecting and recording Afrikaans words in all their forms, the WAT also plays an important role in

the training of lexicographers as well as in the educational use of dictionaries. During the past year five

doctoral students from Gabon and four employees of the Oxford University Press attended courses in

lexicography at the WAT. VenFin has agreed to contribute over a period of three years to the trust fund of

the WAT.

Sport development

SA Golf Development Board (SAGDB) – in a year of many challenges, the SAGDB has completed its restructuring

process and committed itself anew to spending its money where most needed: on the needs of the children

in the national programmes. Structures were brought in accordance with this objective and administrative

costs cut considerably to bring about a more performance-driven organisation. Besides its normal

contribution, VenFin has made additional funds available for the restructuring process.

SAGDB has also adopted Project 312 to assist development managers in assessing their own performance

as well as those of coaches. In addition, coaches taking part in the National Training Programme, completed

their first year of study. The programme provides an opportunity to coaches to gain an accredited tertiary-

level education and a coaching qualification from the PGA, which could help raise the standard of the

programmes they are involved in.

Western Cape Cricket Academy – VenFin is a joint sponsor of this Academy whose contribution to South

African cricket is growing all the time. During the past year the names of current and former Academy

players surfaced everywhere, not only in the SA World Cup squad and the SA “A” side to Australia, but also

in the winning sides of the Lions, Titans and Cobras, respective winners of the Standard Bank Pro20, the

SuperSport Competition and the MTN 45 Championships.

And it doesn’t stop there. Six women from the Western Province (WP), and an equal number from the Boland,

all part of the Academy structure, represented their provinces at the national tournament for women in which

20 teams participated. The WP and the Boland reached the finals, which was won by WP. To cap it all during

a very successful year, several of the Academy’s umpires gained access to international and national panels.

Community development

Ikamva Labantu – thanks to an administrative sponsorship by VenFin and Remgro, Ikamva, a community

project with its roots firmly in the townships of the Western Cape, could, besides its involvement in early

childhood development, family services and care for the visually impaired, continue its role as mentor for

other community organisations.

During the past year, 120 more preschools joined Ikamva and 5 500 additional children between the ages

of 0 and 6 were reached. Food was delivered to 110 indigent preschools, while 20 food gardens were

SUSTAINABILITY REPORT

continued

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2007

successfully initiated for these schools. In the family services sector, children were cared for in 14 homes,

while 15 “magnificent mothers” cared for 90 children from broken families.

A project launched by Ikamva in Philippi East at the request of VenFin and Remgro to determine how many

children were without support, is progressing well. Initially the programme was planned to provide for 100

vulnerable children, but this number soon grew to 247. Support comprises food parcels, school uniforms,

stationery and financial assistance. The aim is to create a standard model of intervention which could be replicated

elsewhere in the country. This also includes a disengagement process as families become more self-sustainable.

u Mephi Child Care Programme – offers abused, unwanted and abandoned orphans a place of security. In 2006,

409 children were admitted to the programme. The ideal for u Mephi is that children should grow up within

their biological families. If this is not possible, the children are cared for in homes or, in the case of babies,

they are made available for adoption. In 2006, 142 babies were adopted locally and internationally.

Childhood should be the happiest time in a child’s life. The unfortunate reality is that many are physically,

emotionally and sexually abused, are rejected and are denied the basic necessities for a normal life.

Seven social workers assist these traumatised children to come to terms with their past in order to cope

with the future.

St Joseph’s Home – runs a ward of 25 beds for the treatment of HIV/Aids paediatric patients. The ward is a step-

down facility for children discharged from tertiary hospitals but still too ill to be sent home. Nursing care and

rehabilitation are provided, and parents and caregivers are instructed in administering antiretroviral drugs.

VenFin’s partial sponsorship of the ward helps to care for children who otherwise would have been sent

home to suffer and even to die. Approximately 90% of the children admitted come from the Cape Town

Metropole and most of them have only a single parent or grandparent.

Stellenbosch Community Development Programme (SCDP) – was founded in 2005 with the aim of:

feeding malnourished, underprivileged, poverty-stricken and orphaned children, many of whom are

infected by HIV/Aids;

providing primary health care;

assisting unemployed parents to lay out vegetable gardens and to learn new skills; and

acting in partnership with other organisations such as Child Welfare and clinics.

The SCDP’s primary focus is on Kayamandi, where 568 children are fed daily and monthly food parcels

provided to 60 families. An estimated 12% of the black township’s children do not attend school because

their parents are too poor. Approximately 23% of Kayamandi’s residents live in dwellings with only one

room, 45% of households still use paraffin for heating, while 25% of adults indicated that they have

periodically gone hungry during the past year.

Health care

Wits/Donald Gordon Medical Centre (WDGMC) – this year the first private academic hospital in the country is

celebrating its fifth anniversary and is still making good progress. The accreditation programme has been

strengthened by confirmation of the status of medical practitioners working at the WDGMC.

The transplant unit of the WDGMC has become the prominent liver, kidney and pancreas transplant centre

in the northern provinces of South Africa, while the oncology and intensive care units are going from

strength to strength. Together with the ear, nose and throat unit and the surgery department, these have all

developed into centres of excellence.

Organ Donor Foundation of SA – dedicates itself to the task of providing many people with a second chance

to a normal life by making life-sustainable organs available to them. VenFin supports this effort by

co-sponsoring four flights per year for the transport of these organs. The excellent service provided by

Falconair’s staff in this regard is appreciated by all, by the doctors performing the transplants and by the

recipients of the organs.

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2007

ANNUAL FINANCIAL STATEMENTS 07

ANNUAL REPORT 2007

CONTENTS

Statement of responsibility by the

Board of Directors

Statement by the Company Secretary

Report of the independent auditor

Report of the Board of Directors

Accounting policies

Balance sheets

Income statements

Statements of changes in equity

Cash flow statements

Notes to the annual financial statements

Annexure A – Principal subsidiary companies

Annexure B – Principal investments

Annexure C – Significant associates

Analysis of shareholders

Dates of importance to shareholders

Administration

Notice to shareholders

Form of proxy

Attached

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2007

STATEMENT OF RESPONSIBILITY

BY THE BOARD OF DIRECTORS

The directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of

the annual financial statements included in this Annual Report.

The annual financial statements are prepared, in accordance with International Financial Reporting Standards (IFRS)

and the requirements of the South African Companies Act, on the going concern basis and incorporate full and

responsible disclosure. The annual financial statements are based upon appropriate accounting policies and supported

by reasonable and prudent judgements and estimates.

The directors are satisfied that the information contained in the financial statements fairly represents the results of

operations for the year and the financial position of the group at year-end. The accuracy of the other information

included in the Annual Report was considered by the directors and they are satisfied that it is consistent with the

financial statements.

The directors are also responsible for the Company’s system of internal financial controls. The system was developed to

provide reasonable, but not absolute, assurance regarding the reliability of the financial statements, the safeguarding

of assets, and to prevent and detect misrepresentation and losses.

The directors are of the opinion that the group will continue as a going concern in the future.

The financial statements were audited by independent auditor, PricewaterhouseCoopers Inc., to whom unrestricted

access was given to all financial records and related information. The directors are further of the opinion that all

statements that were made to the auditor during the course of the audit were valid and relevant. The auditor’s report is

presented on page 45.

Signed on behalf of the Board of Directors.

Johann Rupert

Jannie Durand

Chairman

Chief Executive Officer

Stellenbosch

5 September 2007

STATEMENT BY THE COMPANY SECRETARY

I, Mariza Lubbe, being the Company Secretary of VenFin Limited, hereby certify that all returns required of a public

company have, in respect of the year under review, been lodged with the Registrar of Companies and that all such

returns are true, correct and up to date.

Mariza Lubbe

Secretary

Stellenbosch

5 September 2007

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2007

We have audited the annual financial statements and group annual financial statements of VenFin Limited, which

comprise the directors’ report, the balance sheet and the consolidated balance sheet as at 30 June 2007, the income

statement and the consolidated income statement, the statement of changes in equity and the consolidated statement

of changes in equity, the cash flow statement and the consolidated cash flow statement for the year then ended, and a

summary of significant accounting policies and other explanatory notes, as set out on pages 46 to 81.

Directors’ responsibility for the financial statements

The Company’s directors are responsible for the preparation and fair presentation of these financial statements in

accordance with International Financial Reporting Standards and in the manner required by the Companies Act of

South Africa. This responsibility includes: designing, implementing and maintaining internal control relevant to the

preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud

or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable

in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit

in accordance with International Standards on Auditing. Those standards require that we comply with ethical

requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free

from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the

assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making

those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation

of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by

the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit

opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company

and of the group at 30 June 2007, and of their financial performance and their cash flows for the year then ended in

accordance with International Financial Reporting Standards and in the manner required by the Companies Act of

South Africa.

Director: N H Döman

Registered Auditor

Cape Town

5 September 2007

REPORT OF THE INDEPENDENT AUDITOR

TO THE MEMBERS OF VENFIN LIMITED

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2007

REPORT OF THE BOARD OF DIRECTORS

FOR THE YEAR ENDED 30 JUNE 2007

Dear Shareholder

The Board has pleasure in reporting on the activities and financial results of your group for the year under review.

FINANCIAL PERIOD

VenFin was established on 1 January 2006, with the purchase of all the net assets of the former VenFin group except

the 15% interest in Vodacom Group (Pty) Limited, for a total purchase consideration of R5 billion. Thus, the comparative

period ended 30 June 2006 consists of six months and is not comparable with the 12-month period ended

30 June 2007.

OPERATING ACTIVITIES

VenFin is an investment holding company. The group derives its income mainly from dividends and equity accounted

income of associates in which VenFin invested, while interest is earned on cash resources.

The investee companies’ operating activities are spread over a broad spectrum which include, but are not limited to

telecommunication, technology and media interests. The biggest portion of the individual investments is in South

Africa, but a substantial investment held abroad is the 18.2% equity interest in Dimension Data plc.

FINANCIAL REVIEW

Operating results

Twelve months

Six months

Year ended 30 June:

2007

2006

Normalised headline earnings * (R million)

233

142

Share of net profit of associates (R million)

155

Net interest income and other profit (R million)

– per share (cents)

83.0

48.5

– diluted (cents)

81.5

48.5

Headline earnings (R million)

233

404

– per share (cents)

83.0

137.9

– diluted (cents)

81.5

136.9

Earnings – net profit for the year (R million)

617

240

– per share (cents)

219.5

81.9

– diluted (cents)

216.7

80.9

Dividends **

– ordinary – per share (cents)

30.0

25.0

– special – per share (cents)

50.0

25.0

In determining normalised headline earnings, the headline earnings is adjusted for non-recurring items.

** The ordinary and special dividends were declared after the year-end and were therefore not provided for in the annual financial

statements. The Company has enough STC credits carried forward to cover such a dividend. The utilisation of these STC credits will,

however, lead to the realisation of a deferred tax asset that will be charged to the income statement during the 2008 financial year.

Details of the operating results are set out in more detail in the general report on pages 10 to 13.

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2007

2006

Composition of normalised headline earnings

R million R million

Subsidiary companies

Profits

Losses

(6)

(12)

Associates

155

Profits

166

Losses

(11)

(2)

233

142

INVESTMENTS

The most important changes in investments during the year under review were as follows:

Tracker Investment Holdings (Pty) Limited (Tracker)

During May 2007 Tracker acquired 100% of Mobile Data (Pty) Limited, in terms of a share-for-share transaction,

from Wesbank.

VenFin subsequently acquired a further 3 831 Tracker shares for R60.5 million. On 30 June 2007, VenFin’s interest

in Tracker was 31.0% (2006: 33.7%).

Idion Technology Holdings Limited (Idion)

On 20 November 2006, Idion made a capital distribution of R3.59 per share, following the disposal of their US

subsidiary, Vision Solutions International Inc. VenFin’s share of the distribution amounted to R142.4 million.

Subsequent to this distribution, Idion has been delisted and the voluntary winding up of the company has

commenced.

Sabido Investments (Pty) Limited (Sabido)

During the year under review, Sabido fully repaid its shareholder loan to VenFin. In addition, Sabido made a capital

distribution to its shareholders of which VenFin’s share amounted to R65.9 million.

Repurchase of VenFin shares

VenFin’s wholly owned subsidiary, VenFin Funding Corporation (Pty) Limited, acquired a further 17.3 million VenFin

ordinary shares at an average price of R18.77 per share for a total cost of R325 million. On 30 June 2007, the number

of shares in treasury was 21.1 million, or 8.2% of the issued ordinary shares of 1 cent each.

Milestone China Opportunities Fund II LP (Milestone II)

VenFin has approved a US$25 million commitment to Milestone II, which is a second fund being raised by Milestone

Capital Management Limited, a China-based fund manager. Milestone II will have an investment period of five years

and a further five years to exit its investments. This new investment will give VenFin further exposure to the high-growth

Chinese economy through a local fund manager with whom VenFin has established a good relationship since 2004. On

30 June 2007, Milestone II has already received US$240 million in capital commitments.

VenFin’s actual investment in Milestone II amounted to US$1.3 million on 30 June 2007.

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2007

REPORT OF THE BOARD OF DIRECTORS continued

FOR THE YEAR ENDED 30 JUNE 2007

CDMTV Holding Company (CDMTV)

During March 2007, VenFin co-invested US$5 million in CDMTV, a China-based media company, with Milestone II as

the lead investor.

CDMTV supplies advertising space on digital mobile television channels to a captive viewing environment, e.g. LCD

screens located principally in buses.

Kalahari Energy Limited (KE)

VenFin has made an investment of US$6 million in KE for a 9.8% shareholding. VenFin has the option to significantly

increase its stake in this company on the achievement of certain milestones. KE, through its wholly owned subsidiary,

Sekaname (Pty) Limited, owns leases for coal-bed methane (CBM) exploration in Botswana. CBM is essentially natural

gas, which is a versatile energy resource.

Mosmart Investments (Pty) Limited (Mosmart)

VenFin has committed approximately R85 million to invest in Mosmart in a phased investment strategy over the next

year, ultimately resulting in a 20% shareholding. R19 million has been advanced to 30 June 2007.

Mosmart is a South African company with two main activities:

The cultivation of feedstock and the associated production of bio-diesel across Africa

The production of an organic media for the absorption of pollutants in various applications

Trina Solar Limited (Trina Solar)

During June 2007, VenFin sold 14% of its direct shareholding in Trina Solar, as part of a follow-on offering by Trina

Solar, at an effective price of US$43 per American Depositary Receipt (ADR) for a gross amount of US$1.3 million.

On 30 June 2007, VenFin’s direct interest in Trina Solar was 0.7% (2006: 1.3%).

Fynbos Media (Pty) Limited (Fynbos Media)

During September 2006, VenFin invested R1 million, for a 20% interest, in Fynbos Media and a further R0.5 million

in preference shares of the company.

Fynbos Media is an early-stage Cape Town-based, black controlled, investment holding company. VenFin is involved on

a strategic level with the aim to co-fund future investment opportunities.

During April 2007, VenFin invested R4 million to partially fund Fynbos Media’s investment in Phuthuma Nathi 2 (the

empowerment vehicle of Naspers Limited with a 7.5% equity holding in MultiChoice Africa) amounting to R8 million.

Resource Energy BV (RE)

During the year under review, VenFin approved the establishment of RE with co-founding shareholders being Compagnie

Industriali Riunite, from Italy, and TSB Sugar International.

RE addresses renewable energy through the acquisition, development and integration of an international portfolio of

biofuel production facilities, with its initial focus on the production of ethanol from sugar cane.

VenFin will initially own 22.5% of RE for an amount of approximately R7 million, with additional investments to be

made on a project-by-project basis.

R0.8 million was advanced to 30 June 2007.

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2007

One Digital Media (Pty) Limited (ODM)

During June 2007, VenFin approved an investment of up to R52 million in ODM for a 35% interest, subject to the

fulfilment of certain suspensive conditions.

ODM aims to become a leading digital media network provider to brand owners and retailers, giving them the ability to

flight dynamic content via broadcast or narrowcast to multiple environments or single LCD screens. This model therefore

provides a platform for tactical local, regional or national marketing opportunities to brand owners.

R4 million was advanced by way of a bridge loan to 30 June 2007.

Subsequent to year-end

Alexander Forbes Limited (Alexander Forbes)

On 13 July 2007, Alexander Forbes announced that all conditions precedent in respect of the buyout transaction has

been fulfilled. In terms of this transaction a consortium of private equity investors, led by Actis Africa Fund 2 LP,

acquired the entire issued share capital of Alexander Forbes by way of a scheme of arrangement for a cash consideration

of R17.33 per share.

On 26 July 2007, VenFin received a cash consideration amounting to R2 008.5 million for its shareholding (115.9 million

shares) in Alexander Forbes.

Britehouse Group (Britehouse)

VenFin invested R89 million in Britehouse. Dimension Data consolidated three of its investments into Britehouse and sold

30% to VenFin and 30% to a BEE consortium consisting of Convergence Partners and Safika Holdings.

Britehouse comprises a 31% shareholding in Paracon Holdings Limited, a 57.6% shareholding in 3fifteen and a 75%

shareholding in Pebbletree Consulting.

CDMTV Holding Company (CDMTV)

VenFin invested a further US$5 million in CDMTV. The total investment to date is US$10 million for an equity interest

of 7.7%.

CIV Fibre Network Solutions (Pty) Limited (CIV FNS)

During August 2007, VenFin committed R50 million to CIV FNS for an equity interest of 30%. CIV FNS is a start-up

venture that has two subsidiaries, namely, Dark Fibre Africa (DFA) and Muvoni-Weltex Network Technologies (MWNT).

DFA will provide fibre-optic infrastructures, called Dark Fibre, to licensed telecommunications network operators

and service providers.

MWNT will provide the civil services to lay the fibre-optics using specialised trenching machines and equipment.

VenFin’s partner in Fibre Network is Community Investment Ventures (CIV), a majority black-owned investment holding

company that is focused on the technology sector.

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2007

REPORT OF THE BOARD OF DIRECTORS

continued

FOR THE YEAR ENDED 30 JUNE 2007

SHARE APPRECIATION RIGHT SCHEME

During the year under review the following share appreciation rights (SAR) were offered to participants

(Refer note 11):

Offer

Number of

price

SAR

Grant date

(Rand)

offered

31 July 2006

14.20

16 611

15 August 2006

14.71

6 132

6 September 2006

15.20

9 815

1 November 2006

17.30

2 339

34 897

The current position of the VenFin Equity Settled Share Appreciation Right Scheme is as follows:

Average

Number of

offer price

SAR

(Rand)

offered

Offered and accepted during previous financial year

11.98

9 184 017

Offered during current year

14.78

34 897

Resignations and other

(19 991)

Total at 30 June 2007

11.99

9 198 923

Participants will receive VenFin shares to the value of the appreciation of a specified number of VenFin ordinary shares that must be

exercised within a period of six years after the grant date. These share appreciation rights are exercisable as follows:

– One-third after the third anniversary of the grant date

– Two-thirds after the fourth

– All after the fifth anniversary of the said date

PRINCIPAL SHAREHOLDERS

Business Venture Investments No 1040 (Pty) Limited, a wholly owned subsidiary of the Johann Rupert Trust, holds

19 435 438 of the issued ordinary shares of the Company and 17 753 176 of the issued B ordinary shares of the

Company and is entitled to 33.3% of the total votes. Business Venture Investments No 1027 (Pty) Limited, a wholly

owned subsidiary of the Hanneli Rupert Trust, holds 19 435 437 of the issued ordinary shares of the Company and

17 753 176 of the issued B ordinary shares of the Company and is entitled to 33.3% of the total votes.

An analysis of the shareholders appears on page 82.

SUBSIDIARY COMPANIES AND INVESTMENTS

Particulars of subsidiary companies, associates and other investments are disclosed in Annexures A and B.

DIRECTORS

The names of the directors appear on page 8.

In terms of the provisions of the articles of association, Messrs G T Ferreira and J Malherbe retire from the Board. These

directors are eligible and offer themselves for re-election.

DIRECTORS’ INTERESTS

At 30 June 2007 the aggregate of the direct and indirect interests of the directors in the issued share capital of the

Company amounted to 12.7% (2006: 12.7%).

An analysis of the directors’ interests in the issued share capital of the Company appears on page 83.

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2007

DIRECTORS’ FEES

The Board recommends that directors’ fees for services rendered as directors during the past financial year be fixed at

R745 000 (2006: R206 667).

SECRETARY

Mrs M Lubbe is the company secretary and her address appears on page 85.

AUDITORS

PricewaterhouseCoopers Inc. will continue in office in accordance with section 270(2) of the Companies Act.

ACQUISITION OF SHARES OF THE COMPANY

It is recommended that a general authority is 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 (Act 61 of 1973), as amended.

Special resolutions to this effect are incorporated in the notice of the annual general meeting that appears on page 86.

DIVIDENDS

Dividend No 2

An ordinary dividend of 30 cents (2006: 25 cents) per share has been declared for the financial year ended

30 June 2007 in respect of both the ordinary shares of one cent each and the B ordinary shares of ten cents each.

Special dividend

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
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.

A special dividend of 50 cents per share has been declared in respect of both the ordinary shares of one cent each and

the B ordinary shares of ten cents each.

Payment

The ordinary and special dividends are payable to shareholders of the Company registered at the close of business on

Friday, 12 October 2007.

On payment date, Monday, 15 October 2007, if so mandated, dividends will either be transferred electronically to bank

accounts, or alternatively, cheques will be posted.

APPROVAL

The annual financial statements set out on pages 46 to 81 have been approved by the Board.

Signed on behalf of the Board of Directors.

Johann Rupert

Jannie Durand

Chairman

Chief Executive Officer

Stellenbosch

5 September 2007

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2007

ACCOUNTING POLICIES

The annual financial statements are prepared on the historical cost basis, unless otherwise indicated, in accordance

with International Financial Reporting Standards (IFRS) and the requirements of the South African Companies Act

(Act 61 of 1973), as amended.

These financial statements incorporate accounting policies that have been consistently applied to both periods

presented. During the year under review various new accounting standards, interpretations and amendments to IFRS

became effective. The adoption of these new accounting standards, interpretations and amendments to IFRS had no

impact on the results of either the current or prior year.

The preparation of the financial statements necessitates the use of estimates, assumptions and judgements that affect

the reported amounts in the balance sheet and income statement. Although estimates are based on management’s best

knowledge and judgements of current facts as at balance sheet date, the actual outcome may differ from those

estimates.

The most critical judgement exercised relates to the classification of investments as associates rather than investments

available-for-sale. There are some investments over which VenFin is believed to have significant influence although it

has an interest of less than 20% in these companies. However, as VenFin has board representation and is one of the

major shareholders of these companies, its influence over their financial and operating policies is significant. Those

investments are accordingly accounted for as associates using the equity method. The fair value of associates is set

out in note 2 to the annual financial statements. Another significant judgement is the provision of a deferred tax asset

based on the current secondary tax on companies (STC) tax rate of 12.5% on VenFin’s available STC credits. Current

uncertainty regarding possible changes in taxation legislation brings into doubt the extent of the utilisation of this asset

in the future.

VenFin’s business consists mainly of investing activities, such as the acquisition, management and realisation of

investments. The realisation of a significant investment is not viewed as discontinuing an operation. In instances where

it is decided to dispose of such investments, and the relevant requirements in terms of IFRS 5 are met, they are

reclassified as a non-current asset held for sale.

Other less significant estimates and assumptions relate to the impairment of investments (note 2), the valuation of

unlisted investments (note 3), share-based payments (note 11) and the useful lives of intangible assets included in the

carrying value of associates (note 2).

The accounting policies that the group applied in the presentation of the financial statements are set out below.

(I)

CONSOLIDATION, PROPORTIONATE CONSOLIDATION AND EQUITY
ACCOUNTING

Consolidation – subsidiary companies

All entities in which the group, directly or indirectly, has an interest of more than one half of the voting rights

or otherwise has the power to exercise control over the operations, are included in the consolidated financial

statements. The existence and effect of potential voting rights that are currently exercisable or convertible are

considered when assessing whether the group controls another entity.

The purchase method of accounting is used to account for the acquisition of subsidiaries. Identifiable assets

acquired and liabilities and contingent liabilities assumed in a business combination, irrespective of the

extent of minority interests, are measured initially at their fair values at the acquisition date. The excess of

the cost of the acquisition over the fair value of the group’s share of the identifiable net assets acquired is

recorded as goodwill. If the cost of the acquisition is less than the fair value of the net assets of the subsidiary

acquired, the difference is accounted for directly in the income statement. The cost of an acquisition is

measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed

at the date of exchange, plus costs directly attributable to the acquisition.

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2007

The results of subsidiary companies acquired or disposed of during the year are included in the consolidated

income statement from or to the date on which effective control was acquired or ceased.

Intergroup transactions, balances and unrealised gains are eliminated on consolidation. Unrealised losses are

also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The accounting policies of subsidiaries conform to the policies adopted by the group. Accounting policies

between various industries have been aligned to the extent that it is material and appropriate for the specific

industry.

Special purpose entities are consolidated when the substance of the relationship between the group and the

special purpose entity indicates that the group effectively controls the entity.

Proportionate consolidation – joint ventures

All jointly controlled ventures are accounted for according to the proportionate consolidation method. In

terms of this method the attributable share of assets, liabilities, income, expenditure and cash flow is included

in the consolidated financial statements.

Equity accounting – associates

Entities that are neither subsidiaries nor joint ventures, but in which a long-term interest is held and over

whose financial and operating policies a significant influence can be exercised, are accounted for according

to the equity method as associates. The results of associates, acquired or disposed of, are included in the

consolidated income statement from the date on which effective significant influence begins or until it

ceases. Unrealised gains on transactions between the group and its associates are eliminated to the extent of

the group’s interest in the associate. Unrealised losses are also eliminated unless the transaction provides

evidence of an impairment of the asset transferred. The group’s share of retained income is transferred to

non-distributable reserves. The group’s share of other movements in the reserves of associates is accounted

for as changes in consolidated non-distributable reserves. The carrying value of the group’s associates includes

goodwill (net of any accumulated impairment losses) identified at acquisition. When the group’s share of

losses in an associated company equals or exceeds its interest in the associate, including any other unsecured

receivables, the group does not recognise further losses, unless it has incurred obligations or made payments

on behalf of the associated company.

Dilutionary and anti-dilutionary effects of equity transactions by associates are accounted for directly against

reserves.

When investments in associates are disposed of fully or partially, the accumulated equity reserves are realised

and taken into account in determining the profit and loss on disposal.

Certain associates have year-ends that differ from that of the Company. In such circumstances the results of

listed and certain unlisted companies are accounted for from the latest published information and management

accounts as at year-end, respectively. The accounting policies of associates have been changed where

necessary to align them to those of VenFin and its subsidiaries to the extent that it is material and appropriate

for the specific industry in which the associate operates.

Separate financial statements

In VenFin’s separate financial statements, investments in subsidiaries, joint ventures and associates are

carried at cost.

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2007

ACCOUNTING POLICIES continued

(II) INTANGIBLE ASSETS

Goodwill – On the acquisition of an investment, fair values at the date of acquisition are attributed to the

identifiable assets, liabilities and contingent liabilities acquired.

Goodwill is the difference between the cost of the investments and the fair value of attributable net assets of

the subsidiaries, joint ventures and associates at the acquisition dates. Goodwill is reported in the balance

sheet as non-current assets and is carried at cost less accumulated impairment losses.

Goodwill attributable to associates is included in the carrying value of these companies and is consequently

reported under “Investments – Associates”.

(III)

FINANCIAL INSTRUMENTS

Financial instruments disclosed in the financial statements include cash and cash equivalents, investments,

derivative instruments, debtors and short-term loans and trade and other payables. Financial instruments are

initially recognised at fair value, including transaction costs, when the group becomes party to the contractual

terms of the instruments. The transaction costs relating to the acquisition of financial instruments held at fair

value through profit and loss are expensed. Subsequent to initial recognition, these instruments are measured

as follows:

Loans and receivables – Loans and receivables are non-derivative financial instruments with fixed or

determinable payments that are not quoted in an active market. These instruments are carried at amortised

cost using the effective interest rate method.

Held-to-maturity financial instruments – Instruments with fixed maturity that the group has the intent

and ability to hold to maturity are classified as held-to-maturity financial instruments and are carried at

amortised cost using the effective interest rate method.

Available-for-sale financial instruments – Other long-term financial instruments are classified as

available-for-sale and are carried at fair value. Unrealised gains and losses arising from changes in the fair

value of available-for-sale financial instruments are recognised in non-distributable reserves in the period in

which they arise. When these financial instruments are either derecognised or impaired, the accumulated fair

value adjustments are realised and included in income.

Financial instruments at fair value through profit and loss – These instruments, consisting of

financial instruments held-for-trading and those designated at fair value through profit and loss at inception,

are carried at fair value. Derivatives are also classified as held-for-trading unless they are designated as

hedges. Realised and unrealised gains and losses arising from changes in the fair value of these financial

instruments are recognised in the income statement in the period in which they arise.

Financial assets (or portions thereof) are derecognised when the group realises the rights to the benefits

specified in the contract, the rights expire or the group surrenders or otherwise loses control of the contractual

rights that comprise the financial asset. On derecognition, the difference between the carrying amount of the

financial asset and proceeds receivable, as well as any prior adjustments to reflect fair value that had been

recognised in equity, is included in the income statement.

Financial liabilities (or portions thereof) are derecognised when the obligation specified in the contract is

discharged or cancelled or has expired. On derecognition, the difference between the carrying amount of the

financial liability, including related unamortised costs, and the amount paid for it is included in the income

statement.

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2007

The fair value of financial instruments traded in an organised financial market is measured at the applicable

quoted prices. The fair value of the financial instruments that are not traded in an organised financial market is

determined using a variety of methods and assumptions that are based on market conditions and risk existing

at balance sheet date, including independent appraisals and discounted cash flow methods. Fair values

represent an approximation of possible value, which may differ from the value that will finally be realised.

All purchases and sales of financial instruments are recognised at the trade date.

Any derivatives embedded in financial instruments are separated from the host contract when their economic

characteristics are not closely related to those of the host contract and the host contract is not carried at fair

value. Gains and losses are reported in the income statement.

(IV)

NON-CURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

Non-current assets (or disposal groups) are classified as held for sale if their carrying amounts will be

recovered principally through a sale transaction rather than through continuing use. These assets (or disposal

groups) are measured at the lower of their carrying amount or fair value less costs to sell.

(V) TAXATION

Deferred taxation is provided for at current rates using the balance sheet liability method. Full provision is made

for all temporary differences between the taxation base of an asset or liability and its balance sheet carrying

amount. No deferred tax, other than in a business combination, is recognised where the initial recognition of an

asset or liability has no impact on accounting profit or taxable income. Assets are not raised in respect of

deferred taxation, unless it is probable that future taxable profits will be available against which the deferred

taxation asset can be realised in the foreseeable future. Deferred income tax is determined using tax rates (and

laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when

the related deferred income tax asset is realised or the deferred income tax liability is settled.

Secondary taxation on companies is provided for in respect of dividend payments, net of dividends received

or receivable and is recognised as a taxation charge for the year.

(VI)

FOREIGN CURRENCIES

Functional and presentation currency

Items included in the financial statements of each of the group’s entities are measured using the currency of

the primary economic environment in which the entity operates, i.e. its functional currency. VenFin Group’s

company and consolidated functional and presentation currency is rand and all amounts, unless otherwise

indicated, are stated in millions.

Transactions and balances

Foreign currency transactions are translated to the functional currency using the exchange rates prevailing at the

date of the transactions. Except when deferred in equity as qualifying cash flow hedges and qualifying net

investment hedges, foreign exchange gains and losses resulting from the settlement of such transactions and

from the translation at year-end exchange rates of foreign currency denominated monetary assets and liabilities

are recognised in the income statement. Exchange differences on non-monetary items are accounted for based

on the classification of the underlying items. Foreign exchange gains and losses on financial instruments classified

as available-for-sale financial assets are included in equity, whereas those on financial instruments held at fair

value through profit and loss are reported as part of the fair value gain or loss.

Group entities

The results and financial position of all foreign operations (excluding those operating in hyperinflationary

economies) that have a functional currency different from the group’s presentation currency are translated

into the presentation currency as follows:

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I N A N N U A L R E P O R T

2007

Assets and liabilities are translated at the closing rate on the balance sheet date.

Income and expenses for each income statement are translated at average exchange rates for the year, to

the extent that such average rates approximate actual rates.

All resulting exchange differences are recognised directly in equity.

On consolidation exchange differences arising from the translation of the net investment in foreign operations,

and of borrowings and other currency instruments designated as hedges of such investments, are taken directly

to equity. On disposal of foreign operations, the related exchange differences are recognised in the income

statement as part of the profit or loss on disposal. Goodwill and fair value adjustments arising on the acquisition

of foreign operations are treated as assets and liabilities of the foreign operation and translated at closing rates

at balance sheet date.

(VII) IMPAIRMENT OF ASSETS

Impairment – subsidiaries, joint ventures and associates

An asset is impaired if its carrying amount is greater than its estimated recoverable amount, which is the

higher of its fair value less cost to sell or its value in use. The carrying amounts of subsidiaries, joint ventures

and associates are reviewed annually and written down for impairment where necessary.

Financial instruments carried at amortised cost

The group assesses whether there is objective evidence that a financial asset is impaired at each balance

sheet date. A financial asset is impaired and impairment losses are incurred only if there is objective evidence

of impairment as a result of one or more events that have occurred after the initial recognition of the asset

(a “loss event”) and that loss event has an impact on the estimated future cash flows of the financial asset

that can be reliably estimated.

If there is objective evidence that an impairment loss on loans and receivables or held-to-maturity investments

carried at amortised cost has occurred, the amount of the loss is measured as the difference between the asset’s

carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original

effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in the

income statement. If a held-to-maturity investment or a loan has a variable interest rate, the discount rate for

measuring any impairment loss is the current effective interest rate determined under contract. As a practical

expedient, the group may measure impairment on the basis of an instrument’s fair value using an observable

market price.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related

objectively to an event occurring after the impairment was recognised, such as improved credit rating, the

previously recognised impairment loss is reversed and is recognised in the income statement.

Financial assets carried at fair value

At each balance sheet date the group assesses whether there is objective evidence of possible impairment of

financial assets carried at fair value. If any objective evidence of impairment exists for available-for-sale

financial assets, the cumulative loss, measured as the difference between the acquisition cost and current

fair value, less any impairment loss on the financial asset previously recognised in profit or loss, is removed

from equity and recognised in the income statement.

Impairment losses on equity instruments that were recognised in the income statement are not subsequently

reversed through the income statement – such reversals are accounted for in equity.

Goodwill

Goodwill is assessed annually for possible impairments. For purposes of impairment testing, goodwill is

allocated to cash-generating units, being the lowest component of the business measured in the management

ACCOUNTING POLICIES continued

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2007

accounts that is expected to generate cash flows that are largely independent of another business component.

Impairment losses relating to goodwill are not reversed.

(VIII) EMPLOYEE BENEFITS

Post-retirement benefits

The group provides post-retirement medical benefits to its future retirees. The entitlement to post-retirement

medical benefits is based on the employees remaining in service up to retirement age and the completion of

a minimum service period.

The projected unit credit method of valuation is used to calculate the liability for post-retirement medical

benefits.

The cost of providing post-retirement medical obligation is charged to the income statement to spread the

regular costs over the service lives of the employees in accordance with advice of qualified actuaries. The

medical obligation is measured as the present value of the estimated future cash outflows using interest rates

of government securities that have maturity terms approximating the terms of the related liability.

Past-service costs are immediately expensed, unless the changes to the medical plan are conditional on the

employees remaining in service for a specified vesting period, in which case the past-service costs are

amortised on a straight-line basis over the vesting period.

The net surplus or deficit of the benefit obligation is the difference between the present value of the funded

obligations and the fair value of the plan assets. If the cumulated unrecognised actuarial gains and losses at

the end of the previous reporting period exceed the greater of ten percent of the defined-benefit obligation or

defined benefit plan’s assets, that excess is recognised in future periods over the expected average remaining

working lives of the participating employees.

Equity compensation plans

The VenFin group operates an equity settled share-based compensation plan. The fair value of share offers is

determined on the grant date and is accounted for as an employee services expense over the vesting period

of the offer, with a corresponding increase in equity, based on the group’s estimate of rights that will eventually

vest. Fair value is determined using a binomial model. The expected contract life used in the model has been

adjusted based on management’s best estimate of the effects of non-transferability, exercise restrictions and

behavioural considerations.

Any profits or losses that realise from shares being delivered to participants of the VenFin Equity Settled

Share Appreciation Right Scheme are recognised directly in equity.

Short-term benefits

Employee entitlements to leave are recognised when they accrue to employees involved. An accrual is made

for the estimated liability for leave as a result of services rendered by employees up to balance sheet date.

(IX)

CASH AND CASH EQUIVALENTS

For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held

at call with banks, and investments in money market instruments, net of bank overdrafts. In the balance

sheet, bank overdrafts are included in short-term interest-bearing loans.

(X)

REVENUE RECOGNITION

Interest is recognised on a time proportion basis (taking into account the principal outstanding, the effective

rate and the period), unless collectability is in doubt. Dividends are recognised when the right to receive

payment is established.

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2007

ACCOUNTING POLICIES continued

(XI) TREASURY SHARES

Shares in the Company held by group companies are classified as treasury shares and are held at cost. These

shares are treated as a deduction from the issued number of shares and taken into account in the calculation

of the weighted average number of shares. The cost price of the shares is deducted from the group’s equity.

(XII) CURRENT/NON-CURRENT DISTINCTION

Items are classified as current when they are expected to be realised, traded, consumed or settled within

twelve months after the balance sheet date, or the group does not have an unconditional right to defer

settlement for at least twelve months after the balance sheet date.

(XIII) NEW ACCOUNTING POLICIES AND INTERPRETATIONS

Management considered all new accounting standards, interpretations and amendments to IFRS that were

issued prior to the approval of the financial statements, but not yet effective on that date. The standards that

are applicable to the group, but that were not implemented early, are the following:

IFRS 7: Financial Instruments – Disclosures

(effective date – financial periods commencing on/after 1 January 2007)

This standard significantly impacts on the disclosure requirements regarding financial instruments. It

focuses on the disclosure of entity specific risks, as well as the measures management implemented to

address those risks. IFRS 7 does not impact the measurement of financial instruments.

IFRS 8: Operating Segments

(effective date – financial periods commencing on/after 1 January 2009)

IFRS 8 replaces IAS 14: Segment Reporting. It redefines “operating segment” and prescribes various

disclosures. This standard only affects disclosure and will not impact on the group’s results.

IFRIC 10: Interim Financial Reporting and Impairment

(effective date – financial periods commencing on/after 1 November 2006)

An entity shall not reverse an impairment loss recognised in a previous interim period in respect of

goodwill or an investment in either an equity instrument or a financial asset carried at cost.

IFRIC 11: IFRS 2 – Group and Treasury Share Transactions

(effective date – financial periods commencing on/after 1 March 2007, applied retrospectively in

accordance with the transitional provisions of IFRS 2)

This interpretation clarifies two issues:

The distinction between equity and cash settled share-based payment transactions in instances where the

equity instruments used for settlement are either obtained from a third party or are treasury shares; and

share-based payment arrangements that involve two or more entities within the same group, e.g.

employees of a subsidiary are granted rights to equity instruments of its parent as consideration for the

services provided to the subsidiary.

Issue 1

If an entity provides its own equity instruments as settlement for goods and services obtained, the transaction

is treated as equity settled, regardless of the source from which it obtained the equity instruments.

Issue 2

If the parent grants the right to receive the parent’s equity instruments to the subsidiary’s employees, and

on consolidation the scheme is accounted for as equity settled, the subsidiary shall account for it as an

equity settled share-based payment transaction.

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I N A N N U A L R E P O R T

2007

If the subsidiary grants the right to receive the parent’s equity instruments to its employees, the scheme is

accounted for as a cash settled share-based payment transaction.

IFRIC 12: Service Concession Arrangements

(effective date – financial periods commencing on/after 1 January 2008)

In some countries, governments have introduced contractual service arrangements to attract private sector

participation in the development, financing, operation and maintenance of such infrastructure. The

interpretation sets out the appropriate accounting treatment for the divergent aspects resulting from these

arrangements. The group is not party to such arrangements, therefore the interpretation is not applicable.

IFRIC 13: Customer Loyalty Programmes

(effective date – financial periods commencing on/after 1 July 2008)

This interpretation prescribes the accounting treatment when entities provide customers with incentives

to buy their goods and services, e.g. by means of award credits or so-called “points” where the customer

can use such credits for “free” or discounted goods and services.

Entities shall account for award credits as a separately identifiable component of the sales transaction in

which they are granted. The fair value of the consideration received or receivable in respect of the initial

sale shall be allocated between the award credits and the other components of the sale. The consideration

allocated to the award credits shall be measured by reference to their fair value, i.e. the amount for which

the award credits could be sold separately.

IFRIC 14: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

(effective date – financial periods commencing on/after 1 January 2008)

This interpretation prescribes the amount of post-retirement benefit asset that can be recognised when

there is a surplus in the fund including the effects of minimum funding contribution that may or may not

be available for future reductions.

The post-retirement benefit asset to be recognised is the lower of:

(a) the surplus in the plan; and

(b) the present value of the future service cost to the entity, for each year over the shorter of the expected

life of the plan and the expected life of the entity reduced by the estimated minimum funding

contributions required in respect of future accrual of benefit of that year.

Where the minimum funding contribution is to cover existing shortfall in respect of services already received,

the entity shall recognise the liability by the proportion of the contributions not available as a refund.

Amendment to IAS 1: Presentation of Financial Statements (Objectives, Policies and Processes for

Managing Capital)

(effective date – financial periods commencing on/after 1 January 2007)

The amendment requires disclosures that will enable users to evaluate the group’s objectives, policies

and processes for managing capital. This includes, amongst others, a description of what an entity

manages as capital (including quantitative data), the nature of externally imposed capital requirements

(if applicable) and how it is meeting its objectives for managing capital. The disclosures should be based

on information used by key management in making decisions.

The application of the standards, interpretations and amendments to IFRS, mentioned above, in future

financial reporting periods is not expected to have a significant effect on the group’s financial results,

financial position and cash flow.

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2007

BALANCE SHEETS

AT 30 JUNE 2007

ASSETS

Non-current assets

Investments – Associates

2 087

2 219

–

– Other

512

313

1 012

1 012

Deferred taxation

164

143

–

2 763

2 675

1 012

1 012

Current assets

1 716

1 293

2 300

2 387

Intergroup loans

2 300

2 303

Trade and other receivables

–

Investment held for sale *

606

–

Derivative instruments

–

Taxation

–

Cash and cash equivalents

1 096

1 254

–

Total assets

4 479

3 968

3 312

3 399

EQUITY AND LIABILITIES

Capital and reserves

Issued capital

Share premium

3 281

3 281

3 281

3 281

Reserves

1 527

585

112

Treasury shares

(379)

(54)

–

Total shareholders’ equity

4 435

3 818

3 312

3 399

Current liabilities

150

–

Trade and other payables

117

–

Derivative instruments

–

Taxation

–

Total equity and liabilities

4 479

3 968

3 312

3 399

* The investment in Alexander Forbes was reclassified from an associate to an investment held for sale during the year. The investment

was disposed of on 26 July 2007. (Refer to the Report of the Board of Directors)

Consolidated

The Company

R million

Notes

2007

2006

2007

2006

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2007

INCOME STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

Dividends received

150

Interest received

Finance costs

–

(42)

(2)

(42)

Other net operating expenses

(58)

(21)

–

Fair value adjustments

298

–

Reversal of impairment/(net impairment)

of investments and loans

228

(247)

–

Negative goodwill arising on acquisitions

–

Profit on disposal of investments

133

–

Profit before tax

423

128

112

Taxation

–

Profit after tax

441

142

112

Share of after-tax profit of associates

176

–

Net profit for the year

617

240

112

Earnings per share

Cents Cents

– Basic

219.5

81.9

– Diluted

216.7

80.9

Associates

R million R

million

Share of after-tax profit of associates

Profit before taking into account the following:

209

108

Amortisation of intangibles

(54)

(10)

Profit on disposal of investments

–

Net gain on disposal of property, plant

and equipment

–

Other

–

176

Consolidated

The Company

Twelve months Six months

ended

ended

ended

ended

30 June

30 June

30 June

30 June

R million

Notes

2007

2006

2007

2006

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2007

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2007

Trans-

Long-

Issued

lation

Fair

term

capital and Treasury

Equity adjust-

value

share Retained

R million

premium shares

reserves ments reserve scheme

earnings Total

Consolidated

30 June 2007

Balances at 1 July 2006

3 287 (54) 201 251 (9) – 142

3 818

Total income accounted for

(12)

617

696

Exchange rate adjustments

(12)

Net fair value adjustments

Income accounted for directly in equity

(12) 91

Net profit for the year

617

Dividends

paid

(145) (145)

Change in reserves of associates

381

Transfer between reserves

(260)

260

–

Shares acquired by wholly owned

subsidiary (treasury shares)

(325)

Long-term share incentive

scheme reserve

Balances at 30 June 2007

3 287 (379) 322 239 82 10 874

4 435

30 June 2006

Balances

March

2005

–

Issue

293

issue

expenses

(6)

Total income accounted for

251

(9)

240

482

Exchange

rate

adjustments

251

Net

fair

value

adjustments

(9)

Income accounted for directly in equity

251

(9)

242

Net

profit

for

the

period

240

Change in reserves of associates

103

Income of associates transferred

(98)

–

Shares acquired by wholly owned

subsidiary (treasury shares)

(54)

Balances at 30 June 2006

3 287

(54)

201

251

(9)

–

142

3 818

R million

2007

2006

The Company

Balance at 1 July 2006 (1 March 2005)

3 399

–

Issue

–

3 293

issue

expenses

–

(6)

Net profit for the year

112

Dividends

paid

(146)

–

Balances at 30 June

3 312

3 399

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2007

CASH FLOW STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

Cash flow – operating activities

Net operating profit before taxation

423

128

112

Adjustments

9.1

(455)

(148)

(61)

(112)

Operating loss before working capital changes

(32)

(20)

(2)

–

Working capital changes

9.2

(84)

186

–

Cash generated/(utilised) from operations

(116)

166

(1)

–

Net interest received/(paid)

(2)

(38)

Dividends received

9.3

234

–

150

Taxation paid

9.4

(7)

(7)

–

Cash available from operations

199

157

112

Dividends paid

9.5

(145)

–

(146)

–

Net cash inflow/(outflow) from operating

activities

157

(86)

112

Cash flow – investment activities

113

(2 136)

–

(5 012)

Additions to investments

(167)

(64)

–

Proceeds on disposal of investments

149

212

–

Capital distribution received

134

–

Acquisition of subsidiaries

9.6

–

(2 331)

–

(5 012)

Loans repaid

(3)

–

Cash flow – financing activities

(325)

3 233

4 983

Decrease in intergroup loans

1 696

Repurchase of shares

(325)

(54)

–

Issue of shares

–

3 293

–

3 293

Share issue expenses

–

(6)

–

(6)

Net increase/(decrease) in cash and

cash equivalents

(158)

1 254

(83)

Cash and cash equivalents at the beginning of the year

1 254

–

Cash and cash equivalents at the end of the year *

1 096

1 254

–

* Included is restricted cash of R20.9 million. (Refer note 4)

Consolidated

The Company

Twelve months Six months

ended

ended

ended

ended

30 June

30 June

30 June

30 June

R million

Notes

2007

2006

2007

2006

E N

I N A N N U A L R E P O R T

2007

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

1. EARNINGS

HEADLINE EARNINGS RECONCILIATION

Net profit for the year

617

240

Adjusted for:
– Net impairment/(reversal of impairment) of investments

(230)

261

– Profit on disposal of investments

(139)

(25)

– Net gain on disposal of property, plant and equipment (associates)

(11)

–

– Negative goodwill arising on acquisitions

–

(71)

– Other adjusting items

(4)

(1)

Headline earnings

233

404

NORMALISED HEADLINE EARNINGS RECONCILIATION

Headline earnings for the year

233

404

Adjusted for:
– Fair value adjustment – Dimension Data Bond

–

(295)

– Finance cost relating to the acquisition of surplus assets

–

– Foreign exchange loss relating to repatriation of offshore cash

–

– Reversal of impairment of loans

–

(14)

Normalised headline earnings *

233

142

* The comparative normalised headline earnings has been adjusted from R126 million to R142 million, due to deferred taxation

raised on STC credits that is now classified as recurring and is included in normalised headline earnings.

EARNINGS PER SHARE

Cents Cents

Normalised headline earnings
– Basic

83.0

48.5

– Diluted

81.5

48.5

Headline earnings
– Basic

83.0

137.9

– Diluted

81.5

136.9

Earnings

– Basic

219.5

81.9

– Diluted

216.7

80.9

Number Number

of shares

of shares

Weighted shares in issue

280 993 121

292 918 450

Earnings per share

In determining the earnings per share, headline earnings per share and normalised headline earnings per share,
the weighted number of shares in issue was taken into account, after the deduction of the treasury shares.

Diluted earnings per share

In determining the diluted earnings per share, diluted headline earnings per share and diluted normalised headline
earnings per share, the weighted number of shares in issue was adjusted for the deemed dilutive effect of the shares
accepted by participants by the VenFin Equity Settled Share Appreciation Right Scheme but not yet delivered.

2007

2006

R million R

million

E N

I N A N N U A L R E P O R T

2007

1. EARNINGS (continued)

The delivery of scheme shares to participants will be regarded as an issue of shares. As the market value (fair
value) of the shares at date of delivery will differ from the offer value, the number of shares represented by the
difference will be regarded as an issue of ordinary shares for no consideration. These imputed shares amount to
1 961 368 (2006: Nil) and have been added to the weighted number of shares to determine the dilutive effect.

Some associates have similar management incentive schemes as well as other instruments that can

dilute these companies’ earnings in the future. To calculate VenFin’s diluted earnings per share, R4 million

(2006: R3 million) was offset against earnings to account for the potential dilutive effect.

INVESTMENTS – ASSOCIATES

(Annexures B & C)

2007

2006

Listed Unlisted

Total Listed

Unlisted Total

R million

R million R million R million R million

Cost

1 426

305

1 731

1 681

313

1 994

Equity

adjustment

142

180

322

164

203

Carrying value *

1 568

485

2 053

1 845

352

2 197

Long-term

loans

–

1 568

519

2 087

1 845

374

2 219

Market values of listed

investments

2 272

3 072

Directors’ valuation of

unlisted investments

2 092

1 443

Market values and

directors’ valuation

2 272

2 092

4 364

3 072

1 443

4 515

Excess of market values and

directors’ valuation over the

carrying value of investments:

– attributable to own members

2 277

2 296

* Included in the carrying value of associates are intangible assets of R230 million (2006: R476 million) which are amortised

over seven years. At 30 June 2007, R184 million of Alexander Forbes’ intangibles have been reclassified into investment

held for sale, which was sold subsequent to year-end. (Refer to the Report of the Board of Directors)

The calculations to determine the directors’ valuation of the unlisted investments include an analysis of the

following factors:

Market value and earnings yield of similar listed shares, discounted for limited tradeability of the unlisted

Growth potential and risk factors

Underlying net asset value

Profit history

Cash flow projections

E N

I N A N N U A L R E P O R T

2007

NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

FOR THE YEAR ENDED 30 JUNE 2007

2007

2006

R million R million

INVESTMENTS – ASSOCIATES (continued)

Reconciliation of carrying value at the beginning and end of the year

Carrying value at the beginning of the year

2 219

–

Acquisition of surplus assets on 1 January 2006

–

943

Share of retained profits of associates

(40)

Share of net profit of associates

176

Dividends paid by associates

(216)

–

Exchange rate differences on translation between average rate and year-end rates

(2)

Equity-accounted movements on reserves

381

103

Exchange rate differences accounted for directly on reserves

(21)

206

Additions to investments

Investment available-for-sale reclassified as associate

–

1 131

Long-term loan reclassified as associate

–

Repayment of loans

(21)

(41)

Capital

distributions

(134)

(10)

Loans

granted

–

Disposals

(18)

–

Associate reclassified to investment held for sale

(606)

–

Impairments

(6)

(294)

Reversal of impairment

236

–

Carrying value at the end of the year

2 087

2 219

Portion of the share in net profit retained by associates that has been

accounted for from unaudited interim reports and management reports

Portion of the share of accumulated losses of associates not equity-accounted

– current year

– cumulative

Impairment

Various small adjustments relating to unlisted investments where the carrying

value was higher than the fair value.

Reversal of impairment

In 2006 there was a sharp decrease in the listed market price of Dimension Data,

which resulted in the fair value being lower than the carrying value.

This resulted in an impairment loss being recognised to an amount of

R236 million. The recoverable amount was determined with reference

to the market price less cost to sell.

During 2007 the market value of the investment in Dimension Data increased

significantly and this led to a reversal of impairment to an amount of

R236 million.

Contingent liabilities of associates

Guarantees to third parties – Performance guarantees and letters of credit

of various associates

Claims – There are a number of legal or potential claims against various

associates, the outcome of which cannot be foreseen, but are not regarded

as material, neither individually nor cumulatively.

E N

I N A N N U A L R E P O R T

2007

2006

R million R million

INVESTMENTS – SUBSIDIARY COMPANIES AND OTHER

(Annexures A & B)

3.1 The Company

Unlisted subsidiary companies

1 012

1 012

2007

2006

Listed

Unlisted Total

Listed Unlisted

Total

R million

R million

3.2 Consolidated

Available-for-sale

281

334

–

141

Long-term loans **

–

178

–

172

459

512

–

313

The valuation methodology of the unlisted available-for-sale investments is similar to the valuation of associates.

(Refer note 2)

** Consists mainly of interest-bearing investments in preference shares, with varied rates between prime -3% and

prime +3%.

2007

2006

Investments

Investments

Reconciliation of carrying

available-

Long-term

available- Long-term

value at the beginning and

for-sale

loans Total

for-sale

loans Total

the end of the year

R million

R million

Balance at beginning of year

141

172

313

–

Acquisition of surplus assets

on 1 January 2006

–

1 118

151

1 269

Additions

103

155

Exchange rate adjustments

–

(8)

(12)

(20)

Fair value adjustments for

the year

107

291

294

– per income statement

–

295

298

– equity

–

(9)

–

(9)

Reversal of impairment

of loans

–

Reclassifications

–

(1 131)

(17)

(1 148)

Repayment of loans

–

(62)

–

Capital

distributions/Disposals

(1)

–

(1)

(183)

(9)

(192)

Balance at the end of the year

334

178

512

141

172

313

E N

I N A N N U A L R E P O R T

2007

NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

FOR THE YEAR ENDED 30 JUNE 2007

CASH AND CASH EQUIVALENTS

Local

539

925

Offshore

557

329

Dollar

145

108

Pound

166

Euro

246

177

1 096

1 254

At year-end cash and cash equivalents earned interest at effective interest rates that vary between 8.5% and
9.4% (2006: 6.0% and 7.1%) per annum in rand, between 5.1% and 5.3% (2006: 3.2% and 5.0%) per
annum in dollar, between 4.4% and 5.7% (2006: 4.4% and 4.5%) per annum in pound and between 2.7% and
4.0% (2006: 2.0% and 2.9%) per annum in euro.

During the year the Company committed R24 million for an investment. This amount was placed in an escrow
account pending the investment’s viability. R3.5 million escrow cash has been invested and subsequently
impaired due to the early stage of the investment. R20.9 million escrow cash is reported as restricted cash and
these deposits are not available to finance day-to-day operations.

2007

2006

R million R million

5. SHARE

CAPITAL

Authorised
512 493 650 ordinary shares of 1 cent each

5.1

5.1

40 506 352 B ordinary shares of 10 cents each

4.1

4.1

9.2

9.2

Issued

257 443 997 ordinary shares of 1 cent each

2.6

2.6

35 506 352 B ordinary shares of 10 cents each

3.5

3.5

6.1

6.1

Each ordinary share has one vote.

Each B ordinary share has ten votes.

Number Number

of shares

of shares

Shares in issue
– Ordinary shares of 1 cent each

257 443 997

257 443 997

– B ordinary shares of 10 cents each

35 506 352

35 506 352

Total number of shares in issue

292 950 349

292 950 349

– Shares held in treasury (ordinary shares

of 1 cent each)

(21 079 106)

(3 773 651)

271 871 243

289 176 698

2007

2006

R million R

million

E N

I N A N N U A L R E P O R T

2007

PROFIT

Profit is stated after taking the following into account:

7.1 The Company

Income

Dividend income – unlisted investments

150

Interest

received

7.2 Consolidated

Income

Dividend income – unlisted investments

Fair value adjustments

298

Dimension Data Bond

–

295

Other financial instruments

Interest

received

Unlisted investments and deposits

Dividends on preference shares

Exchange rate differences

–

Profit on disposal of investments *

133

Idion (surplus on capital distribution)

127

–

Trina Solar

–

GenuOne

–

FrontRange

–

Other

–

Reversal of impairment of investments in associates

236

–

Reversal of impairment of long-term loans

* Refer to the Report of the Board of Directors for more information.

Expenses

Administration and management fees – net corporate costs

Paid to M&I in respect of costs

Less: Fees

received

(3)

(2)

Administration fees – other

–

Auditor’s remuneration – audit services

Staff costs *

Salaries

Share scheme costs

–

Pension costs – defined contribution

–

Other

–

Donations

Professional

fees

–

Exchange rate differences

–

Impairment of associates

294

Impairment of loans

* Comparative staff costs are included in administration and management

fees paid to M&I. This amounts to R7 million.

Post-retirement medical benefits are included in salaries and are immaterial.

2007

2006

R million

R million

NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

FOR THE YEAR ENDED 30 JUNE 2007

E N

I N A N N U A L R E P O R T

2007

2006

R million

R million

TAXATION

8.1

Taxation in income statement

Current

– current year – South African normal taxation

–

– Capital gains tax

–

– previous year – South African normal taxation

(10)

–

Deferred – current year

(13)

–

Secondary taxation on companies – deferred

(7)

(16)

(18)

(14)

2007

2006

R million

% R million

8.2

Reconciliation of effective tax rate
with standard rate

Effective tax rate

(18)

(4.3)

(14)

(10.9)

Reduction/(increase) in standard rate
as a result of:

Exempt dividend income

1.1

29.0

Non-taxable capital profit

4.3

7.0

Secondary tax on companies

1.6

12.5

Other non-taxable income/(expenses)

21.7

(11)

(8.6)

Previous year taxation

2.4

–

Tax losses utilised

4.8

–

Foreign taxation

(11)

(2.6)

–

Standard

rate

123

29.0

29.0

2007

2006

R million

R million

8.3

Deferred tax asset

STC credits *

150

143

Tax

losses

–

Provisions

–

164

143

The movement between balances of deferred taxation at the

beginning and end of the year can be analysed as follows:

Beginning of the year

143

–

STC credits *

143

Other

–

164

143

No deferred tax is provided on temporary differences relating to investments in subsidiary companies as
VenFin controls the dividend policy of these companies and consequently also controls the reversal of the
temporary differences.

The carrying values of investments in associates and joint ventures are mainly recovered through dividends.
As no taxable temporary differences exist, no deferred tax is provided.

E N

I N A N N U A L R E P O R T

2007

TAXATION (continued)
8.4 Tax

losses

Estimated tax losses available for set-off against future taxable income

Utilised to create deferred tax asset

(42)

–

8.5

Secondary taxation on companies (STC)

The STC credits on 30 June, which could be set off against future
dividend payments, amount to

1 204

1 146

– The Company

150

– Wholly owned subsidiary companies

1 140

996

Utilised to create deferred tax asset

(1 204)

(1 146)

Unutilised STC credits *

–

* Current uncertainty regarding possible changes in taxation legislation brings into doubt the extent of utilisation of this

asset in the future.

Consolidated

The Company

2007

2006

2007

2006

million

R million

R million

R million

9. CASH FLOW

INFORMATION

9.1

Adjustments

Net impairment of investments and loans

(231)

247

–

Share scheme cost

–

Movements in provisions

–

Exchange rate differences

–

Fair value adjustments

(16)

(298)

–

Net interest paid/(received)

(88)

(1)

Dividends

received

(16)

(2)

(60)

(150)

Profit on sale of investments

(133)

(27)

–

Negative goodwill arising on acquisition

–

(71)

–

Other

–

(455)

(148)

(61)

(112)

9.2

Movement in working capital

Decrease in derivative liabilities

–

Increase in derivative assets

(2)

–

Decrease in trade and other receivables

142

–

Increase/(decrease) in trade and other

payables

(107)

–

(84)

186

–

9.3

Reconciliation of dividends received

Receivable at the beginning of the year

–

Per income statement

150

Acquisition of subsidiaries

–

Dividends received from associates

216

–

Receivable at the end of the year

(2)

(4)

–

Cash

received

234

–

150

2007

2006

R million

R million

NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

FOR THE YEAR ENDED 30 JUNE 2007

Consolidated

The Company

2007

2006

2007

2006

million

R million

R million

R million

9. CASH FLOW

INFORMATION (continued)

9.4

Taxation paid is reconciled with the amount

disclosed in the income statement

Paid in advance at the beginning of

the year

–

Unpaid at the beginning of the year

(10)

–

Charged to the income statement

(2)

(2)

–

Acquisition of subsidiaries

–

(14)

–

Unpaid at the end of the year

–

Paid in advance at the end of the year

–

(1)

–

Cash

paid

(7)

(7)

–

9.5

Reconciliation of dividends paid

Paid by VenFin Limited

(146)

–

(146)

–

Less: Treasury

dividends

–

Cash

paid

(145)

–

(146)

–

9.6

Acquisition of subsidiaries *

Cash and cash equivalents

–

(2 681)

–

Investments in associates

–

(943)

–

Other investments and loans

–

(1 269)

–

(4 000)

Deferred tax asset

–

(127)

–

Investments in subsidiaries

–

(1 012)

Trade and other receivables

–

(182)

–

Trade and other payables

–

118

–

Net assets acquired

–

(5 084)

–

(5 012)

Negative

goodwill

–

Purchase

consideration

–

(5 013)

–

(5 012)

Purchase consideration due

–

Cash in subsidiary acquired

–

2 681

–

Cash outflow on acquisition

–

(2 331)

–

(5 012)

* Relates to the purchase of net assets of the former VenFin group on 1 January 2006. (Refer to the Report of the Board

of Directors for more details)

2007

2006

Non-

Non-

Executive

executive Total

Executive

executive Total

R’000

R’000 R’000 R’000 R’000

10. DIRECTORS’

EMOLUMENTS

Fees

495

250

745

165

207

Salaries

5 512

–

5 512

1 978

–

1 978

Retirement fund contributions *

1 220

–

1 220

418

–

418

Other

benefits

140

–

140

–

Total

7 367

250

7 617

2 652

2 694

E N

I N A N N U A L R E P O R T

2007

E N

I N A N N U A L R E P O R T

2007

NOTES TO THE ANNUAL FINANCIAL STATEMENTS continued

FOR THE YEAR ENDED 30 JUNE 2007

10. DIRECTORS’ EMOLUMENTS (continued)

2007

2006

Salaries

Salaries

Fees

and

other Total Fees

and

other Total

R’000

R’000 R’000 R’000

Paid

by:

The Company

250

–

250

–

Management company

495

6 872

7 367

165

2 487

2 652

745

6 872

7 617

207

2 487

2 694

All VenFin’s staff belong to the M&I retirement fund, the costs of which are charged to VenFin by way of an administration fee.

11.

VENFIN EQUITY SETTLED SHARE APPRECIATION RIGHT SCHEME

The share-based payments that are accounted for in the financial statements are in respect of the VenFin Equity

Settled Share Appreciation Right Scheme (the “Scheme”). Participants are offered shares to the value of the

appreciation of a specified number of VenFin ordinary shares that must be exercised within a period of six years

after the grant date. These share appreciation rights are exercisable as follows:

One-third after the third anniversary of the grant date

Two-thirds after the fourth

All after the fifth anniversary of the said date

The valuation of the Scheme was performed using an actuarial model. This model was developed by an

independent third party from the standard binomial option pricing model in order to address the unique nature

of the Scheme, especially with regard to early exercise of rights.

The expected contract lifetimes are estimated by considering separately each of the tranches within that grant.

The risk-free rate was estimated by using the implied yield on an SA zero-coupon government bond and the yield

curve over the expected contract lifetimes of 3, 4 and 5 years from the grant date.

Share price volatility of ordinary shares in VenFin was determined with reference to movements in the share

price since 4 April 2006, that being the date from which VenFin commenced trading on the over-the-counter

market.

Dividend yield was assumed to be 3% as VenFin had no dividend record.

2007

2006

R’000 R’000

Fair value of rights offered during the year

115

35 945

Share-based payment cost included in the income statement

(in accordance with IFRS 2)

9 419

236

Portion attributable to directors

5 236

131

E N

I N A N N U A L R E P O R T

2007

11.

VENFIN EQUITY SETTLED SHARE APPRECIATION RIGHT SCHEME (continued)

Number of weighted average exercise prices of all rights offered to participants of the Scheme:

2007

2006

Number

Number

of rights

Rand

of rights

Rand

Previous financial year

9 184 017

110 052 002

–

Offered in current financial year

34 897

515 731

9 184 017

110 052 002

Forfeited in current financial year

(19 991)

(273 877)

–

Total at 30 June

9 198 923

110 293 856

9 184 017

110 052 002

Exercisable at the end of the year

–

Weighted

Weighted

average

average

Number

remaining

Number

remaining

of rights

contract

of rights

contract

outstanding

lifetime

outstanding

lifetime

Exercise prices of all rights:

at year-end

in years

at year-end

in years

R11.24

6 410 175

6 410 175

R13.70

2 753 851

2 773 842

R14.20

16 611

–

R14.71

6 132

–

R15.20

9 815

–

R17.30

2 339

–

The following assumptions were used in the binomial model to value rights offered:

2007

2006

Weighted average VenFin share price for the year (Rand)

17.72

13.99

Exercise price (Rand)

11.24 – 17.30 11.24 – 13.70

Average expected exercise term (years)

3 – 6

4 – 6

Price volatility (%)

Risk-free rate (%)

7.87 – 7.88

7.87 – 7.88

Expected dividend yield (%)

R million R million

12.

INVESTMENTS COMMITTED

Investment expenditure authorised and committed

412

–

Investment expenditure authorised, but not yet contracted

734

1 146

The above-mentioned commitments will be financed by internal sources and borrowed funds.

E N

I N A N N U A L R E P O R T

2007

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

continued

FOR THE YEAR ENDED 30 JUNE 2007

13. BORROWING

POWERS

There are no limitations on the borrowing powers of the Company and its subsidiaries in respect of loans and
guaranteed debts.

14.

FINANCIAL INSTRUMENTS
14.1 Financial instruments and risk management

Various financial risks have an impact on the financial statements: Market risk (including price and
foreign exchange risk), credit risk, liquidity risk and interest rate risk. The Company and its subsidiary
companies’ risk management programmes, of which key aspects are explained below, acknowledge the
unpredictability of financial markets and are aimed to minimise any negative effect thereof. Derivative
instruments are used to hedge against certain financial risk exposures.

Financial instruments include investments, loans receivable, debtors, cash, creditors and derivative
instruments. Details of the nature, extent and terms of these instruments are explained in the notes to the
relevant items. Relevant financial risks and programmes that limit these risks are summarised as follows:

Market

risk

Price risk

Exposure to share price risk is due to investments in shares. Investments available-for-sale consist
mainly of the investment in private equity funds and convertible preference shares that are included at
market value under “Investments – Other” in the balance sheet. The executive committee monitors all
investments continuously and make recommendations to the Board of Directors in this regard.

Foreign exchange risk

The Company and its subsidiary companies operate internationally and are therefore exposed to foreign
currency risk due to commercial transactions denominated in foreign currency.

Net assets of investments in foreign operations are exposed to foreign exchange translation risk. The most
prominent of these are the investments in Dimension Data and cash.

Credit

risk

The group has no significant concentrations of credit risk.

Derivative instrument and cash transactions are limited to financial institutions with good credit ratings. The
treasury committee approves these institutions and determines limits for credit exposure in each entity.

Liquidity

risk

The Company and its subsidiary companies have substantial cash balances at their disposal and limit
their liquidity risk by minimising long-term debt. Nevertheless it is ensured that adequate credit facilities
are available to maintain flexibility in the funding of transactions.

Interest rate risk

Due to significant cash investments, movements in market interest rates influence income. The profile of
cash and cash equivalents is explained in note 4.

2007

2006

R million R million

14.2 The following material derivative instruments existed at 30 June:

Assets

Derivative instrument (at fair value through profit and loss)

–

A loan was advanced where the return is based on the minimum
SAFEX deposit rates or the value of the weighted volume average
share price of the underlying investment.

Liabilities

Put option (at fair value through profit and loss)

A third party has the right to put certain shares to VenFin.
Maximum exposure amounts to R25 million.

E N

I N A N N U A L R E P O R T

2007

14.

FINANCIAL INSTRUMENTS (continued)
14.3 Fair value

On 30 June 2007 and 2006, the fair value of financial instruments, excluding investments in associates,
approximates their carrying value.

15.

RELATED-PARTY INFORMATION
Subsidiaries

Details of income from and investments in subsidiaries are disclosed in note 3 and in Annexure A respectively.

Associates

Details of investments in and income from associates are disclosed in note 2 as well as in Annexures B and C.

Key management personnel

VenFin’s directors and executive committee are key management personnel. Information on directors’ emoluments and
their shareholding in the Company appears in notes 10 and 11 as well as in the Report of the Board of Directors.

Shareholders

Details of the principal shareholders appear in the Report of the Board of Directors. A detailed analysis of
shareholders appears on page 82 of the Annual Report.

2007

2006

Related-party transactions

R million R million

ONSOLIDATED

Transactions of VenFin Limited and its subsidiary companies with:

Associates

Interest received

–

Dividends received

217

–

Administration and management fees paid

–

Administration and management fees received

Key management personnel

Short-term benefits

Post-retirement benefits

Share-based payments

–

Loans to related parties

Loans to associates

Preference shares to associates

OMPANY

Transactions of VenFin Limited with:
Subsidiaries

Loans *

2 300

2 303

Dividends received

150

No security is given for any outstanding balances. No provisions for bad debts against outstanding balances with
related parties have been made and no bad debt of related parties has been written off during the year.

* These loans are interest-free and have no repayment terms.

E N

I N A N N U A L R E P O R T

2007

NOTES TO THE ANNUAL FINANCIAL STATEMENTS

continued

FOR THE YEAR ENDED 30 JUNE 2007

16. SEGMENT REPORTING

16.1 Primary reporting format – business segment

The group is mainly engaged in investing activities which are organised, managed and internally reported

per investment. Information about the most significant of these investments is disclosed in Annexure C.

16.2 Secondary reporting format – geographical

The group’s interests can be divided into two main geographical areas, namely South Africa and abroad.

2007

2006

Investment

Headline Total Investment

Headline

Total

expenditure

earnings

assets

expenditure

earnings

assets

R million

R million R

million R million R million

South

Africa

200

3 047

2 336

2 969

Abroad

102

1 042

340

856

167

233

4 089

2 395

404

3 825

Total assets include assets and investments in associates, but exclude deferred tax assets and taxation

paid in advance.

E N

I N A N N U A L R E P O R T

2007

ANNEXURE A

PRINCIPAL SUBSIDIARY COMPANIES AT 30 JUNE 2007

NAME OF COMPANY

ISSUED

EFFECTIVE

HELD

BY COMPANY

CAPITAL

INTEREST

SHARES

LOAN

Incorporated in South Africa

R (unless other-

2007

2006

2007

2006

2007

2006

unless otherwise stated

wise stated)

R R million

R million

UNLISTED

Industrial Electronic

Investments Limited

1 000

100

100

RPII Holdings Limited

8 600 000

100

100

933 273 860

933 273 860

1 209

1 209

Tracking and Signal Distribution

Technologies (Pty) Limited

21 412

100

100

VenFin Finance Corporation

(Pty) Limited

100

100

VenFin Financial Investments

Limited

5 000

100

100

VenFin Funding Corporation

(Pty) Limited

100

100

100

VenFin Group Finance

(Pty) Limited

100

100

14 559 957

14 559 957

1 091

1 094

VenFin Holdings

Limited – Jersey (€)

352 179 775

100

100

VenFin Investments

(Pty) Limited

100

100

100

VenFin Media Investments

(Pty) Limited

100

100

VenFin Risk Services

Investments (Pty) Limited

100

100

100

VenFin Shareholding

(Pty) Limited

100

100

100

VenFin Share Platform

(Pty) Limited

100

100

–

VenFin Securities

(Pty) Limited

100

100

100

VenFin Technology

(Pty) Limited

200

100

100

64 554 557

64 554 557

1 012 388 448

1 012 388 448

2 300

2 303

(€) euro

Details of sundry subsidiary companies, which are not material to the evaluation of the business of the group, are not

shown.

E N

I N A N N U A L R E P O R T

2007

ANNEXURE B

PRINCIPAL INVESTMENTS AT 30 JUNE 2007

NAME OF COMPANY

2007

2006

Effective

Effective

Incorporated in South Africa

Shares

interest Shares

interest

unless otherwise stated

held

held

LISTED

Alexander Forbes Limited

115 900 000

24.5

115 900 000

26.4

Dimension Data Holdings plc

282 092 463

18.2

282 092 463

18.3

Idion Technology Holdings (Pty) Limited

–

39 679 640

35.3

Trina Solar Limited

(1)(3)

175 678

0.7

204 678

1.3

UNLISTED

Sabido Investments (Pty) Limited

17 730 594

31.5

17 730 594

31.5

Tracker Investment Holdings (Pty) Limited

28 374

31.0

24 543

33.7

Psitek (Pty) Limited

620 612

33.4

620 612

33.2

SAIL Group Limited

81 392 413

36.6

81 392 413

38.1

SAIL preference shares

(1)

144 788 321

100.0

144 788 321

100.0

VHF Technologies SA

1 984

15.6

1 875

26.1

Johanna Solar Technology GbmH

(1)

8.2

9.5

Cash Axcess Corporation (Pty) Limited

200

50.0

200

50.0

Cueincident (Pty) Limited

3 191

19.5

989

12.4

Destiny Corporation Holdings (Pty) Limited

20.0

20.0

Fraxion (Pty) Limited

3 000 000

31.4

3 000 000

33.3

Fundamo (Pty) Limited

149 805

28.9

149 805

43.1

Fynbos Media (Pty) Limited

200

20.0

–

i to i technologies (Pty) Limited

(2)

45 069 905

46.0

45 069 905

48.5

Kalahari Energy Limited

(1)

4 800 000

9.8

–

CDMTV Holding Company

2 236 136

4.6

–

Equity fund investments

Carrying value

USD million

2007

2006

GEMS II

(1)

4.0

5.5

GEMS III

(1)

9.2

6.2

Milestone China I

(1)

8.4

2.6

Milestone China II

(1)

1.3

–

Veritas

(1)

0.7

0.6

Notes:
(1) Not associates and/or their results are not accounted for according to the equity method.

(2) No losses equity-accounted.

(3) Trina Solar was listed December 2006

The effective interest represents VenFin’s shareholding after taking into account treasury shares.

Details of investments, which are not material to the evaluation of the business of the group, are not shown.

E N

I N A N N U A L R E P O R T

2007

ANNEXURE C

SIGNIFICANT ASSOCIATES – ADDITIONAL INFORMATION

Dimension Data

Sabido (e.tv)

Tracker

2007

2006

2007

2006

2007

2006

Effective interest

18.2%

18.3%

31.5%

31.0%

33.7%

R million

Carrying value of investments

1 568

1 322

149

143

237

120

Share of retained equity income
– Current year

113

Income

Dividends

(20)

–

(194)

–

Amortisation of intangibles

(36)

–

(4)

(2)

Other changes in reserves
and exchange rates

–

213

– Cumulative

142

113

Summarised financial information:

Per

Interim Report

Annual Report

31/03/2007

31/03/2006

31/03/2007

31/03/2006

30/06/2007

30/06/2006

BALANCE SHEET

Assets
Property, plant and equipment

1 585

1 622

123

127

Intangible assets

693

681

–

335

Investments and loans

202

166

–

Other assets

532

253

159

254

236

Current assets

9 872

8 946

369

379

285

314

Cash

2 513

2 477

189

160

Other

7 359

6 469

330

339

154

12 884

11 668

657

767

906

443

Equity and liabilities
Shareholders’ funds

3 462

2 423

474

455

596

285

Minority interest

745

746

–

Non-current liabilities

1 252

2 226

–

205

Current liabilities

7 425

6 273

134

312

105

12 884

11 668

657

767

906

443

12 months

3 months

12 months

3 months

12 months

6 months

ended

31/03/2007

31/03/2006

31/03/2007

31/03/2006

30/06/2007

30/06/2006

INCOME STATEMENT
Revenue

23 886

4 663

840

168

660

285

Headline earnings

243

205

228

121

Net profit for the year

324

205

228

121

The investments above represent 93.6% (2006: 71.4%) of the total carrying value of associates.

E N

I N A N N U A L R E P O R T

2007

ANALYSIS OF SHAREHOLDERS

AT 30 JUNE 2007

2007

2006

Number of

Number

shares

MAJOR BENEFICIAL SHAREHOLDERS

Ordinary shares

Sanlam

21.25

54 714 384

19.74

50 830 679

VenFin Funding Corporation (Pty) Limited

8.19

21 079 106

1.47

3 773 651

Business Venture Investments No 1040 (Pty) Limited

7.55

19 435 438

7.55

19 435 438

Business Venture Investments No 1027 (Pty) Limited

7.55

19 435 437

7.55

19 435 437

VenFin Manco (Pty) Limited

5.67

14 590 745

5.67

14 590 745

Other

49.79

128 188 887

58.02

149 378 047

100.00

257 443 997

100.00

257 443 997

B ordinary shares

Business Venture Investments No 1040 (Pty) Limited

50.00

17 753 176

50.00

17 753 176

Business Venture Investments No 1027 (Pty) Limited

50.00

17 753 176

50.00

17 753 176

100.00

35 506 352

100.00

35 506 352

Total

292 950 349

292 950 349

No other shareholder held an interest of more than 5% in the Company on 30 June 2007.

DISTRIBUTION OF SHAREHOLDERS

2007

2006

Number of shares in issue

– Ordinary shares of 1 cent each

257 443 997

257 443 997

– B ordinary shares of 10 cents each

35 506 352

35 506 352

Total number of shares in issue

292 950 349

292 950 349

Ordinary shares repurchased and held in treasury

(21 079 106)

(3 773 651)

271 871 243

289 176 698

Weighted number of shares

280 993 121

292 918 450

E N

I N A N N U A L R E P O R T

2007

INTEREST OF THE DIRECTORS IN THE ISSUED SHARE CAPITAL OF THE COMPANY

Ordinary shares

Direct

Indirect

Non-

% of shares

Beneficial

beneficial

Beneficial

beneficial Total

issued

30 June 2007

Jannie Durand

–

3 549 822

–

3 549 822

1.38

G T Ferreira

–

558 625

0.22

Josua Malherbe

–

8 896 797

3.45

Johann Rupert

–

19 435 438

7.55

Neville Williams

–

249 110

–

249 110

0.09

–

3 798 932

28 890 860

32 689 792

12.69

30 June 2006

Jannie Durand

–

3 549 822

–

3 549 822

1.38

G T Ferreira

–

558 625

0.22

Josua Malherbe

–

8 896 797

3.45

Johann Rupert

–

19 435 438

7.55

Neville Williams

–

249 110

–

249 110

0.09

–

3 798 932

28 890 860

32 689 792

12.69

B ordinary shares

Business Venture Investments No 1040 (Pty) Limited, a wholly owned subsidiary of the Johann Rupert Trust,

holds 17 753 176 (50%) of the issued B ordinary shares of the Company. Business Venture Investments No 1027

(Pty) Limited, a wholly owned subsidiary of the Hanneli Rupert Trust, holds 17 753 176 (50%) of the issued B ordinary

shares of the Company.

Since the end of the financial year to the date of this report the interest of the directors remained unchanged.

E N

I N A N N U A L R E P O R T

2007

Financial year-end

30 June

Annual general meeting

Wednesday, 24 October 2007

Financial reports

Announcement of interim results

March

Interim

report

March

Announcement of annual results

September

Annual financial statements

September

Dividends

Ordinary

dividend

– declared

September

– paid

October

Ordinary Dividend No 2 and Special Dividend

Ordinary dividend per share

30 cents

Special dividend per share

50 cents

Last day to trade in order to participate in the ordinary and special dividend

Friday, 5 October 2007

Trading on or after this date will be ex the ordinary and special dividend

Monday, 8 October 2007

Record date

Friday, 12 October 2007

Payment date

Monday, 15 October 2007

DATES OF IMPORTANCE TO SHAREHOLDERS

E N

I N A N N U A L R E P O R T

2007

ADMINISTRATION

SECRETARY

Mariza Lubbe

BUSINESS ADDRESS AND REGISTERED OFFICE

Carpe Diem Office Park

Quantum Street

Techno Park

Stellenbosch

7600

PO Box 456

Stellenbosch

7599

AUDITOR

PricewaterhouseCoopers Inc.

Cape Town

TRANSFER SECRETARIES

Link Market Services South Africa (Proprietary) Limited

5th Floor

11 Diagonal Street

Johannesburg

2001

South Africa

PO Box 4844

Johannesburg

2000

South Africa

WEBSITE

www.venfin.com

E N

I N A N N U A L R E P O R T

2007

The 2007 Annual General Meeting of the Company will be held on Wednesday, 24 October 2007, at 15:30 in

Magnifica 3, Protea Hotel Stellenbosch, Techno Avenue, Techno Park, Stellenbosch, to consider the following resolutions

and, if deemed fit, approve same with or without modification (“the annual general meeting”):

1. APPROVAL OF ANNUAL FINANCIAL STATEMENTS

Ordinary Resolution Number 1

Resolved that the audited annual financial statements of the Company and the group for the year ended

30 June 2007 be accepted and approved.

2. APPROVAL OF DIRECTORS’ REMUNERATION

Ordinary Resolution Number 2

Resolved that the directors’ fees for services rendered as directors during the past financial year be fixed at

R745 000.

3. ELECTION OF DIRECTOR

Ordinary Resolution Number 3

Resolved that Mr G T Ferreira who retires in terms of article 25.1 of the Company’s articles of association and who

has offered himself for re-election, be hereby re-elected as a director of the Company.

4. ELECTION OF DIRECTOR

Ordinary Resolution Number 4

Resolved that Mr J Malherbe who retires in terms of article 25.1 of the Company’s articles of association and who

has offered himself for re-election, be hereby re-elected as a director of the Company.

Details of all directors of the Company are set out on page 8 of the Annual Report.

5. AUTHORITY TO PLACE SHARES UNDER CONTROL OF THE DIRECTORS

Ordinary Resolution Number 5

Resolved that 10% of the authorised but unissued share capital of the Company, being 25 504 965 ordinary shares

of one cent each and 500 000 B ordinary shares of ten cents each, be and are hereby placed under the control of

the Board of Directors of the Company as a general authority in terms of section 221(2) of the Companies Act

(Act 61 of 1973), as amended (“the Companies Act”), until the next annual general meeting, for allotment and

issue to such persons and on such conditions as the Board of Directors may deem fit, subject to the provisions of

the Companies Act and the Company’s articles of association.

6. AUTHORITY TO ACQUIRE OWN SHARES

Special Resolution Number 1

Resolved that the Board of Directors of the Company be hereby authorised, by way of a renewable general authority,

to approve the acquisition of its own ordinary shares by the Company or to approve the acquisition of ordinary

shares in the Company by any subsidiary of the Company, subject to the provisions of sections 85 to 89 of the

Companies Act.

It is the intention of the Board of Directors to use such general authority should prevailing circumstances (including

the tax dispensation and market conditions), in their opinion, warrant it.

The Company’s directors undertake that they will not implement any share acquisition while this general authority

is valid, if there are reasonable grounds for believing that:

the Company is, or would after the payment be, unable to pay its debts as they become due in the ordinary

course of business; or

the consolidated assets of the Company fairly valued would after the payment be less than the consolidated

liabilities of the Company.

NOTICE TO SHAREHOLDERS

E N

I N A N N U A L R E P O R T

2007

Reasons for and effect of the Special Resolution Number 1

The reasons for and the effect of the special resolution is to grant the Company’s directors a general authority to

approve the acquisition by the Company of its own shares and to permit a subsidiary of the Company to acquire

shares in the Company.

And to transact any other business that may be transacted at an annual general meeting.

A member entitled to attend and vote at the annual general meeting is entitled to appoint a proxy to attend, speak and

vote in his/her stead. For this purpose a form of proxy is enclosed with this notice of annual general meeting. A proxy

need not also be a member of the Company.

Every member present in person or by proxy and entitled to vote at the annual general meeting of the Company shall,

on a show of hands, have one vote only, irrespective of the number of shares such member holds, but in the event of a

poll, every member shall be entitled to that proportion of the total votes in the Company which the aggregate amount

of the nominal value of the shares held by him/her bears to the aggregate amount of the nominal value of all the shares

issued by the Company.

By order of the Board of Directors.

Mariza Lubbe

Secretary

Stellenbosch

5 September 2007

E N

I N A N N U A L R E P O R T

2007

5. SHARE CAPITAL (continued)

Movement in the number of ordinary shares of 1 cent each for the year:

Total number of shares issued at 1 July

257 443 997

Subdivided

100:1

–

693

Shares issued during the year

–

257 443 297

Total number of shares at 30 June

257 443 997

257 443 997

Movement in the number of B ordinary shares of 10 cents each for the year:

Total number of shares issued at 1 July

35 506 352

–

Shares issued during the year

–

35 506 352

Total number of shares at 30 June

35 506 352

35 506 352

At present, 10% of the authorised but unissued share capital of the Company, being 25 504 965 ordinary
shares of one cent each and 500 000 B ordinary shares of ten cents each, are under the control of the Board of
Directors of the Company as a general authority in terms of section 221(2) of the Companies Act (Act 61 of
1973), as amended (“the Act”) until the next annual general meeting, for allotment and issue to such persons
and on such conditions as the Board of Directors may deem fit, subject to the provisions of the Act and the
Company’s articles of association.

Treasury shares

During the year under review VenFin’s wholly owned subsidiary, VenFin Funding Corporation (Pty) Limited,
acquired a net number of 17 305 455 ordinary shares of VenFin for a total amount of R325 million. On
30 June 2007, 21 079 106 treasury shares were held.

2007

2006

R million R

million

RESERVES
(Also refer to the Statements of changes in equity on page 62)

Composition of reserves

The Company:

Retained earnings

112

Subsidiary

companies

1 180

270

Translation adjustments

239

249

Fair value reserve

(9)

Long-term share scheme

–

Retained earnings

849

Associates

322

203

Equity reserves

322

201

Translation adjustments

–

1 527

585

Number

Number

of shares

of shares

E N

I N A N N U A L R E P O R T

2007

FORM OF PROXY

For use by shareholders of the Company (“member”) at the 2007 Annual General Meeting of the Company to be held

on Wednesday, 24 October 2007, at 15:30 in Magnifica 3, Protea Hotel Stellenbosch, Techno Avenue, Techno Park,

Stellenbosch (“the annual general meeting”).

I/We

_____________________________________________________________

being the holder/s of

ordinary shares in the Company, hereby appoint

(see note 1 overleaf)

___________________________________________________

or failing him/her,

___________________________________________________

or failing him/her,

3. the chairman of the annual general meeting,

as my/our proxy to attend and vote for me/us and on my/our behalf or to abstain from voting at the annual general

meeting of the Company and at any adjournment thereof, as follows (Please read note 2 and instruction 2 overleaf):

Insert an “X” or the number of votes exercisable

(one vote per ordinary share)

In favour of

Against

Abstain

Ordinary resolutions

1. Approval of annual financial statements

2. Approval of directors’ remuneration

3. Election of director – G T Ferreira

4. Election of director – J Malherbe

5. Authority to place shares under control of the directors

Special resolution

1. Authority to acquire own shares

Signed at

____________________________________________

________________________

2007

Signature/s

_________________________________________________________

Assisted by

_________________________________________________________

(where applicable)

Please read the notes and instructions overleaf.

(Incorporated in the Republic of South Africa)

(Registration number 2004/034954/06)

(ISIN: ZAU000005308)

(“the Company”)

Notes:

A member entitled to attend and vote at the annual general meeting is entitled to appoint a proxy to attend, speak

and vote in his/her stead and such proxy need not also be a member of the Company.

2. Every member present in person or by proxy and entitled to vote at the annual general meeting of the Company

shall, on a show of hands, have one vote only, irrespective of the number of shares such member holds, but in the

event of a poll, every member shall be entitled to that proportion of the total votes in the Company which the

aggregate amount of the nominal value of the shares held by him/her bears to the aggregate amount of the nominal

value of all the shares issued by the Company.

Instructions on signing and lodging the form of proxy:

A member may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the

space/s provided overleaf, with or without deleting “the chairman of the annual general meeting”, but any such

deletion must be initialled by the member. Should this space be left blank, the proxy will be exercised by the

chairman of the annual general meeting. The person whose name appears first on the form of proxy and who is

present at the annual general meeting will be entitled to act as proxy to the exclusion of those whose names

follow.

2. A member’s voting instructions to the proxy must be indicated by the insertion of an “X”, or, the number of votes

exercisable by that member in the appropriate spaces provided overleaf. Failure to do so will be deemed to authorise

the proxy to vote or to abstain from voting at the annual general meeting, as he/she thinks fit in respect of all the

member’s exercisable votes. A member or his/her proxy is not obliged to use all the votes exercisable by him/her or

by his/her proxy, but the total number of votes cast, or those in respect of which abstention is recorded, may not

exceed the total number of votes exercisable by the member or by his/her proxy.

3. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal

capacity are produced or have been registered by the transfer secretaries.

4. To be valid, either the original or a notarially certified copy of the completed form of proxy must be lodged with the

transfer secretaries of the Company, Link Market Services South Africa (Proprietary) Limited, 5th Floor, 11 Diagonal

Street, Johannesburg, 2001, South Africa, or posted to the transfer secretaries at PO Box 4844, Johannesburg, 2000,

South Africa, to be received by them not later than Monday, 22 October 2007, at 15:30 (South African time).

5. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity

must be attached to this form of proxy unless previously recorded by the transfer secretaries or waived by the

chairman of the annual general meeting.

6. The completion and lodging of this form of proxy will not preclude the relevant member from attending the annual

general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof,

should such member wish to do so.

7. The completion of any blank spaces overleaf need not be initialled. Any alterations or corrections to this form of

proxy must be initialled by the signatory/ies.

8. The chairman of the annual general meeting may accept any form of proxy which is completed other than in

accordance with these instructions, provided that he is satisfied as to the manner in which a member wishes to

vote.

compress ) pb3465/3466

www.venfin.com

ANNUAL REPORT

Incorporated in the Republic of South Africa

Registration number 2004/034954/06

ISIN ZAU000005308

www.venﬁn.com

2008

VENFIN

ANNUAL REPORT

2008

CONTENTS

Investment philosophy

Group investments

Group profile

Financial highlights

Share statistics

Directors and Board Committees

Management Committee

General report

Net asset value

Investment review

Corporate governance

Sustainability report

Annual financial statements

Analysis of shareholders

Dates of importance to shareholders

Administration

Notice to shareholders

Form of proxy

Attached

VENFIN

ANNUAL REPORT

2008

VenFin is an active investment company, focusing on high-growth

investment opportunities with expected returns materially in excess of our

cost of capital. VenFin’s experience lies in the telecommunications, media, information

technology and technology sectors and while we continue to seek attractive opportunities in

these sectors, we will not limit our investment scope to these sectors.

VenFin is not a passive portfolio investor. Investments are actively managed through

shareholders’ agreements, regular dialogue with other shareholders, directors and management

of investee companies and by providing strategic input through board, audit and other

committee representation.

VenFin adds value to its investments through its close relationships with the

broader Rupert group, as well as through its networks, which include formal

and informal alliances with venture capitalists in major global markets. These

global venture capital networks, in addition to broadening our deal ﬂow, provide both our

shareholders and investee companies with access to important markets which would otherwise

be difﬁcult to access directly. VenFin also provides treasury services, other facilities and

ﬁnancial and risk management services on a voluntary participation basis to its investee

companies.

VenFin operates in the small to medium market where very few big private

equity players have a presence. This creates a unique deal ﬂow. In addition, VenFin has

created a separate fund, called InVenFin, as a true capital fund to assess and invest in unique

early-stage intellectual property opportunities in South Africa.

INVESTMENT PHILOSOPHY

VenFin is a longer-term investor looking to make investments in businesses

that:

possess proprietary intellectual property that provides barriers to entry;

have proven technologies or present minimal technology risk;

have the potential for internationalisation;

have a strong and committed management team with a proven track record;

VenFin understands and where its team of investment professionals can add value; and

represents an opportunity that has the size, or has the potential to grow to a size, sufﬁcient

to have a meaningful impact on VenFin’s net asset value.

VENFIN

ANNUAL REPORT

2008

GROUP INVESTMENTS

AT 30 JUNE 2008

EQUITY INVESTMENTS

Interest

(1)

Dimension Data

21.7%

Sabido (e.tv)

31.7%

Tracker

31.0%

SEACOM

25.0%

SAIL

40.0%

Britehouse

30.0%

Psitek

33.5%

CIV FNS

30.0%

VisionChina

6.1%

One Digital Media

35.0%

Kalahari Energy

9.8%

VHF Technologies SA

16.8%

Trina Solar

0.7%

Johanna Solar

8.6%

Fundamo

28.9%

Cash Axcess

50.0%

Fraxion

36.7%

Resource Energy

22.5%

fring

1.8%

Destiny Corporation

10.0%

Fynbos

20.0%

i to i technologies

47.9%

Mosmart *

* Loan to be converted to equity

FUND INVESTMENTS

Carrying value

USD million

Milestone China I

(2)

1.5

Milestone China II

(3)

13.5

GEMS II

2.6

GEMS III

13.0

Veritas

(4)

0.9

CORPORATE

VenFin Finance Corporation

100%

Short-term investments of surplus cash in South Africa

VenFin Financial Investments

100%

Provides corporate services to the VenFin group and investee companies

VenFin Holdings

100%

Short-term investments of offshore surplus cash

InVenFin

100%

Intellectual property venture capital fund

(1) Percentages represent the VenFin group’s holding in the total issued shares of each investee company, after taking into account

treasury shares.

(2) Outstanding commitment of USD0.6 million

(3) Outstanding commitment of USD17.0 million

(4) Outstanding commitment of USD0.2 million

(5) Annexures A and B provide further information of subsidiary companies and investments.

VENFIN

ANNUAL REPORT

2008

GROUP PROFILE

INFORMATION ON THE COMPANIES IN WHICH INVESTMENTS ARE HELD

TRINA SOLAR

, based in China, is an integrated solar-cell photovoltaic manufacturer, differentiated by a

vertical integration strategy and the ability to use recycled silicon.

www.trinasolar.com

TRACKER’s

core business is the sale and installation of vehicle tracking systems for the recovery of stolen

vehicles in South Africa.

www.tracker.co.za

SEACOM

will provide high-capacity international fibre-optic bandwidth for Southern and East Africa.

www.seacom.mu

SAIL

is an investment company in the sport and entertainment industry in South Africa. SAIL also has

investments in sports brands.

www.sail.co.za

BRITEHOUSE

is the holding company of five operational businesses which operate in the business soft-

ware applications arena.

www.britehouse.co.za

SABIDO

has a range of media interests, the most significant of which is e.tv. e.tv is the only independent

free-to-air television broadcaster in South Africa.

www.etv.co.za

KALAHARI ENERGY

, through its wholly owned subsidiary, Sekaname (Proprietary) Limited, owns leases

for coal-bed methane exploration in Botswana.

www.kalaharigas.com

CIV FNS

has investments that will enable the group to build, own, maintain and monitor infrastructure

suitable to carry services such as fibre-optic networks.

www.civ.co.za

VISIONCHINA

, based in China, operates an out-of-home advertising network on mass transportation

systems, including buses and subways, through TV broadcasting.

www.visionchina.cn

PSITEK

has established itself as a leader in providing products in the fixed-line and mobile

telecommunication arenas in South Africa and internationally.

www.psitek.com

DIMENSION DATA

is a leading global technology company that provides solutions and services that

enable businesses to plan, build, support, optimise and manage their IT infrastructures.

www.dimensiondata.com

VHF TECHNOLOGIES SA

, based in Switzerland, develops and manufactures thin-film flexible solar cells

on a plastic substrate.

www.flexcell.com

ODM

is a leading digital media network provider to brand owners and retailers, giving them the ability to

flight dynamic content via broadcast or narrowcast to multiple environments or single LCD screens.

www.onedigitalmedia.com

JOHANNA SOLAR

is a new company committed to building a solar-cell plant in Germany, using a CIGSSe-

based silicon-free technology.

www.johanna-solar.com

VENFIN

ANNUAL REPORT

2008

Resource Energy

RESOURCE ENERGY

aims to acquire and/or develop an international portfolio of biofuel production

facilities, with initial focus on ethanol from sugarcane.

www.resourceenergy.net

FRING

, an Israeli mobile communications company, develops and markets a mobile internet service

which enables its users to talk, chat and interact with other fring users.

www.fring.com

i to i technologies

offers integrated solutions to safeguard assets, people and information.

www.itoitechnologies.com

CASH AXCESS

provides ATM-related products and services to the South African financial and retail

markets.

www.cashaxcess.com

FRAXION

develops and sells advanced spend management software that allows companies to control,

manage and analyse spending behaviour in real time.

www.fraxion.co.za

DESTINY CORPORATION

, a South African black economic empowered company, makes equity

investments with a view to long-term capital appreciation.

www.destinycorporation.co.za

FYNBOS

is an early-stage black-controlled investing holding company that makes equity investments with

a view to long-term capital appreciation.

www.fynbosmedia.co.za

FUNDAMO

is a leading supplier of mobile banking and payment software solutions to enterprise

customers.

www.fundamo.com

INVENFIN

was established by VenFin to focus on smaller early-stage investments.

www.invenfin.com

CORPORATE

MOSMART

is involved in biodiesel production across Africa as well as the production of an organic

medium for the absorption of pollutants in various applications.

MILESTONE CAPITAL

, based in mainland China, is a China-focused private equity investment firm

www.mcmchina.com

VERITAS

is Israel’s oldest venture capital ﬁrm and primarily invests in seed-stage technology companies.

www.veritasvc.com

GEMS

, based in Hong Kong, is a private equity fund management group that makes investments in the

Asia Pacific Region.

www.gems.com.hk

FUND INVESTMENTS

VENFIN

ANNUAL REPORT

2008

VENFIN

ANNUAL REPORT

2008

FINANCIAL HIGHLIGHTS

2008

2007

Headline earnings

R268 million R233 million

Share of net profit of associates

R183 million

R155 million

Net interest income and other profit

R85 million R78 million

Earnings – net profit for the year

R1 527 million R617 million

Headline earnings per share

100.4c

83.0c

Earnings per share

572.1c

219.5c

Dividend per share

– ordinary

36.0c

30.0c

– special

50.0c

Net asset value (NAV) per share

– at book value

R23.07

R15.82

– at market value of listed investments and directors’

valuation of unlisted investments

R30.00

R27.95

Closing price per share at 30 June (over-the-counter market)

R26.90

R23.25

NET ASSET VALUE

2008

2007

R million

R million

2 385

30.5

Dimension Data

2 272

29.9

1 662

21.3

Cash

1 096

14.4

1 270

16.3

Sabido

1 261

16.6

685

8.8

Tracker

594

7.8

485

6.2

VisionChina Media (VCM)

0.5

–

Alexander Forbes

1 988

26.2

1 316

16.9

Other net assets (ONA) *

352

4.6

7 803

100.0

Total

7 598

100.0

16.9% ONA

30.5% Dimension Data

21.3% Cash

16.3% Sabido

8.8% Tracker

6.2% VCM

4.6% ONA

29.9% Dimension Data

14.4% Cash

16.6% Sabido

7.8% Tracker

0.5% VCM

26.2% Alexander Forbes

* For a detailed analysis of ONA refer to the schedule on page 13.

2008

2007

VENFIN

ANNUAL REPORT

2008

VENFIN

ANNUAL REPORT

2008

VENFIN

ANNUAL REPORT

2008

S H A R E S TAT I S T I C S

V E N F I N S H A R E P R I C E

1 000

1 250

1 500

1 750

2 000

2 250

2 500

2 750

3 000

Jun

May

Apr

Mar

Feb

Jan

Dec

Nov

Oct

Sept

Aug

Jul

Jun

Mar

Dec

Sept

Jun

1 420

1 670

1 800

2 060

2 325

2 450

2 400

2 520

2 295

2 290

2 470

2 500

2 540

2 425

2 690

Cents per share

2008

2007

2006

Weighted number of VenFin ordinary shares in issue (’000)

231 418

245 487

257 412

– excluding B ordinary shares

Market capitalisation at 30 June (R million)

– ordinary shares only

6 602

5 986

3 656

– inclusive of B ordinary shares

7 558

6 811

4 160

Information on shares traded through the VenFin over-the-counter

market:

Price (cents per share)

– 30 June

2 690

2 325

1 420

– Highest

2 700

2 400

1 500

– Lowest

2 215

1 410

1 350

Number of shares traded (’000)

8 826

15 132

9 359

Value of shares traded (R million)

216

274

131

Shares traded/weighted number of ordinary shares (%)

3.8

6.2

3.6

Number of transactions

1 279

1 434

425

Monthly closing price

VENFIN

ANNUAL REPORT

2008

D I R E C TO R S

APPOINTED 2006

Johann Rupert (58)

Chairman

Dillie Malherbe (52)

Deputy Chairman

G T Ferreira (60)

Independent Non-executive Director

Jannie Durand (41)

Chief Executive Officer

Neville Williams (44)

Financial Director

Audit and Risk Committee

Dillie Malherbe (Chairman)

Jannie Durand

Neville Williams

Remuneration and Nomination Committee

Johann Rupert (Chairman)

G T Ferreira

Investment Committee

Dillie Malherbe (Chairman)

Jannie Durand

G T Ferreira

Neville Williams

Management Committee

Jannie Durand (Chairman)

Neville Williams

Hein Carse

Stefan de Villiers

Bhavnesh Gopal

Anniel Lambrechts

Peter Liddiard

Gregory Roberts-Baxter

Chris van den Heever

BOARD COMMITTEES

COMPOSITION AT 30 JUNE 2008

VENFIN

ANNUAL REPORT

2008

MANAGEMENT COMMITTEE

COMPOSITION AT 30 JUNE 2008

Jannie Durand (41)

Qualifications

BAcc (University of Stellenbosch)

Hons BAcc (University of Stellenbosch)

CA(SA)

MPhil Management Studies (Oxford University)

Neville Williams (44)

Qualifications

BComm (University of Western Cape)

Hons BComm (University of Western Cape)

CA(SA)

Hein Carse (46)

Qualifications

BEng (Electronic) (University of Stellenbosch)

MEng (Electronic) (University of Stellenbosch)

MBA (University of Pretoria)

Stefan de Villiers (47)

Qualifications

BSc Aeronautical Engineering (University of the Witwatersrand)

Bhavnesh Gopal (35)

Qualifications

BComm (University of Cape Town)

PDA (University of Cape Town)

CA(SA)

Anniel Lambrechts (36)

Qualifications

BAcc (University of Stellenbosch)

Hons BCompt (University of South Africa)

CA(SA)

Peter Liddiard (43)

Qualifications

BComm (University of Port Elizabeth)

PDA (University of Port Elizabeth)

CA(SA)

Gregory Roberts-Baxter (35)

Qualifications

BSc Electrical Engineering (University of the Witwatersrand)

MSc Electrical Engineering (University of the Witwatersrand)

MBA (University of Cape Town)

Chris van den Heever (43)

Qualifications

BSc Chemical Engineering (University of Stellenbosch)

MBA (University of Stellenbosch)

VENFIN

ANNUAL REPORT

2008

VENFIN

ANNUAL REPORT

2008

GENERAL REPORT

The past 12 months’ economic global climate has been substantially different from the previous 12 months. VenFin also

experienced this, especially in the valuations of investment opportunities. Our cost of capital has increased materially in the

volatile economic climate. This has influenced our valuations models and risk appetite. Downside risk has increased

appreciably, and an investor’s goal for at least the next 12 months should be to preserve capital.

The exposure of banks, funds and savings capital to substantial losses in the global market has not been fully comprehended

yet. This has already changed investors’ perception of risk and it is the change in risk perception and not in risk tolerance that

explains the high volatility of financial markets.

During the period under review, the global economy slowed down as the US financial crisis and relentless increase in

commodity prices took their toll. Emerging economies will not be left unscathed, although current expectations remain

relatively upbeat, which may yet ensure that the global economy escapes recession. However, growth forecasts are being

scaled down.

Following a period of robust economic growth, the South African economy has run into serious headwinds: the slowdown of

the global economy, as explained previously, the electricity crisis and political uncertainty.

Arguably the most potent force in the current slowdown in economic growth has been the cyclical decline arising from the

steady increase in inflation and interest rates since the middle of 2006. This is also evident on the balance of payments where

foreign investors’ risk appetite to continue financing South Africa’s current account deficit has somewhat decreased.

In these uncertain economic environments locally and globally, we are required to adapt to changes to remain successful in

our ventures.

Given the broader picture, a slowdown to a 3% GDP growth rate over the short term will by no means be a train smash for

South Africa, but should rather be seen as an opportunity to find a new balance, to reduce debt, increase productivity and to

address the infrastructure bottlenecks in the South African economy.

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

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 tradability of the unlisted shares

Growth potential and risk factors

Underlying net asset value

Cash flow projections

The net asset value (at valuation) after providing for potential gross CGT liability of R381 million (2007: R497 million),

increased by only 2.7%, from R7 598 million to R7 803 million at 30 June 2008, reflecting mainly the increase in the

market value of VisionChina Media, coupled with an increased shareholding in that company, as well as an increase in

the valuation of Tracker, offset by a reduction in the market value of Trina Solar and Dimension Data (from 57 pence per share

at 30 June 2007 to 46 pence per share at 30 June 2008).

VENFIN

ANNUAL REPORT

2008

The net asset value per share (at valuation) amounted to R30.00 at 30 June 2008, compared to R27.95 at

30 June 2007. This represents an increase of 7.3% year-on-year, 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 260 095 506

(2007: 271 871 243).

Compared to the closing over-the-counter market price of R26.90 at 30 June 2008 (2007: R23.25), the share price traded

at a 10.3% discount (2007: 16.8% discount) to VenFin’s net asset value (at valuation). Excluding the cash balance, the

shares traded at a discount of 13.1% (2007: 19.6%).

A schedule, setting out a more detailed composition of the underlying net asset value, is included at the end of this report.

Headline earnings

Headline earnings for the year to 30 June 2008 increased by 15.0% to R268 million (2007: R233 million). This was due mainly

to the increased contribution of Dimension Data to VenFin’s headline earnings, amounting to R122 million (2007: R44 million).

This significant increase was as a result of improved performance by Dimension Data, as well as an increase in the shareholding

in Dimension Data, from 18.2% to 21.7%, during the second half of the year. Interest received (after taxation) increased to

R159 million (2007: R64 million), mainly as a result of the higher average cash balances due to the proceeds of the Alexander

Forbes transaction received at the beginning of the year.

The headline earnings per share, however, increased by 21.0% to 100.4 cents (2007: 83.0 cents), due to the favourable impact

of the share repurchase programme.

The headline earnings consists mainly of equity accounted earnings from associates, amounting to R183 million

(2007: R155 million), as well as interest and other net income derived from cash and other investments, net of head office costs,

amounting to R85 million (2007: R78 million).

Composition of headline earnings

Year ended Year

ended

30 June 2008

30 June 2007

R million

R million

Associates

Dimension Data

(1)

122

Sabido

(1)

Tracker

(2)

Fundamo

(2)

–

Britehouse

(3)

–

SAIL

(2)

SEACOM

(4)

(11)

–

VHF Technologies

(2)

(12)

(6)

Psitek

(2)

(17)

Alexander Forbes

(5)

–

Other

(16)

(5)

Amortisation of intangibles raised on acquisition

(32)

(54)

Subsidiaries

Interest and other net income

Headline earnings

268

233

Notes:

(1) These associates were equity accounted for the year to 31 March 2008.

(2) These associates were equity accounted for the year to 30 June 2008.

(3) This associate was equity accounted for the six months to 31 March 2008.

(4) This associate was equity accounted for the eight months to 30 June 2008.

(5) The investment in Alexander Forbes was disposed of on 26 July 2007.

VENFIN

ANNUAL REPORT

2008

GENERAL REPORT

CONTINUED

INVESTMENTS

During the year under review, VenFin invested R1 218 million in current and new investments, of which R392 million was

utilised to acquire an additional 50 million Dimension Data shares in the open market. Furthermore, we invested R244 million

for a 25% interest in SEACOM, R143 million in Britehouse, as well as R109 million in the Equity Funds.

Another significant event was the conclusion 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. VenFin received proceeds amounting to R2 009 million for

its shareholding, realising an internal rate of return (IRR) of 25% on its investment in Alexander Forbes. (Please refer to the

Directors’ 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 R1.4 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 longer-term view and the focus 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, 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. 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 12.2 million VenFin ordinary shares at an average price of R24.14 per share for

R295 million during the year under review.

Dividends

A dividend of 36 cents (2007: 30 cents) per share has been declared. The ordinary dividend is covered 2.2 times (2007:

4.9 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

29 August 2008

VENFIN

ANNUAL REPORT

2008

NET ASSET VALUE

Composition of net asset value (R million)

30 June 2008

30 June 2007

Book value

Valuations

Book value

Valuations

Listed

(1)

2 650

2 906

2 227

4 313

Dimension Data

2 129

2 385

1 568

2 272

VisionChina Media

485

–

Trina Solar

Alexander Forbes

–

606

1 988

Unlisted

(2)

1 689

3 616

978

2 686

Sabido

162

1 270

149

1 261

Tracker

146

685

103

594

Fund investments

247

168

SEACOM

246

264

–

SAIL – equity

– preference shares

104

CIV FNS

178

–

Britehouse

147

173

–

VHF Technologies

One Digital Media

–

Psitek

VisionChina Media (previously CDMTV)

–

Other net assets

402

431

351

371

Cash

1 662

1 096

Net asset value (NAV)

6 001

8 184

4 301

8 095

Potential CGT liability

(3)

(381)

(497)

NAV after tax

7 803

7 598

NAV after tax per share (Rand)

23.07

30.00

15.82

27.95

Share price (Rand)

26.90

23.25

Discount to NAV

10.3%

16.8%

(1) Market value

(2) Directors’ valuation

(3) The potential capital gains tax (CGT) liability, which is unaudited, is calculated at an effective rate of 14%. No provision

was made for the effect of potential capital losses.

VENFIN

ANNUAL REPORT

2008

DIMENSION DATA 21.7%

(22 July 2008: 25.4%)

www.dimensiondata.com

Dimension Data Holdings plc (Dimension Data) is a leading global technology company that provides solutions and services

that enable businesses to plan, build, support, optimise and manage their IT infrastructures. The company is listed on the

London Stock Exchange (LSE) and has a secondary listing on the JSE Limited.

Dimension Data’s expertise lies in the technology areas of network integration, converged communications, security, Data

Centres and Storage (DCS), Customer Interactive Solutions (CIS) and Microsoft Solutions. The company applies its skills in

consulting, integration and managed services to create customised client solutions. It is a global leader in the field of

simplifying and consolidating IT infrastructures through Internet Protocol (IP) convergence.

With expected revenues in excess of US$4 billion in the current financial year and 10 600 employees in over 42 countries,

Dimension Data has a global footprint that supports highly personalised regional execution, while leveraging the domain

experience and depth of a global business.

In December 2002, R&V Technology Holdings Limited (R&V), a wholly owned subsidiary of VenFin, subscribed to a

US$100 million seven-year convertible bond issued by Dimension Data. RFS Finance Limited, a wholly owned subsidiary of

VenFin, subsequently acquired 93 970 485 shares in the open market, representing a shareholding of 7% in Dimension Data.

In April 2006, R&V elected to convert the US$100 million convertible bond into 188 121 978 ordinary Dimension

Data shares. On conversion, the additional shares amounted to 12.2% of the enlarged issued share capital of Dimension Data.

R&V acquired an additional 50 000 000 shares in the first quarter of 2008 to give it an effective shareholding of 21.7%.

Overview of the six months to 31 March 2008

Dimension Data reported another period of excellent progress in the first half of 2008. Revenue growth was robust at 23%

and returns improved significantly, with operating profit up by 55% to US$85 million. Earnings per share increased by

42% to 3.4 cents. The company’s growth in revenue was fuelled by solid demand for both product and services, and strong

performance across all regions and lines of business.

In Dimension Data’s most significant line of business, Network Integration (47% of group revenues), revenue growth of 17%

was underpinned by the refresh cycle and supported by Dimension Data’s investment in new technologies, including wireless

networks to support mobility, performance optimisation to improve the performance of services and applications over networks,

and operations management to drive services efficacy and service level adherence.

Strong performances were also reported from the other global lines of business: security, converged communications, Microsoft

Solutions, CIS and DCS. These lines of business account for 33% of revenue, up from 32% in the comparative period, and

provide exposure to high-growth markets where Dimension Data is well positioned to compete. Security had an excellent half

year, growing by 36%. Security technology continues to permeate all aspects of corporate infrastructure and is increasingly

important as organisations seek to enable convergence and more collaborative and mobile business models. Converged

communications grew by 21%, with growth being underpinned by the group’s enhanced IP telephony deployment methodologies

and managed IP telephony service offerings. The Microsoft Solutions line of business grew by 15% and achieved a significant

INVESTMENT REVIEW

EQUITY INVESTMENTS

VenFin has signiﬁcant minority interests in the following investments and provides strategic guidance

to these companies through board and subcommittee representation. We are a longer-term investor

in these companies with the intention of realising returns.

VENFIN

ANNUAL REPORT

2008

improvement in the gross profit contribution. The group has seen a considerable increase in clients piloting and deploying

unified communications solutions and has benefited from projects which upgrade and manage core Microsoft infrastructure.

Trading in the CIS line of business (+14%) benefited from continued migration to IP-based contact centres. Demand for

process improvement solutions and the consolidation of vendor platforms is also underpinning growth. The DCS line of

business grew by 17%, fuelled by demand for server virtualisation, storage consolidation, and back-up and recovery solutions

as well as increased interest in “green IT” solutions.

Growth of 10% in Dimension Data’s regional lines of business (20% of revenues) was driven by a combination of continued

robust demand (+30%) for Internet Solutions’ internet access, virtual private network and hosting offerings; slower growth in

Plessey at significantly higher gross margins; and a flat revenue performance in Express Data, the distribution business

in Australia.

Dimension Data enjoyed solid growth in both services and product. Services growth of 18% reflected strong demand for both

managed and professional services. Product revenues increased by 15%, with good demand from the public sector and service

provider clients, while the financial services segment was resilient despite challenging macro-economic conditions. The

group’s services to multinational clients continued to expand and to differentiate the group in the marketplace.

From a geographic perspective, good revenue growth was achieved in all regions, with particularly strong growth reported in

the Americas region (24%), Asia (30%) and Middle East and Africa (20%). Operating margins improved in all regions and

further progress was achieved in improving the return on sales of the European region. A 0.5% increase in the group’s gross

margin reflected firmer product and services margins combined with an improved services mix. The improved gross margins,

combined with an ongoing focus on costs containment, resulted in an improvement in the operating margin to 3.9% from

3.1% in the prior period.

Further progress was made in reducing the company’s effective tax rate to 27%, from 29% in the first half of 2007.

Group cash and cash equivalents totalled US$397 million at the end of the reporting period (2007: US$352 million),

reflecting the growth in the business.

BEE

The black economic empowerment equity transaction concluded by Dimension Data’s South African subsidiary in 2004

continues to deliver favourable results and a further 5% vested for the year to September 2007, which brought the total

amount vested to 14.2%.

The future

Dimension Data’s strategy of investing in both its lines of business and services, combined with a close focus on delivering on

key financial targets, is producing results. The group will continue to invest to ensure that it captures market opportunities

early in its global and regional lines of business and thereafter to build returns through scale and efficiency gains as markets

move to maturity. The group plans to continue to invest in services, systems, standardisation and processes to drive operational

excellence and efficiencies. While the growth strategy remains primarily organic, it will make selective acquisitions to secure

future growth in important new markets.

Dimension Data remains positioned ideally to benefit from significant market trends, including the continued adoption of IP-

based infrastructure, unified communications, standardisation and virtualisation. There will be a continued focus on driving

improved profitability ratios through efficiency and scale benefits, which will be combined with a close focus on the overhead

base. While recognising the global macro-economic headwinds to growth, Dimension Data is nevertheless optimistic about the

remaining part of the 2008 financial year. Dimension Data is in a strong strategic and operational position, with the benefit

of a robust balance sheet. The group continuously reviews operational plans to be able to adapt to developing circumstances.

Dimension Data continues to see solid demand in the market for its industry-relevant solutions and service offers, and remains

confident that the group is well positioned to promote continued profitable growth.

VENFIN

ANNUAL REPORT

2008

INVESTMENT REVIEW

EQUITY INVESTMENTS CONTINUED

Datacraft Asia Scheme of Arrangement

On 22 July, Datacraft and Dimension Data made a joint announcement on Dimension Data’s intent to acquire the remaining

44.9% of the issued shares of Datacraft which it does not already own. The proposed acquisition will be effected by way of a

Scheme of Arrangement under Section 210, Chapter 50, of the Singapore Companies Act. In consideration of the transfer of

each Datacraft share under the scheme, eligible shareholders will receive an aggregate of US$1.33 in cash. This per share

consideration will comprise approximately US$1.09 in cash from Dimension Data and approximately US$0.24 in cash

through a capital distribution from Datacraft. (Dimension Data and its related corporations will not be entitled to the capital

distribution.)

If successful, the total consideration of approximately US$276 million will be funded from a combination of internal cash

resources (US$156 million) and the placing of new shares (US$120 million). The outcome of the scheme will be known in

the fourth quarter of 2008.

The placing of shares occurred on 22 July and raised approximately

60.2 million. The placing was fully underwritten by

VenFin Limited and Allan Gray (on behalf of its clients). Of a total of 136 121 909 new ordinary shares placed at

44.25 pence, VenFin acquired 98 375 347 (72.3%). As a consequence of the above, VenFin’s shareholding in Dimension

Data is now 25.4%.

SABIDO (including e.tv ) 31.7%

www.etv.co.za

Sabido Investments (Proprietary) Limited (Sabido) has a range of media interests, the most significant of which is e.tv. During

the year under review, Sabido invested in new media initiatives which will enhance e.tv’s growing focus on the production,

aggregation and distribution of content across multiple platforms in South Africa and abroad.

Overview of the year to 30 June 2008

e.tv

e.tv maintained its position as the largest English-medium television channel in South Africa and the second most

watched channel overall. During the period under review, the channel averaged a 24-hour market share of 21.6%

(2007: 21.9%) and a prime time (18:00-22:00) market share of 20.1% (2007: 18.6%). e.tv has continued to grow its

market share among the black middle class, particularly among the celebrated “Black Diamond” group.

Programming costs remained stable. Prime-time news, films, wrestling and South African dramas command the highest

audience ratings. Newly launched local drama, Rhythm City, has shown unprecedented growth for a daily drama and has

y
y

driven prime-time growth year on year. Television advertising spending continued to grow and e.tv achieved an 11.2%

growth in revenue year on year. In pursuing its strategy to become a multi-channel business, e.tv continues to be actively

involved in the development of a national policy for the introduction of digital terrestrial television in 2008.

Other Sabido projects

Sabido’s other interests include e.sat, Viamedia, YFM, Sasani Studios, African broadcast interest, Natural History Unit

and the Cape Town Film Studios and adjacent property development. During the year e.sat, a 100% subsidiary of Sabido,

was awarded a satellite pay-TV licence. Sabido pursued potential investments in free-to-air television and radio broadcasters

in various African countries. It acquired a 49% interest in Botswana-based Gaborone Broadcasting Company and is in the

process of acquiring interests in West Africa and other parts of the continent. Sabido also entered into an agreement with

Multichoice Africa to distribute a 24-hour news channel on the DStv platform. Sabido will have a 42.5% fully diluted

shareholding in Cape Town Film Studios development and is in the process of investing in several entities complementary

to its core business.

VENFIN

ANNUAL REPORT

2008

BEE

e.tv is a fully black-empowered company in both ownership and employment, and has exceeded its employment equity

objectives. 74% of its employees are black, 46% women and 5% disabled. e.tv spends in excess of 5% of its salary bill on

training and has established in-house training programmes for historically disadvantaged individuals in middle-management

positions.

The future

Sabido’s vision is to leverage e.tv’s market position and to develop a compelling content production and distribution business

with a pan-African focus.

TRACKER 31.0%

www.tracker.co.za

As a leading player in the South African stolen vehicle recovery industry, Tracker Network (Proprietary) Limited (Tracker) has

a strong monthly subscription-based income stream. Its core business is the sale and installation of vehicle-tracking systems

for the recovery of stolen vehicles.

Tracker’s contract partnership with the South African Police Service (SAPS), in terms of which Tracker’s technology is used to

track and recover stolen vehicles throughout South Africa, has proved highly successful. This contract partnership has been

renewed for a further five years in 2008. Since its inception in 1996, more than 38 000 stolen vehicles have been recovered,

7 100 criminals arrested and 290 chop shops and vehicle syndicates exposed through Tracker’s technology.

The product range currently comprises three products, namely Tracker Retrieve (stolen vehicle recovery system), Tracker Alert

(Retrieve plus an early alert enhancement) and, as from 1 June 2007, Skytrax (internet-based fleet monitoring system with

stolen vehicle recovery capabilities).

Overview of the year to 30 June 2008

On 1 June 2007, Tracker acquired Mobile Data, a vehicle monitoring and telematics company, previously 50% owned by

WesBank, which offers a range of GPS/GSM-based products known as Skytrax. Tracker has also secured the technological

expertise and intellectual property relating to the Skytrax technology.

The past year has seen the integration of the two businesses, which management believes will be completed successfully when

Tracker moves to its newly built premises. Tracker achieved a 1.5% growth in operating profit compared to 2007, 14% growth

in net subscribers and strong cash flows. During the year Tracker installed almost 150 000 units (a 50% increase from the

previous year), while its subscriber base increased to 538 000 vehicles.

The company is in the midst of an Oracle and Siebel installation, having outgrown its incumbent financial and customer

relationship management solutions. In addition, significant investments are being made in a comprehensive disaster recovery

site and other information technology hardware and software to position the company for expected future growth.

BEE

The Mineworkers Investment Company (MIC) has been an investor in Tracker since 2000 and has increased its historical 25%

stake to 26.5% following the merger with Mobile Data. WesBank now holds a 32.5% stake, VenFin 31% and the balance of the

equity, i.e. 10%, is held by a private investment consortium.

The future

Tracker is poised for attractive growth in 2009, but the impact of the current high interest and inflation rates on the sale of new

vehicles and the repossession of financed vehicles should not be underestimated. Tracker’s management is responding to this

challenge by driving down input costs and by investing in its systems to maintain the highest possible recovery rate as well as

excellent customer support services. In addition, international opportunities are being explored.

VENFIN

ANNUAL REPORT

2008

INVESTMENT REVIEW

EQUITY INVESTMENTS CONTINUED

SEACOM 25.0%

www.seacom.mu

SEACOM Capital Limited (SEACOM) will provide the first terabit undersea fibre-optic cable to connect Southern and East

Africa to Europe and Asia. The cable is currently under construction by Tyco Telecommunications (USA) and, when fully

functional in June 2009, SEACOM will provide high-capacity international fibre-optic bandwidth for Southern and East Africa.

The cable will connect through South Africa, Mozambique, Tanzania, Kenya and Djibouti and onwards to the rest of the world

via landing points in France (and onwards to London) and India.

Covering a distance of 15 000 km and with a capacity of 1 280 gigabits per second, SEACOM’s state-of-the-art cable will

enable bandwidth-hungry African economies to enjoy true broadband internet, peer-to-peer networks and HDTV. Through its

high-volume and low-cost business model, SEACOM is able to offer high bandwidth capacity at prices significantly lower than

current satellite or fibre offers on an open access basis. Open access to high bandwidth at low cost will be the catalyst for the

growth in the ICT-linked service industries such as outsourced call centres, back-office business process outsourcing and

research centres across the African continent. The new bandwidth brought on-stream by the SEACOM cable system means

that connectivity costs will be reduced significantly.

The key aspects of the SEACOM cable are:

Significantly reduced pricing relative to existing fibre and satellite solutions.

Planned ready-for-service date of June 2009, well ahead of any competing cable initiatives and ready in time to meet the

bandwidth needs of the Confederations Cup and the 2010 Soccer World Cup in South Africa. The SEACOM cable is the

only new cable initiative that has financing in place and where construction is already under way through its turnkey

partner Tyco Telecommunications (USA).

The cable is the first open access solution in the market, allowing any customer to directly obtain access to international

bandwidth.

The SEACOM solution will provide customers in key territories with backhaul solutions included in the offering. In

addition, SEACOM’s solution will include connectivity to London, thus providing a true end-to-end solution for

customers.

SEACOM has been structured to meet the policy objectives of governments and NEPAD.

SEACOM is majority African owned, with a 77% economic interest in African hands.

Overview of the year to 30 June 2008

With the funding and shareholder arrangements for SEACOM concluded in November 2007, construction and development

of the system is progressing well and remains on schedule to go live in June 2009. The marine survey and manufacturing of

the cable system is on schedule. In line with the project’s progress, several additional personnel were appointed to assist with

the ongoing development and construction and also to prepare the SEACOM cable for full operational status.

The future

The focus will remain on completing the project on schedule and to ensure commercial readiness by June 2009. Demand for

bandwidth capacity is expected to continue to exceed significantly the current capacity available within SEACOM’s markets

in South Africa, Mozambique, Tanzania, Kenya and Djibouti.

In addition to the coastal countries, SEACOM is and will continue to work with the landlocked countries to ensure that

networks are built to enable these countries to benefit from the SEACOM fibre-optic cable.

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ANNUAL REPORT

2008

SAIL 40.0%

www.sail.co.za

SAIL Group Limited (SAIL) is an investment company in the sport and entertainment industry. Through its investments in

CIRCA Hospitality (CIRCA), Edusport, Navitute, SAIL Sport and Entertainment (SSE) and Rugby brands, the company offers

various services including sport business consulting, rights commercialisation, event creation, merchandising, sponsorship

management, event management, investments, hospitality management and sport and leisure travel.

Structure of the business

SSE

Offers event management, sponsorship management and corporate client services, and merchandising management.

CIRCA

CIRCA specialises in the management and co-ordination of business, social and sports events, with an emphasis on

excellent hospitality experiences. The expertise is in managing events of any scale and nature through professional project

management teams.

Soccer World Cup 2010

CIRCA entered into a joint venture with Megapro (Primedia subsidiary) to act as the ticket agent for Sub-Saharan Africa.

Since sales started in June, there has been overwhelming interest from corporate South Africa.

Navitute

Navitute specialises in the creation and ownership of innovative events in the sports and entertainment industry.

Overview of the year to 30 June 2008

In 2008, SAIL continues to produce growth in revenue and earnings from its various service offerings. Edusport, SSE and Blue

Bulls rugby provided earnings above expectation, while CIRCA, Navitute and Western Province Rugby have shown steady

growth. Positive cash flows were utilised to settle long-term debt and to buy back shares. The remaining cash will be utilised

for future growth.

The group also expanded its business with the acquisition of a 50% equity interest in Premier Teams Holdings Limited, a

United Kingdom holding company with interests in Saracens Rugby Club (89%), RT Marketing (100%), Premier Team

Promotions (100%) and National Sporting Club (49%).

During the year, SAIL completed its strategy to disinvest from its non-core rugby investments when it sold its equity interest

in Leopards Rugby.

BEE

SAIL group of companies is fully committed to broad-based black economic empowerment (BBBEE) and views it as a key

business imperative. To this end, the company has embarked on a number of initiatives to comply with the gazetted BBBEE

Codes of Good Practice, published by the Department of Trade and Industry.

The company currently has a 40% BEE shareholding of which Vuwa Investments owns the majority. The percentage of

historically disadvantaged employees employed by the company is currently at 66% against a targeted 68% for 2008.

The company’s indicative broad-based self-assessment on BEE is currently that of a Level 4 contributor. An external verification

process will be completed shortly.

The future

With the 2010 Soccer World Cup and the British Lions 2009 tour providing strong stimulus in the industry, the group of

companies are looking forward to a period of sustained growth.

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2008

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ANNUAL REPORT

2008

INVESTMENT REVIEW

EQUITY INVESTMENTS CONTINUED

BRITEHOUSE 30.0%

www.britehouse.co.za

Britehouse Holdings (Proprietary) Limited (Britehouse) is the holding company of five operational businesses which operate

in the business software applications arena. Britehouse owns 57.6% of 3fifteen, 75% of Pebbletree Consulting, 75% of One

Arch Consulting, 93% of Auto-Mate and 32% of Paracon Holdings.

3fifteen is a Microsoft Gold Partner and provides specialist Microsoft services, including consulting, software application

development and deployment. Pebbletree and One Arch provide strategic business consulting services in respect of SAP

software and value-adding, complementary mobile, front-end and outsourced solutions. Auto-Mate provides a unique hosted

ERP (European Recovery Programme) service to the automotive dealership market. Paracon Holdings is an empowered JSE-

listed ICT resourcing and solutions company.

As a result of its investments in Pebbletree and One Arch, Britehouse is a SAP alliance partner.

Overview of the year to 30 June 2008

For the six months ended 31 March 2008, the Britehouse group reported revenue of R223.9 million and operating profit of

R39.2 million. In addition, its share of associate income from Paracon contributed another R12.1 million to company profits.

These results included the addition of One Arch and Auto-Mate, which were acquired during the year. On a comparative basis,

revenue and operating profit grew organically by 45% and 75%.

The largest contribution to growth came from the SAP businesses, where certain objectives at large customer projects were

achieved earlier than anticipated, resulting in better than expected revenue. This overachievement will be slightly offset in

year two when the objectives should have been achieved as planned. However, there is scope for new project revenue from

these customers that should sustain future growth.

The actual gross margin was 2% below expectations. Estimates of the contractor ratio appear to have been more accurate than

in previous years, but contractor rates have continued to increase, with a delay in passing them on to customers. However, as

the global market issues receive more exposure, a number of contractors are querying the possibility of being offered permanent

positions again.

Despite the decline in reported vehicle sales volumes against prior periods, Auto-Mate continues to perform well. This is

mainly due to the professional services area where certain dealers request assistance in the design of different business

intelligence reports – the style of which revolves around cost management by the dealers.

Auto-Mate has not yet seen a material number of dealerships closing, but the situation is monitored closely as this is a major

concern, especially taking into account the poor performing vehicle sales sector.

Paracon had a good first half-year, with revenue 15% higher at R439 million and EBITDA 29% higher at R43 million when

compared with the first half-year of 2007. Britehouse received a dividend of 10 cents per share from Paracon in March 2008,

amounting to R12 million.

BEE

In 2007, 60% of Britehouse was sold to a BEE and investment consortium comprising VenFin, Convergence

Partners Investments (Proprietary) Limited and Safika Holdings (Proprietary) Limited. The remaining 40% is held by

Dimension Data.

Convergence Partners, previously known as Ngcaba Holdings, is an empowerment company led by Andile Ngcaba who has

been active in the ICT industry for a number of years, and was previously director-general of the South African Department of

Communications for eight years.

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Safika is a black-owned investment holding company which focuses on making strategic investments and assisting in the

management of these investments.

The future

With the addition of One Arch to its SAP offering, Britehouse is now one of the largest SAP consulting companies in South

Africa. Together with its Microsoft offering and access to skills provided by Paracon, it has significant project delivery capability

and resource expertise to compete with other large application consulting organisations. Skills attraction and retention remains

a concern in these areas and Britehouse continues to build its brand within the IT community in order to attract and retain

key talent.

The companies all have strong business channels and forecasts, but due to the global macro-economic factors destined to

have an impact on IT spending, Britehouse will continue to monitor the situation closely.

Auto-Mate, operating exclusively in the car dealership market, is not forecasting significant growth as a result of the poor

vehicle sales volume and anticipated closing of dealerships around the country.

PSITEK 33.5%

www.psitek.com

Psitek (Proprietary) Limited (Psitek) creates products and solutions specifically for the emerging markets where the problems

and opportunities are unique and require the type of innovative and appropriate thinking that the Psitek brand has come

to represent.

With a clear understanding of the requirements for sustainability and the challenges of different market segments, Psitek has

created a number of independent product and service brands that are recognised and valued by users and customers around

the world. Traditionally Psitek has been active in the telecommunications segment, providing products that create access to

voice services in the form of supervised public payphones and wireless local loop devices. During the year, Psitek’s strategy

was consolidated around four market segments relating to the traditional access-to-voice segment and then three others

relating to access to payment services, information and media.

Psitek has a strong and well-organised product development capability and distributes and supports its products around the

world through direct engagements as well as through partners. The company owns a world-class manufacturing facility that

produces all its products and provides manufacturing services to a number of South African and, more recently,

overseas customers.

Overview of the year to 30 June 2008

Psitek invested heavily in new businesses and new products and this, coupled with a general and significant decline in the

traditional product-sales business, resulted in a much worse than expected financial result for the year. The consolidated

turnover for the period declined to R194.5 million (2007: R316.5 million).

During the first half of the year, the company strategy and structure were re-evaluated and four business streams were created

to satisfy the diverse requirements of the market segments that were targeted. The company moved away from its traditional

product-sale model to one of creating, delivering and supporting longer-term annuity-income-generating businesses. This re-

evaluation, as well as the consequential shift in operations, was quite disruptive for the organisation. At the same time,

Psitek’s traditional business declined to the extent that it was not able to support the overheads of the company on an ongoing

basis and, as a result, the company moved into a loss-making position.

The decision was taken to support the ongoing investment in new business streams and to restructure the company to take

advantage of the immense opportunities which exist.

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ANNUAL REPORT

2008

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2008

INVESTMENT REVIEW

EQUITY INVESTMENTS CONTINUED

The Southern Africa market is engaged via Psitek South Africa in Johannesburg, and the rest of the international business is

engaged from the head office in Cape Town. Good progress was made in the establishment of new businesses, with local

partners in Latin America as well as Eastern Europe. Activities in Asia have been reduced significantly to focus on these areas.

Partnerships with local companies, both network operators and others, as well as strategic engagements with key customers,

have been a significant focus of the sales team.

During the year, the product development team created a number of new product ranges that will allow the company to

compete and grow its business in the traditional segment as well as to open up new streams. Substantial investments were

made in software development to create the platforms required to manage the transactions and devices needed for the new

annuity-income-generating businesses. Innovation and development efficiency continue to be key drivers for this group.

BEE

Two empowerment deals were concluded successfully in Psitek’s local operations during the prior financial year and, together

with the subsequent relationships which developed, should add great value to all parties involved.

The first empowerment deal related to Elprom, Psitek’s electronic goods manufacturing facility in Stellenbosch, and involved

25% of the shares made available to its employees in a broad-based BEE initiative. This has been in place for over a year and

has added significantly to the BEE profile of the company and the group. Projects were initiated during the year to drive other

aspects of the BBBEE scorecard. The company’s BEE profile is expected to continue to improve as a result.

The second empowerment deal related to Psitek South Africa, Psitek’s sales, distribution and support subsidiary responsible

for the region of South Africa and its neighbouring countries. Currently 20% of the company is owned by Regiments Capital

under the leadership of Litha Nyhonyha.

The future

The outlook for the new financial year remains difficult, and with the company only expecting to return from its loss-making

position in the last quarter, management will continue to balance the need for short-term financial performance carefully

against its longer-term objectives. The foundations of new annuity-income-generating businesses will be established this year

in both the traditional and new business streams. In addition, sales of both existing and new products from all regions are

expected to contribute positively.

CIV FIBRE NETWORK SOLUTIONS 30.0%

www.civ.co.za

CIV Fibre Network Solutions (Proprietary) Limited (CIV FNS) is a holding company with investments in Dark Fibre Africa

(Proprietary) Limited (86%) and Muvoni Weltex Network Technologies (Proprietary) Limited (72%). These investments will

enable the group to build, own, maintain and monitor infrastructure suitable to carry services such as fibre-optic networks.

With the advent of a deregulated telecommunications environment, newly licensed telecommunication and media operators

have moved rapidly to commission their own network infrastructures. Apart from limited network deployment resources (civil

engineering) to build these networks, there is a significant overlap in routes which results in cost duplication. Civil engineering

infrastructure and ducting, account for the majority of costs. The CIV FNS group offers the advantage of shared infrastructure

which will result in huge cost reductions for its clients.

Due to the diversity of operations in the CIV FNS group companies, each company will be addressed separately.

BEE

The 70% shareholding held by Community Investment Venture Holdings (Proprietary) Limited in CIV FNS culminates in CIV

FNS being defined as a black-owned company in terms of the “modified flow through principal” as defined in the DTI’s Codes

of Conduct.

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ANNUAL REPORT

2008

VENFIN

ANNUAL REPORT

2008

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ANNUAL REPORT

2008

DARK FIBRE AFRICA (PROPRIETARIETARY) LIMITED 25.8%
(indirectly via CIV FNS) (DFA) is a 86%-owned subsidiary of CIV FNS. It is a leading independent and carrier neutral
provider of secureducting infrastructure, suitable to accommodate services such as fibre-optic cables used by its clients
for the transmission of urban and long-haul telecommunications traffic. The major benefits to customers
are lower cost transmissions and reduced time to market.

Overview of the six months to 31 March 2008
DFA commenced the rollout of its network in October 2007 with the assistance of its sister company,
Muvoni Weltex Network Technologies. A core ring in Johannesburg, regarded as the most important
communication ring in Africa, was the first priority. The ring links important areas such as Germiston,
New Doornfontein (CBD), Rosebank, Sandton, Randburg, Sunninghill and Midrand. The ring was
completed by the end of July 2008. Midrand, Centurion and Pretoria will be next in line, while activities
have also started in Durban and Cape Town.

The company achieved its prime objective of securing an initial customer, and sales efforts have
commenced in earnest with the availability of the segments of the mentioned Johannesburg ring.
A sophisticated network control centre was built to provide a world-class monitoring and maintenance
service for clients.

The future
Project funding to the value of R785 million was secured from a consortium led by Absa Capital. Absa
Capital acquired a 10% equity stake in DFA during July 2008.
DFA will start generating revenue in July 2008 after the completion of its first ring. DFA enters into long-
term annuity agreements with customers.

DFA plans to extend its network in all major urban areas in South Africa. Networks will also be linked by
intercity long-haul routes. Sales and marketing efforts will be increased as additional ducting infrastructure
is completed. It is anticipated that several new telecommunications licences will be issued within the
next year, which will expand the size of DFA’s target market.

MUVONI WELTELLX NETWORK TECHNOLOGIES
(PROPRIETARIETARY) LIMITED 21.6% (indirectly via
CIV FNS) (MWNT) is a 72%-owned subsidiary of CIV FNS. MWNT specialises in the mechanical trenching
of road surfaces to facilitate the laying of ducts, that house fibre-optic cable, and other related services.
Once completed, the duct infrastructure is sold to DFA, its sister company. DFA will lease duct
infrastructure to licensed telecoms operators in South Africa. MWNT supplies its services exclusively to
DFA until the planned DFA network is completed in approximately five years’ time.

MWNT is a capital-intensive civil engineering company with an expected asset base of R150 million
by 2009. The mechanical trenchers utilised are unique in that they trench roads fast and cleanly, hence
the name “Cleanfast” machines. Traffic is partly disrupted for short periods and the narrow trenches
(100 mm) are less disruptive than the conventional hand-trenching method. Rubble cut from the road
surface is sucked up by the trencher’s supersucker ability and stored in an enclosed bin. MWNT has the
first mover advantage in South Africa as its technology is considerably more productive than the traditional
manual trenching methods.

Overview of the year to 30 June 2008
MWNT commenced trenching for DFA exclusively in October 2007 by using one Cleanfast trenching
machine. Once asset financing was approved in January 2008, additional machines were secured and
production increased, resulting in over 100 km being trenched in the Johannesburg area by June 2008.
Four mechanical trenchers were employed, with another seven to be delivered during the second half
of 2008.

VENFIN

ANNUAL REPORT

2008

INVESTMENT REVIEW

EQUITY INVESTMENTS CONTINUED

Prior to October 2007, the company only had a small staff complement. Subsequently, significant focus

was put on building the company’s resources and systems. By June 2008, the company had 115 full-

time employees and more than 150 contracted labourers.

BEE

MWNT appointed a 100% BEE subcontractor to assist it with manual trenching in areas where mechanical

trenching was not possible. Other BEE suppliers are used where available. Employment equity employees

comprise 44% of the full-time labour force and 100% of the contracted labour force.

The

future

MWNT plans to roll out all its trenching teams as soon as possible and aims to improve delivery of urban

trenches from 35 km per month to 130 km per month by early 2009. Long-haul trenching (intercity)

commences shortly, primarily through the use of subcontractors. The production capacity of long-haul

work is 150 km per month. MWNT’s turnover is expected to reach the R100 million mark per month in

the second quarter of 2009.

VISIONCHINA MEDIA 6.1%

www.visionchina.cn

VisionChina Media Inc. (previously CDMTV) (VisionChina) operates an out-of-home advertising network on mass transportation

systems, including buses and subways, through TV broadcasting. In March 2008, VisionChina’s network included over

48 719 LCD displays in 15 of China’s most affluent cities, including Beijing, Guanzhou and Shenzhen.

Overview of the six months to 31 March 2008

During 2007 VenFin co-invested US$10 million in a B preference round of US$40 million in VisionChina Media for a

30.8% equity stake in the company. The round was led by Milestone China II at a stage when the company was still in

a loss-making position.

The company successfully listed on NASDAQ on 6 December 2007, raising US$108 million at a price of US$8 per share.

On 30 June 2008, the share closed at US$15.8, resulting in a market capitalisation of just over US$1 000 million. This 97%

increase in share price is significant when compared with the decline of 15.3% in the NASDAQ Composite Index over the

same period.

Overview of the year to 30 June 2008

Total revenues in the fourth quarter of 2007 were US$12 million and US$13.6 million in the first quarter of 2008. The

corresponding operating profit was US$5 million and US$4.5 million. This decrease of 9.4% in operating profit is due mainly

to costs associated with network expansion and increased sales and marketing expenses.

The company estimates total revenues of US$98 million for the full year of 2008 and a net income of US$40 million.

ONE DIGITAL MEDIA 35.0%

www.onedigitalmedia.com

One Digital Media (Proprietary) Limited (ODM) is one of the largest network owners of digital media for retail in South Africa.

By June 2008 the company had 5 576 digital screens installed on different networks around the country. ODM aims to give

brand owners and retailers the ability to display dynamic content via broadcast or narrowcast to multiple environments or

single LCD screens.

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ANNUAL REPORT

2008

The company effectively started operations in February 2007, and since June 2007 VenFin has invested R52 million

in ODM.

Overview of the year to 30 June 2008

ODM has signed an exclusive agreement with the SPAR group to install LCD screens in its franchised SUPERSPAR stores,

through which FMCG brand owners can reach potential customers where they make their purchasing decisions. During the

year 3 466 screens have been installed successfully in SUPERSPAR stores and 722 screens in TOPS stores. Revenue is

generated by selling advertising space in the form of slots. Typically, advertisers have to buy space on a per slot basis in all

stores in a specific network and the slots are priced on a per store per month basis. Advertisers can be offered exclusivity on

specific product categories.

Another initiative which should benefit from the 2010 Soccer World Cup is the placement of LCD screens in taverns – 358

screens out of a target of 500 have been installed to date. Other projects include stand-alone display stands (e.g. cellular

phone stands in DION) and electronic menu boards at fast-food outlets that can be updated remotely.

BEE

With ODM still in a start-up phase, it is difficult to introduce BEE shareholders who cannot fund shares from their own balance

sheet. This aspect of the business will receive attention in the next year or two.

The future

During the next year the company will aim to extend its presence as new network opportunities, which will be carefully

selected, continue to present themselves.

KALAHARI ENERGY 9.8%

www.kalaharigas.com

Kalahari Energy Limited BVI (KE) wholly owns Sekaname (Proprietary) Limited, a Botswana company that holds exploration

licences for coal-bed methane (CBM) in that country. KE possesses specialised equipment, expertise and experience in CBM

exploration. VenFin owns 9.8% of KE and has an option to increase its shareholding to approximately 30%.

Independent resource projections show that large quantities of CBM are available in Botswana for exploitation, which could

impact significantly on the energy sector in Southern Africa.

Overview of the year to 30 June 2008

During the year, KE farmed out five of its licence areas, including its original exploration site, to Saber Energy which continues

to explore with a view to power generation and other beneficiation projects. Once such projects materialise, KE will benefit

financially from gas utilisation through royalties.

KE relocated its own exploration activities and has established, in addition to a number of other exploration wells, a complete

five-well production configuration for the purpose of reserve certification. Data capture has commenced for reserve

certification.

The company has managed to bolster its CBM exploration expertise and hardware further and is at present operating the

largest and most advanced equipment in the region.

The future

In support of reserve certification, KE is developing, in conjunction with various partners and clients, a number of projects

running parallel to one another. In the shorter term these include power generation and distribution of compressed natural gas

(CNG). In the medium and long term, projects under consideration include replacement products for liquid petroleum gas

(LPG) and pipeline distribution of gas to industrial zones in the region.

By the very nature of KE’s activities, project realisation will require a number of years. KE’s primary objective for the upcoming

period is initial reserve certification, albeit on a limited scale.

VENFIN

ANNUAL REPORT

2008

INVESTMENT REVIEW

EQUITY INVESTMENTS CONTINUED

VHF 16.8%

www.flexcell.com

VHF Technologies SA (VHF), based in Yverdon in Switzerland, develops and manufactures thin-film flexible solar cells, using

its proprietary very-high-frequency plasma technology to deposit thin layers of amorphous silicon onto plastic substrates.

The VHF product is a flexible photovoltaic (PV) solar cell, as opposed to the well-established rigid crystalline silicon solar

panels on a glass substrate, which currently comprise 90% of the PV market. Owing to its highly flexible substrates, VHF is

able to deliver innovative solar consumer products (e.g. rollable battery chargers) and to provide integration solutions for the

building industry and industrial OEM (original equipment manufacturer) markets.

Initially, VenFin and Richemont each invested CHF3.2 million in VHF, enabling the company to develop its technology. The

investment in VHF is one of three that VenFin has made to date in the solar industry. The others are in Johanna Solar

Technology GbmH (Germany) and Trina Solar Limited (China). With the three investments VenFin has exposure to three

different PV technologies in the industry: crystalline silicon-based (Trina Solar), thin-film amorphous silicon-based (VHF) and

thin-film CIGSSe-based (Johanna Solar).

In June 2006, Q-Cells AG from Germany, the second largest manufacturer of crystalline silicon-based solar cells in the world,

became a shareholder in VHF. In February 2007, Q-Cells exercised its option to increase its shareholding in VHF to 51%.

Overview of the year to 30 June 2008

In May 2007, VHF decided to invest in a 30 MW factory to be built in Yverdon, and since then VenFin has invested

CHF9.6 million in the project. VenFin’s total commitment to the project is CHF13.2 million. The new factory building will be

completed by the end of July 2008 and the final equipment installed by the end of October. Up to now production capacity

at VHF has been limited to its pilot-line facility, which was mainly used to optimise process parameters for the 30 MW factory.

Only a small percentage of production on the pilot line has been made available for the production of consumer modules,

which has largely been sold to the yachting industry.

The future

VHF enters a crucial twelve-month period during which it needs to improve production in the new factory and sign up its first

customers in the building-integrated PV market.

TRINA SOLAR 0.7%

www.trinasolar.com

Based in Jiangsu Province, China, Trina Solar Limited (Trina Solar) is an integrated solar photovoltaic (PV) manufacturer,

differentiated by a vertical integration strategy and the ability to use recycled silicon. Since its inception in 1998, the

company has changed from a solar systems integrator to a company covering most of the PV crystalline silicon value chain,

from silicon ingots, wafers and modules to system integration.

In May 2006, VenFin invested US$1.5 million in Trina as part of a consortium led by Milestone China I that invested a total

of US$40 million for a 34% shareholding. These proceeds, together with cash raised during a very successful public offer on

the NYSE in December 2006, were used for establishing cell-manufacturing capacity and working capital. In May 2007,

VenFin sold 14% of its initial investment in Trina for US$43 per share, compared to a price of US$7 per share paid in

May 2006.

VENFIN

ANNUAL REPORT

2008

Overview of the year to 30 June 2008

Trina has established itself as a reputable Chinese manufacturer of solar modules and achieved total turnover of

US$301 million for the 12 months ended 31 December 2007, and US$120 million in the first quarter of 2008. The

corresponding operating income was US$35 million and US$20 million. The company sold 75 MW of modules in 2007 and

29 MW in the first quarter of 2008, while annual capacity has now reached 200 MW. Production capacity is expected to

reach 350 MW by December 2008.

Since its listing, Trina’s share price has been following a roller-coaster ride, peaking at US$53.00 in December 2007 and

bottoming again at US$36.10 in January 2008. In November 2007, VenFin took advantage of these share movements and

acquired more Trina shares, investing US$5 million at an average price of US$36.10 per share. In June 2008, all these

shares were sold at an average price of US$45.50 per share.

The future

VenFin’s view is that the future demand for PV, post-grid parity, is very large, but that the PV industry will have its share of

booms and busts along the way. The PV industry could experience a margin squeeze, shakeout, and consolidation towards the

end of 2009 and during 2010, which again might present attractive investment opportunities.

JOHANNA SOLAR 8.6%

www.johanna-solar.com

Since May 2006, VenFin has invested €4.2 million in Johanna Solar Technology GbmH (Johanna Solar), a new company

committed to building a 30 MW solar cell plant in Germany. The factory is currently being built in the federal state of

Brandenburg, which offers lucrative financial incentives and subsidies from the local government and a strong solar R&D

environment.

Johanna Solar uses a CIS (copper indium sulphide)-based silicon-free technology, more specifically CIGSSe, developed by the

Johannesburg University and Professor Vivian Alberts. Johanna Solar has entered into a global (excluding Africa) manufacturing

licence agreement with the owners of the intellectual property, which also allows it to sell sublicences outside Africa.

The benefits of the CIGSSe technology are similar to other thin-film technologies: a lower price than the incumbent crystalline

silicon-based technologies as well as the usage of non-silicon materials.

Overview of the year to 30 June 2008

At present the project is not performing to expectations, due to a combination of technical and management challenges.

The future

While the company was expected to produce commercial modules by August 2007, this is not expected before

September 2008. The delay has resulted in additional funding demands on the shareholders, to which VenFin is contributing

on a pro rata basis.

FUNDAMO 28.9%

www.fundamo.com

Fundamo (Proprietary) Limited (Fundamo) is one of the leading suppliers of mobile banking and payment software solutions

to enterprise customers. In this emerging industry, Fundamo established itself as the largest independent supplier of these

solutions.

VENFIN

ANNUAL REPORT

2008

INVESTMENT REVIEW

EQUITY INVESTMENTS CONTINUED

The bulk of Fundamo’s business is derived from developing economies (predominantly Africa, Middle East and Pakistan).

Some progress has been made in expanding the business in the USA. The business is well positioned in a fast-growing

industry, with the right mix of products and partners.

Overview of the year to 30 June 2008

Fundamo was selected as the technology supplier for the GSM Association Market Accelerator Programme (MAP) during the

past year. MAP is an initiative supported by Western Union with the intention of accelerating the adoption of mobile financial

services. This programme enabled Fundamo to increase its profile and to attract a large source of blue-chip, global companies

as potential clients. The visibility of the Fundamo brand at conferences, exhibitions and with analysts, subsequently improved

significantly.

Fundamo’s installations increased significantly and clients now include major companies and institutions, such as the MTN

Group, Middle East-based Zain and the US Department of Defence. Fundamo now services clients in more than 20 countries

in Africa, Asia and the Americas. The company has offices or representatives in eight cities and the number of people have

more than doubled. Partnership agreements have been concluded with Accenture (systems integrator and outsourcer), Gemalto

(supplier of smart cards and SIM cards) and S1 Corporation (leading supplier of internet banking solutions).

During the past year, revenue and profits increased by more than 100% although from a low base.

BEE

Fundamo is a South African-based company operating as a global business. Fundamo supports the general BEE principles

and guidelines and its employment, promotion and governance procedures are in line with these guidelines. Fundamo expects

to introduce BEE shareholding into the company during the next financial year.

The future

With a healthy source of business and excellent prospects in a fast-growing industry, the biggest challenge is limited delivery

capacity. Significant investments will be made to improve delivery capacity and the ability of the company to achieve scale of

production.

Fundamo expects to close deals with major industry-leading companies and to increase revenue. A major drive will be to

increase the relative portion of recurring revenue during the next period. A strategy of collaboration with major system

integrators and enterprise software vendors will be extended further in the new year.

Fundamo expects some consolidation to occur in the mobile payment industry and will participate in this consolidation to the

benefit of shareholders.

CASH AXCESS 50.0%

www.cashaxcess.com

Cash Axcess Corporation (Proprietary) Limited (Cash Axcess) provides a fully outsourced ATM service to banks, allowing the

banks to provide cash withdrawal services in previously underserviced areas. Cash Axcess’s head office is in Cape Town,

together with a national sales complement.

Overview of the year to 30 June 2008

Cash Axcess concluded a fully branded ATM agreement with Absa during the year in terms of which both parties will

co-operate to combine their contributory products and activities to achieve the successful implementation and ongoing

operation of at least 1 000 ATMs. Cash Axcess is an independent contractor to Absa, giving it flexibility to enter into similar

arrangements with other retail banks and partners.

BEE

Subsequent to an internal restructuring at Mvelaphanda Group, the 50% Coin shareholding in Cash Axcess was transferred

to them. Mvelaphanda Group Limited is a broad-based, black-controlled, owned and managed diversified group. According

VENFIN

ANNUAL REPORT

2008

to the final BEE Codes of Good Practices, as gazetted on 9 February 2007, Cash Axcess is a Level 3 contributor

(110% recognition level).

The future

Cash Axcess continues to focus on the deployment of Absa-branded ATMs and will explore opportunities in the market to

deploy lower transaction volume ATMs in previously underserved areas. The company will endeavour to bring additional

services to ATMs.

FRAXION 36.7%

www.fraxion.co.za

Fraxion (Proprietary) Limited (Fraxion) develops and sells advanced spend management software that allows companies to

control, manage and analyse spending behaviour in real time.

Overview of the year to 30 June 2008

Fraxion completed the development of a new version of its product which incorporates capital expenditure management, travel

management, expense reimbursement, general procurement, accounts payable authorisation as well as credit note and petty

cash management. This version has been adopted by mid-to-large-sized companies throughout Africa. New customers include

MTN, Standard Chartered Bank, African Growth, Transaction Capital group companies, Batibele Group, Compass Group,

Tourvest, Retail Credit Solutions (RCS), Dialogue Group, Succeed Publishing and Showtime Arabia.

Over the period VenFin, together with other shareholders in Fraxion, subscribed for additional shares in the company as part

of a milestone-based funding agreement. VenFin’s portion of the total funding was R3.7 million, the last portion of which

was invested in July 2008. The funds were applied to enhance product development and to increase the sales function

within Fraxion.

BEE

Fraxion will introduce BEE ownership once the company has reached a more mature stage of development.

The future

A number of key implementations are going ahead this coming year. The Fraxion solution has been selected by Standard

Chartered Bank as its standard solution in Africa and will be implemented in 13 different countries. In addition, Tourvest is

delivering the solution to its major travel clients (under the brands of Seekers and American Express Travel). Product

development continues to open new markets and territories and it is expected that the customer base will be broadened in the

new financial year, and the functionality and integration capabilities of the product range expanded.

Resource Energy

RESOURCE ENERGY 22.5%

www.resourceenergy.net

Resource Energy B.V. (RE) was incorporated in the first quarter of 2007, with its head office and centre for worldwide

development in Amsterdam, the Netherlands. The three founding shareholders are the CIR Group from Italy, Tsb Sugar

International (TsbSI) and VenFin. RE aims to acquire and/or develop an international portfolio of biofuel production facilities,

with initial focus on ethanol from sugarcane.

RE believes that sugarcane-based ethanol is the most efficient and environmentally friendly form of fuel production in the

market. Sugarcane ethanol may be used either as a substitute for petroleum or as an additive to gasoline for greater fuel

efficiency. This means that sugarcane ethanol has an independent value that is not a simple function of the oil market. Sugar

production and other bio-refinery by-products also help shield sugarcane-based ethanol production from some of the volatility

VENFIN

ANNUAL REPORT

2008

INVESTMENT REVIEW

EQUITY INVESTMENTS CONTINUED

likely to occur as global biofuel markets mature. Related sources of income, such as energy generation from biomass (bagasse),

constitute a further source of revenue as well as a positive environmental impact.

Looking forward, RE believes that the next generation of biofuel development, such as cellulosic or butanol, will build upon

the natural productivity advantage of sugarcane production.

Overview of the year to 30 June 2008

During the year, RE established management and development teams, with headquarters in Europe and with a Latin American

base situated in Miami. Personnel have been employed in Brazil, Peru, Mozambique and South Africa.

A range of projects and assets have been evaluated in countries such as Brazil, Peru, the Caribbean, Nigeria, Ghana and

Mozambique. These opportunities are all being considered in conjunction with strong local partners.

The future

The company’s prime objective in the upcoming period is to acquire its first significant asset. It is envisaged to build up

a portfolio of assets over the next five years that will make RE a significant global player.

FRING 1.8%

www.fring.com

Israeli mobile communications company fringland Limited (fring), develops and markets an award-winning mobile internet

service and community called fring® (www.fring.com) which enables its users to talk, chat and interact with other fring users

and their online communities, using their mobile device’s internet capability.

fring has millions of users from over 200 countries and is experiencing excellent growth globally. fring aggregates the internet’s

most valuable community services into one integrated contact list which allows users to interact with all their fring®, Skype®,

MSN® Messenger, Google Talk™x, Twitter, Yahoo! ™, AIM®, ICQ® and regular phone contacts. fring also supports SkypeOut

and hundreds of SIP-based services.

Overview of the year to 30 June 2008

Over this period, fring extended its application to additional handsets and enhanced the user experience with more mobile

VoIP functionality and a greater choice of call and chat providers. fring recently launched its API (Application Programming

Interface), thus sharing its capabilities with third parties to develop applications of their own.

fring also successfully completed a second round of fundraising. The round was led by US-based North Bridge Venture

Partners, joined by VenFin Limited and current investors Pitango Venture Capital and Veritas Venture Partners. In terms of

this fundraising, VenFin converted its portion of the bridging loan, previously extended to fring, into equity.

The future

fring seeks to strengthen its leadership position further by delivering innovative mobile communication and internet solutions

that will add real value to its users’ mobile capabilities.

DESTINY 10.0%

www.destinycorporation.co.za

Destiny Corporation (Proprietary) Limited (Destiny) is a black economic empowered Johannesburg-based company whose

primary business is equity investments with a view to long-term capital appreciation.

VENFIN

ANNUAL REPORT

2008

VenFin previously owned 20% of Destiny but has sold a 10% interest to Sanlam Private Equity (SPE) in October 2007. SPE

owns 19.9% of Destiny, which is in its third year of operation.

Overview of the year to 30 June 2008

The year under review saw a consolidation in existing business activities comprising:

57.0% interest in Thermaweld Industries (Proprietary) Limited, a supplier of welding equipment and associated gases;

31.2% interest in Specpharm Holdings (Proprietary) Limited, a manufacturer and distributor of pharmaceuticals; and

75.0% interest in Koenigsegg Automotive, an importer and distributor of the Koenigsegg supercar.

During the year under review, in addition to the original R12 million invested in Specpharm, a further R7.5 million was

invested. The total investment was funded by VenFin through a preference share structure.

BEE

Destiny is a black-controlled business started by a group of young black professionals with investment banking experience.

The future

Destiny intends to continue with the expansion of its investment portfolio when opportunities arise.

FYNBOS 20.0%

www.fynbosmedia.co.za

Fynbos (Proprietary) Limited (previously Fynbos Media (Proprietary) Limited) (Fynbos) is an early-stage black-controlled Cape

Town-based investment holding company whose primary business is equity investments with a view to long-term capital

appreciation. VenFin, which owns 20% of Fynbos, is involved at a strategic level. VenFin has committed an initial R5 million

to the company, of which R1.5 million has been drawn, and will also consider co-investing with the company on an ad hoc

basis.

Overview of the year to 30 June 2008

No new investments have been added during the year under review. Current investments consist of:

25% interest in The Grape Company, an exporter of table grapes; and

R8.1 million in Phuthuma Nathi 1 and 2, empowerment vehicles with equity stakes in MultiChoice Africa.

BEE

Fynbos is a black-controlled business, with 68% of the shares held directly or indirectly by four black individuals. The

company continues to evaluate investment opportunities with the aim of establishing BEE partnerships.

The future

Fynbos is reassessing its strategy of whether to pursue new investments on its own or to join forces with other similar

entities.

i to i 47.9%

www.itoitechnologies.com

Overview of the year to 30 June 2008

Various strategic programmes were initiated to prepare the company for taking on higher-value projects and seeking business

opportunities that have less need for highly commoditised products.

VENFIN

ANNUAL REPORT

2008

INVESTMENT REVIEW

EQUITY INVESTMENTS CONTINUED

The past year saw the termination of less profitable service categories, and the streamlining of operational and commercial

divisions. The first truly integrated electronic security projects were commissioned successfully and a range of new opportunities

allow for new product bundles to be offered.

BEE

Circle Capital Ventures, Circle Capital Partners and Imphandze Technologies collectively own 40.9% of i to i technologies.

The future

Fundamental to the next fiscal year’s strategy will be the focus on growing profitable elements of the business, while

developing new, lucrative offerings in areas with high demand and low level of commoditisation. Continued effort will be

required to increase business efficiency and improving cash flow.

MOSMART

Mosmart Investments (Proprietary) Limited (Mosmart) has two main activities: the cultivation of feedstock and the associated

biodiesel production; as well as the development of selected intellectual property (IP) products. To date VenFin, who is in the

process of acquiring 20% of the company, has been assisting Mosmart financially with loans.

Overview of the year to 30 June 2008

Mosmart was split into two independent entities, with biodiesel activities moving offshore and products relating to IP remaining

in a South African vehicle.

Significant offtake agreements regarding the proprietary products have been concluded over the latter half of the year.

Mosmart managed a palm oil plantation in Guinea during the year and upgraded and expanded the production facilities.

Start-up problems have been experienced. The project is under evaluation.

The future

VenFin, together with the other shareholders, is restructuring the company. VenFin’s investment will be in the South African

IP business where it can add more value.

VENFIN

ANNUAL REPORT

2008

INVESTMENT REVIEW

FUND INVESTMENTS

MILESTONE CHINA I AND II

www.mcmchina.com

In September 2003, VenFin committed US$5 million to Milestone China Opportunities Fund I L.P. (Milestone China I),

a limited partnership, which is managed by Milestone Capital Management Limited (MCM), a China-focused private

equity investment firm, with offices in Shanghai and Beijing. MCM is the general partner in this US$47 million fund of

2003 vintage.

In March 2007, VenFin committed US$25 million to Milestone China II, a second fund managed by MCM. This second fund

has received commitments of US$310 million from investors to date.

The principal objective of MCM is to achieve superior medium-term capital appreciation in its funds through direct investments

in well-established, high-growth companies which seek expansion or acquisition capital in China. All the executive team

members of MCM comprise mainland Chinese with extensive investment and operational experience in both China and

the USA.

Overview of the year to 30 June 2008

VenFin has invested US$4.3 million in Milestone China I to date, and the fund has returned US$9.3 million to VenFin from

investments exited or partly exited. Milestone China I’s commitment period ended in May 2007, hence MCM does not foresee

any further investments by this fund. Seven investments have been made to date, three of which have been exited.

Of the four remaining investments, the fund has now realised 98.5% of its Trina Solar shares, which has been a very successful

investment. Apart from Trina Solar, the other three remaining investments comprise a distributor of imported medical equipment

based in Beijing, a xanthan gum producer (xanthan gum is used as an emulsifier in food) and a mobile phone handset design

company.

VenFin has invested US$8 million in Milestone China II to date, i.e. 32% of its total commitment. The fund’s first investment

of US$15 million was in VisionChina Media Inc., which operates one of China’s largest out-of-home advertising networks using

real-time mobile digital television broadcasts to mass transportation systems. In December 2007, VisionChina was successfully

listed on NASDAQ at US$8 per share and on 30 June 2008 traded at US$15.87 per share. VenFin also made a direct

investment of US$10 million in VisionChina Media at US$2.24 per share.

The fund’s second investment is in one of the largest independent domestic passenger car manufacturers in China, and in

June 2008 it concluded its third investment in a solar-energy-related company, GCL Silicon Technology Holdings.

The future

MCM will focus its future efforts on the realisation of the remaining four investments in Milestone China I as well as on making

new investments through its second fund.

VenFin has made investments in a few equity funds. In addition to providing VenFin shareholders

with access to high-growth opportunities in markets they otherwise would not have access to, these

investments provide VenFin and its investee companies with access to potential direct investment

opportunities as well as to networks and expertise in markets outside South Africa.

VENFIN

ANNUAL REPORT

2008

INVESTMENT REVIEW

FUND INVESTMENTS CONTINUED

GEMS II AND III

www.gems.com.hk

General Enterprise Management Services Limited (GEMS) is a private equity fund management group that manages the

GEMS funds (GEMS I – 1998 vintage, GEMS II – 2001 vintage and GEMS III – 2005 vintage). These funds make direct

investments in the Asia Pacific Region. Funds under management in the GEMS II amount to US$248 million and in GEMS III to

US$154 million.

VenFin has invested US$12.5 million in GEMS II, of which US$6.6 million has been returned to date. In 2005, VenFin also

committed a further US$12.5 million to GEMS III of which the full amount has now been drawn.

GEMS II originally made eleven investments – six are fully exited or impaired, while five still remain in the portfolio. The latter

comprises a distributor of proprietary call centre/customer relationship management software applications, two semiconductor

manufacturers, an oil reserve development company and a retailer.

GEMS III has made three investments to date – one in a listed property developer in Thailand, one in a Singapore-based insurance

syndication company and one in a GSM network operator in New Zealand. The fund has commitments to two other potential

investments which, if concluded, will result in the fund being fully invested.

The future

Going forward, management will focus its efforts on the realisation of the remaining five investments in GEMS II as well as on

unlocking value in the more recent investments of GEMS III.

VERITAS

www.veritasvc.com

Veritas Fund II L.P. (VVP Fund II) is a venture capital fund managed by Veritas Venture Partners (Cayman) L.P. (Veritas),

Israel’s oldest venture capital firm. VenFin is a limited partner of the fund.

This investment broadens VenFin’s access to international deal flows and networks. It has given VenFin exposure to Israel

and, to a lesser extent, the southeast US region, where the fund is primarily invested in seed-stage technology companies.

Overview of the year to 30 June 2008

VVP Fund II L.P. focuses on making seed-stage investments. By June 2008, VVP Fund II L.P. had made fifteen investments.

Over the period the fund made a number of follow-on investments in its existing portfolio and one new investment in the

software sector.

During the first quarter of 2008, 92 Israeli hi-tech companies raised US$427 million in venture capital, the highest quarterly

figure since the first quarter of 2001 (according to Kesselman & Kesselman PricewaterhouseCoopers). Seed-stage investments

represented US$44 million investment in 18 companies, an increase of 116% from the previous quarter, but a decrease of

20% from the corresponding quarter of 2007. During the first quarter of 2008, the recent market downturn and uncertainty

has resulted in a steep decline in venture-backed exits.

The future

The fund does not expect to make any new investments going forward as it is fully invested. It will focus on making follow-up

investments in its existing portfolio, with the view to developing the portfolio to exit potential. The fund expects to be in

a position to begin exiting specific investments within the next 18 to 24 months.

VENFIN

ANNUAL REPORT

2008

INVENFIN

www.invenfin.com

VenFin has established InVenFin (Proprietary) Limited (InVenFin) to focus on smaller, early-stage investments. This is an

investment area in South Africa which needs special management skills and which currently lacks the support of longer-term

strategic investors who are able to oversee the development of new intellectual property into commercially viable products

and businesses.

InVenFin has its own capital fund, independent management and a board with the necessary skills and experience to evaluate

early-stage opportunities and to support them in the commercialisation process to become successful production businesses.

InVenFin investments could eventually become potential investments for VenFin. R50 million has initially been allocated to

InVenFin as seed capital.

Overview of the year to date

In the five months since its formation, InVenFin has worked to establish a variety of channels to ensure an adequate deal flow.

This includes the launch of its website www.invenfin.com, which has a facility to submit appropriate business proposals. They

have also established an evaluation process to ensure appropriate and speedy review of proposals. Added to this are the

internal controls and procedures put in place to ensure appropriate corporate governance.

Apart from the team involved full time in daily operations, InVenFin has access to a global network of successful businesses

via its directors and VenFin group companies. InVenFin draws on this expertise as well as directly applicable skills it may

contract in on a project-by-project basis to assist in the evaluation of opportunities as well as their commercialisation.

As of June 2008, InVenFin has reviewed in excess of 60 proposals. The number of proposals received has been increasing

significantly after the official announcement of the fund was done in July. This is however an area which traditionally sees

only one in 20 deals selected for some form of due diligence, with even fewer of these being selected for investment. To date,

no investments have been made although several investment opportunities are reaching final validation stages.

The future

InVenFin has several opportunities under review and will continue with thorough and diligent investigation, with the objective

of identifying investment opportunities with high-value potential to compensate for the typically higher levels of risk. Further

development of its channels, alliances and market presence will enhance the quality of proposals being received.

I N V E S T M E N T R E V I E W

INTELLECTUAL PROPERTY VENTURE CAPITAL FUND

VENFIN

ANNUAL REPORT

2008

The King Reports on Code of Practices and Conduct echo principles deeply embedded in the fabric of the group from which

VenFin originated. The group is principle-driven and guided by the philosophy of its founder, Dr Anton Rupert. The group has

been led by example from inception and no formal codes of conduct have been required.

VenFin inherited, with pride, this sound corporate governance system – a model for doing business ethically – which does not

need to be enforced but stems from internal conviction.

One of the cornerstones of our business model is the belief that a company has three levels of responsibility: shareholders,

staff and the community. The group’s shareholders are served by sound business practices and a continued quest for excellence

which ensure that profitable investments are being made. The group’s staff and the community are served and supported as

set out in the sustainability report on page 42.

Therefore, it comes naturally to VenFin to endorse, and to comply with the principles of the King Reports as it corresponds to

the way in which business has been conducted in the group for more than 50 years.

In setting the parameters for this report, guidance was taken from the Global Reporting Initiative (GRI) Boundary Protocol.

Disclosure is limited to those entities that could generate significant impact to the Company’s sustainability performance and

where it exercises control over the financial and operating policies of such entities, save where those entities disclose the

relevant information in their own publicised annual reports.

CORPORATE STRUCTURE

The Company is an investment holding company.

Investments of the Company mainly comprise both listed and unlisted investments which are not controlled by VenFin but are,

due to significant influence and board representation, mostly associates.

The Company manages its investments actively and provides strategic input through board, audit and risk and other committee

representation. The Company is a longer-term investor which forces strategic alliances on a partnership basis, while

endeavouring to add value.

The Company’s associates endorse the Code of Corporate Practices and Conduct. The Company continues to encourage full

compliance within the investee portfolio, where possible, and disclosure where not.

In accordance with the recommendations of King II, the Board adopted a formal charter, as set out below.

BOARD CHARTER

A charter, read and endorsed by all directors of VenFin, has been implemented to:

identify, define and record the responsibilities, functions and composition of the Board; and to

serve as a reference to new directors.

The Board, having reflected on the following, is satisfied that for the reporting year, it executed the required actions contained

in the charter satisfactorily.

COMPOSITION OF THE BOARD

VenFin has a fully functional Board, comprising executive and non-executive directors, which leads and controls the group.

Currently there are five directors of whom one is independent. In this charter, executive directors are collectively referred to

as executive management.

It is a function of the Board to ensure that its size and the collective skills and experience of members are suitable to carry

out its responsibilities. Circumspection is exercised by the Board in the selection and the orientation of directors.

The roles of the chairman and the chief executive officer are separated. The chairman is a non-executive director but is not

independent.

CORPORATE GOVERNANCE

VENFIN

ANNUAL REPORT

2008

All directors of VenFin have access to the advice of the company secretary and any relevant outside people when required.

Board members are listed on page 8.

ROLE AND RESPONSIBILITIES

The Board provides strategic direction by proposing, deliberating, evaluating and approving plans and strategies. In directing

the group, the Board exercises leadership, integrity and judgement to achieve continuing prosperity for the group.

After approving operational and investment plans and strategies, the Board empowers executive management to implement

these and to provide timely, accurate and relevant feedback on progress made.

However, the Board remains accountable for the overall success of the approved strategies, based on values, objectives and

stakeholder requirements, and for the process and policy which ensures the integrity of risk management and internal

controls. The Board is the focal point of the group’s corporate governance and is also responsible for ensuring that it complies

with all relevant laws, regulations and codes of best business practices.

The Board monitors the operational and investment performance of the group, including relevant financial and non-financial

aspects. It also ensures that procedures and practices are in place to protect the Company’s assets and reputation and deliver

accurate and transparent reporting.

VenFin’s Board established the following subcommittees to assist it in discharging its duties and responsibilities:

The Remuneration and Nomination Committee, consisting of two directors, advises the Board on remuneration and terms of

employment of all directors and members of senior management and is responsible for succession planning. The committee

is also responsible for the nomination of directors. Additionally, it participates annually in evaluating the performance of

directors. Directors do not have long-term contracts or exceptional benefits associated with the termination of services. The

chairman of the Board is chairman of this committee. The chief executive officer attends meetings only by invitation.

The committee has a formal mandate and its effectiveness is appraised by the Board accordingly.

The Audit and Risk Committee, consisting of three directors, reviews the adequacy and effectiveness of the following:

financial reporting; the system of internal control; the management of financial, investment, technological and operating

risks; risk funding; the internal and external audit processes; the Company’s procedures for monitoring compliance with

laws and regulations; its own code of business conduct; and procedures implemented to safeguard the Company’s assets.

The deputy chairman of the Board is the chairman of this committee. This committee also reviews the level of disclosure

in the annual report and the appropriateness of policies adopted by management.

The committee has a formal mandate and its effectiveness is evaluated by the Board accordingly.

In anticipation of the Corporate Amendment Act requirements becoming effective in the next financial year the Audit and

Risk Committee made provision for the following:

Committee constitution enhancements

Implementation of a policy governing the appointment of the external auditor, in specific nominations of the external

audit partner for the ensuing year and pre-approval of budgets for non-audit services

The Management Committee, consisting of two directors and seven senior managers, meets regularly between Board

meetings to deal with issues delegated by the Board.

The Investment Committee, consisting of four directors, is responsible for the evaluation and recommendation or approval

of investments according to the formal mandate given by the Board.

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The appointment and orientation of new directors are also the responsibility of the Board. Non-executive directors are selected

for their broader knowledge and experience and are expected to contribute effectively to decision-making and the formulation

of strategies and policy.

MEETINGS AND QUORUM

The articles of association require three directors to form a quorum for Board meetings. A majority of members, preferably

with significant representation of the non-executive directors, is required to attend all committee meetings.

The VenFin Board meets at least four times a year. The Audit and Risk Committee meets at least three times a year, and the

Remuneration and Nomination Committee at least once a year.

ATTENDANCE AT MEETINGS

Remuneration

Audit and Risk

and Nomination

Investment

Board *

Committee

Committee *

Meetings held

Directors

J P Rupert

J Malherbe

J J Durand

G T Ferreira

N J Williams

* Over and above the five Board meetings and one Investment Committee meeting, the Investment Committee and the Board each passed four

round-robin resolutions.

MATERIALITY AND APPROVAL FRAMEWORK

Issues of material or strategic nature which might impact on the reputation and sustainable performance of the Company, are

referred to the Board. All other issues, as mandated by the Board, are dealt with at executive management level.

The minutes of all the committee meetings are circulated to the members of the Board. Issues that require the Board’s attention

or a Board resolution are highlighted and included as agenda items for the next Board meeting.

REMUNERATION PRINCIPLES

The Company’s policy regarding the remuneration of all directors and senior management aims at:

attracting and retaining directors and senior management of high calibre;

providing directors and senior management with remuneration that is fair and just;

ensuring that no discrimination occurs;

recognising and encouraging exceptional and value-added performance;

protecting the Company’s rights via service contracts; and

ensuring that remuneration structures are consistent with the Company’s long-term requirements.

In line with these objectives, the Remuneration and Nomination Committee annually reviews and evaluates the performance

of the executive directors and determines the annual salary adjustments for each. For this purpose it refers to salary surveys

compiled by independent organisations and other market information.

DUTIES OF THE DIRECTORS

According to the Companies Act, which does not differentiate between executive and non-executive directors, the Company

directors:

prepare the annual financial statements that should represent fairly the Company’s state of affairs and its profit or loss

position for the period under review;

select suitable accounting policies and apply them consistently;

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state whether applicable accounting standards have been followed; and

endeavour to make judgements, valuations and estimates that are reasonable and prudent.

They also have a duty to:

set and maintain appropriate value systems;

apply due care and skill in harnessing entrepreneurial flair in maximising sustainable returns;

keep proper accounting records;

take steps to safeguard the assets of the Company;

set the group’s risk appetite;

implement effective risk management processes and internal controls, and monitor their efficiency;

ensure compliance with all relevant laws;

adhere to stakeholder relations and requirements, including social and environmental responsibility;

disclose potential conflicts of interest; and

disclose information truthfully and transparently.

The Board formulates the Company’s communication policy and ensures that spokespeople adhere to it. This responsibility

includes transparent, balanced and truthful communication to shareholders and relevant stakeholders.

CONFLICTS OF INTEREST

Mechanisms have been put in place to recognise, respond to and manage any potential conflicts of interest. Directors sign, at

least once a year, a declaration stating that they are not aware of any conflicts of interest that may exist due to their interest

in or association with any other company.

In addition, directors disclose their interest in contracts that are significant to the Company’s business. Any potential conflict

of interest is disclosed as soon as it arises.

All information acquired by directors in the performance of their duties, which is not disclosed publicly, is treated as

confidential. Directors may not use, or appear to use, such information for personal advantage or for the advantage of

third parties.

Directors of the Company are required to comply with gifts and donation policies and the prescriptions of the VenFin Code

of Conduct on inside information transactions and disclosure of transactions.

COMPANY SECRETARY AND PROFESSIONAL ADVICE

Directors are entitled to seek, at the Company’s expense, independent professional advice concerning the affairs of the group.

They have unlimited access to the services of the company secretary, who is responsible to the Board to ensure that proper

corporate governance principles are adhered to. Board orientation or training is done when appropriate.

GOING CONCERN

At least once a year the Board considers the going concern status of the group with reference to the following:

Net available resources and the liquidity thereof

The group’s Residual Risk Profile

World economic events

The following year’s strategic/business plan, budgets and cash flow models

The group’s current financial position

Corporate structures and contractual obligations and rights

SERVICE COMPANY

An agreement has been negotiated with M&I Group Services Limited, a subsidiary of Remgro Limited, to provide certain

support and administrative services to the VenFin group of companies at a fee determined annually.

The fees for the past year are disclosed in note 11 to the annual financial statements.

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RISK MANAGEMENT AND INTERNAL CONTROL

In determining strategic objectives, the Board of Directors has ensured its understanding of all the risks associated with

the Company’s investment portfolio with a view to maximising sustainable profits and growth. These risks are measured

continuously against the risk appetite defined by the Board. The risk management process is fundamentally based on the

skill and calibre of individuals employed, their motivation and drive and the value systems they adhere to. In addition,

the investment portfolio serves to spread investment risk.

The categories of risk identified can be broadly classified as follows:

Performance risk, including strategic risk, opportunity risk, reputational risk, liquidity risk, and also risks relating to

corporate governance, social and environmental responsibility and stakeholder relations.

Investment risk inherent to existing investments. The Board has delegated the responsibility for investment risk management

to the Management Committee.

These risks are furthermore managed at VenFin by ensuring that future investments are subject to rigorous due-diligence

reviews. These reviews include, inter alia, verification of intellectual property rights, management competency, business

plans, market analyses, contractual rights and obligations, product feasibility, cash flow and liquidity requirements.

Consideration is also given to ensure that the investment is optimally structured, using appropriate investment

instruments.

Performance of operational management, measured against budgets and other measurement criteria, is regularly appraised

for timely corrective action, when deemed appropriate.

Operational risk which includes operational effectiveness and efficiency, safeguarding of assets, compliance with relevant

laws and regulations, reliability and integrity of reporting, effective operational risk management, human resource risk,

technology risks, business continuity and risk funding.

Operational risks are managed mainly by means of internal control. This is a process designed to provide reasonable

assurance regarding the achievement of organisational objectives and to reduce the possibility of loss or misstatement to

accepted levels. The effectiveness of risk management is measured by the level of reduction of the Company’s cost

of risk.

Management structures have been established to focus on certain key risk activities, including safety, health, environment,

asset protection, tax and risk funding.

Treasury risk. VenFin has a dedicated treasury function whose responsibility it is to manage risk associated with interest

rates, compliance, liquidity, as well as financing and foreign exchange transactions in accordance with a written mandate.

Furthermore, V&R Management Services AG renders administrative and treasury services to the Company’s foreign

subsidiaries.

A treasury committee, in terms of a mandate from the Board, constituted of nominated executive directors and senior

management, is responsible for determining policy and procedures as well as clearly defined levels of responsibility.

Regular feedback is given to the Board via the Audit and Risk Committee.

VenFin registered its treasury services as a Level 1 service provider under FIAS (Foreign Investment Advisory Service) with

the FSB (Financial Services Board).

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The Board has documented and implemented a comprehensive risk management system, which incorporates continuous risk

identification, assessment, evaluation, and internal control embedment.

The Board influences the control environment by setting ethical values and organisational culture while ensuring that

management styles, delegated authorities, business plans and management competency are appropriate, effective and

efficient.

The Board also monitors the effectiveness of governance structures implemented by the boards of those entities it

invests in.

Risk funding is focused strategically on a self-insurance methodology aimed at reducing the group’s cost of risk, save for those

risks which cannot be cost-beneficially controlled or have potential catastrophic exposures.

Internal audit

The Company has an internal audit function, which has been outsourced to M&I’s Risk Management and Internal Audit

department. It is an effective independent appraisal function and employs a risk-based audit approach, compliant with the

Institute of Internal Auditors’ (IIA) definition of internal auditing and documented in a charter approved by the Board.

The head of this department has direct access to the chairman of the Audit and Risk Committee as well as to the chairman

of the Board.

External audit

The Company’s external auditors attend all Audit and Risk Committee meetings and have direct access to the chairman of the

Audit and Risk Committee. Their audit coverage is adequately integrated with the Internal Audit functions without their scope

being restricted.

Other services provided by the auditing firm mainly relate to tax matters and are effected by a department independent of the

audit partners. Independence is further assured by terms of appointment.

DEALINGS IN SECURITIES

The Company has adopted a code of conduct to prevent insider trading. During the closed period, directors and designated

employees are prohibited from dealing in the Company’s securities. During open periods directors and personnel may only deal

in the Company’s securities with the approval of the chairman, deputy chairman or the chief executive officer. The closed

period is from the end of a financial reporting period until the publication of financial results for that period. Additional closed

periods may be declared from time to time if dictated by special circumstances.

ACCESS TO INFORMATION

VenFin complies with the regulations of the Promotion of Access to Information Act (No. 2 of 2000). The Act ensures the

constitutional right of access to information required for exercising or protecting rights.

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VenFin’s three levels of corporate social responsibility were mentioned earlier and its obligation to shareholders was dealt with

under Corporate Governance. In this section its responsibilities towards the community (to be a worthy citizen grateful of the

goodwill received from the public) and to staff (to ensure that their work remains a meaningful and rewarding experience)

receive attention.

GROUP ETHICS

VenFin’s commitment to ethical behaviour is contained in the following published documents:

Code of ethics

Computer: Acceptable usage policy

Disciplinary code

Gifts and donations policy

The Board was responsible for the establishment and distribution of these documents, with compliance being monitored by

means of management structures, internal audit and the group’s central forensic function.

EMPLOYMENT EQUITY

VenFin has a service agreement with M&I Group Services Limited. This agreement includes, inter alia, the administration of

VenFin’s labour plan.

VenFin and M&I, in accordance with the Employment Equity Act, strives to afford all staff the opportunity to realise their full

potential. Management and personnel are continuously involved in determining training and development needs and in the

implementation and monitoring of a labour plan. Special attention is given to those groups which, because of historic reasons,

might be in a disadvantaged position. In accordance with the requirements of the Employment Equity Act, M&I annually

submits a combined labour plan to the Department of Labour.

Because of the nature of its operations, to provide, inter alia, core services to VenFin, M&I and VenFin’s workforce is

characterised by the following:

A high level of expertise within the top structure of the organisation and in various specialised divisions

A low turnover rate of staff and, consequently, limited opportunities for new appointments

VenFin believes that the quality of its staff affords it an important sustainable competitive advantage. Therefore it believes

that its success does not lie in the uniformity of its staff but in the diversity and development of their collective talents. For

these, space and opportunity will always be created.

Human resource policies and procedures also address the issues of non-discrimination, child labour, disciplinary practices,

human rights, etc.

BROAD-BASED BLACK ECONOMIC EMPOWERMENT (BBBEE)

The Board believes that BBBEE is a social, political and economic imperative and we therefore support the Company’s

subsidiaries’ and associates’ initiatives in this regard. Although the ideal is to support people to realise their full potential,

special focus is needed on those who, for historical reasons, have lagged behind. The aim is to enable them to compete on

merit in the market. During the year VenFin embarked on a review of its BBBEE endeavours with a view to identify any further

viable opportunities in this regard.

VenFin facilitated and funded the following BEE transactions at the underlying investment companies:

The acquisition by Vuwa Investments (Proprietary) Limited, headed by Bulelani Ngcuka, of a 36.6% interest in SAIL from

SACTWU during December 2006

The acquisition of a 24% in Cueincident (Proprietary) Limited, by Circle Capital Technologies (Proprietary) Limited,

headed by Mamphela Ramphele

Funding of the acquisition by Circle Capital Ventures and Ehlobo of initially a 45% interest in i to i

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Funded Fynbos Media to acquire shares in Phuthuma Nathi 2, an empowerment vehicle with a 7.5% equity holding in

MultiChoice Africa, at a cost of R8 million

Funded Destiny Corporation, a black controlled business, to acquire a 31.2% interest in Specharm Holdings at a cost of

R19.5 million

SAFETY AND ENVIRONMENT

The Company has a duly constituted safety and health committee, in terms of the Occupational Health and Safety Act. This

committee is tasked with ensuring that the Company provides and maintains a safe and healthy risk-free environment for staff

and visitors by identifying risks and ensuring that controls designed to mitigate these risks are effective and complied with.

Most of the group’s core activities are considered and rated as having a low environmental impact.

As part of its investment mandate VenFin advocates and monitors environmental responsibility at its investee level via the

governance structures in place.

Endeavours are ongoing at Company level to ensure responsible usage of environmental resources and energy.

HIV/AIDS POLICY

From the perspective of an investment holding company, the risk of HIV/Aids comprises two elements, namely:

Group risk

Given the potential impact of HIV/Aids on the markets, on human capital cost of employment and on the operational processes

of the various businesses invested in, this risk is managed within the governance structures of the various companies.

VenFin monitors the progress of these policies and strategies against best practice standards.

Company risk

VenFin and M&I have a formal HIV/Aids policy and are committed to managing the pandemic and the business risks associated

with it actively. Its policy makes provision, inter alia, for the following:

Compliance with all legal requirements as far as HIV/Aids is concerned

No discrimination against employees or potential employees based on their HIV status

Strict confidential treatment of information on the HIV status of employees

General measures to prevent accidental infection

Remedi Medical Aid Scheme, of which most of M&I’s and VenFin’s staff are members, has a management plan for HIV/Aids

and employees can participate in it by choice.

COMMUNICATION TO STAKEHOLDERS

The Board places great emphasis on communication to shareholders and other stakeholders to ensure that they are kept

informed appropriately on matters affecting the group.

The following are recognised as stakeholders in the Company:

Shareholders and lenders as providers of capital

The State as policy-maker and regulator

The investment community as interested party

The community, through the creation of employment, as part benefactor of taxes paid by profitable organisations, and as

a recipient of social contributions

VenFin is committed to transparency and disclosure of relevant and appropriate information in its Annual Report and through

other communication channels to ensure a proper evaluation of the performance of the Company.

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CORPORATE SOCIAL INVESTMENT

Corporate citizenship, namely the commitment of business to contribute to sustainable economic development, endorses the

principle that no business exists in isolation but is undeniably an integral part of the environment in which operations take

place. In its relations with all stakeholders (clients, personnel and the community), VenFin strives to be a value partner.

The focus of the Company’s donation programme is primarily on the development of young people from disadvantaged

communities as well as on assisting people in need, knowing that social investment brings dignity and a sense of hope.

Donations to deserving institutions are usually made over specific periods and although they cover quite a wide range, there

is one noticeable exception – political parties. Although the Company respects the individual’s right of choice to get involved

with these organisations, it does not exercise a choice itself.

The Company’s donation budget is based on a percentage of its annual free cash profits.

During the past year, the Company has been involved in the following projects and institutions:

Community development

Ikamva Labantu (Ikamva) – was founded 45 years ago as an “emergency unit” for black urban communities in the Western

Cape. Today it serves as a “midwife” and laboratory for community initiatives and has become a model of transforming

despondency into hope.

During the past year 30 000 preschool children, 1 000 orphans, 750 seniors and 6 000 youth were reached by various

programmes of Ikamva. Nutrition services to all programmes continue, with 50 urban food gardens supplementing all meals

provided by Ikamva programmes.

The major focus in the family services sector is on VenFin’s pilot programme. It has assisted 271 children from 73 households,

with particular programme emphasis placed on the acquisition of government social grants and on parenting skills for the

adult carers of the children. All “VenFin” children receive material and psychosocial support, including food parcels, stationery,

uniforms and school fees.

Ikamva and VenFin have evaluated this model and are planning to replicate it elsewhere in the country as it has proved to be

a successful system to help vulnerable children to support themselves.

u Mephi – is an intensive care programme which caters for orphans as well as abused and molested children. Rather than

caring for the children in institutions, they are moved as quickly as possible to homes within the community. At present there

are 27 such satellite homes. The aim is to get involved in children’s lives as early as possible before they are maltreated or

become street children.

Another main aspect of u Mephi’s child-caring programme is to find suitable homes for babies who are referred to them by

pregnancy crisis centres. For this purpose 19 halfway homes have been established in the larger cities of the country. The first

prize is always for the children to return to their mothers or to the extended families. If not possible, the next option is

adoption. Only in exceptional cases foster care homes are considered.

u Mephi has more than 2 500 babies in its care and the next goal is to assist at least 10 000 children by 2010.

Stellenbosch Community Development Programme (SCDP) – one of the most important aims of this programme is to attend to the

nutritional needs of Ikaya Primary School in Kayamandi, Stellenbosch, where some 900 children are fed daily. VenFin is also

involved in other facets of this school’s development through the ORT SEED programme.

Other programmes of the SCDP include after-school activities for malnourished children as well as those in the obese category,

assistance to unemployed mothers through the vegetable garden and craft projects, and a continuous engagement with

teachers and the community with regard to hygiene and the discipline of children.

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Entrepreneurship and training

Tsiba – the Tertiary School in Business Administration (Tsiba) was founded in Cape Town in 2004 with the aim of preparing

young people with potential through a B degree in Business Administration for the world of work. The course, which spans

four years, is fully sponsored and much is being done to create an inspirational environment in which students, staff and

volunteers can co-operate to integrate the transfer of knowledge with the reality of society.

Leadership and entrepreneurship form an integral part of the curriculum and during the course students are exposed to

various practices regarding campus management and community service. Tsiba students do not pay back their bursaries, but

are encouraged to “pay it forward” by engaging actively in community initiatives, thereby enriching the country’s human

resources.

Tsiba is accredited by the Department of Education and the Council on Higher Education, and since its inception has enrolled

80 students per year, of whom the first group will graduate at the end of 2008. VenFin has committed itself to supporting

Tsiba for a full student cycle of four years.

Beyers Naudé School Development Programme (BNSDP) – some years ago the Kagiso Trust became aware of the great need for

facilities and resources in rural schools in the Limpopo province and responded by launching a programme to promote healthy,

viable and sustainable school communities in this area.

Attention is given especially to the infrastructure of schools participating in the BNSDP. VenFin has committed itself to this

programme for three years and during the past year assisted with the funding of a science and computer laboratory at

Gwamasenga Secondary School in Limpopo.

Paul Roos Academy – when the first group of 61 Gr. 7 learners from disadvantaged schools were admitted to the Academy in

April 2003, it was expected that the extra tuition during school holidays would help the learners to prepare themselves for the

transition to the higher grades. It was hoped that the learners would stay in the programme for at least three years until the

end of Gr. 9.

Eventually the learners stayed in the programme until Gr. 11 when 21 of the original class received their certificates in 2007.

At the end of 2008, these learners will write their final examination and only then, from an academic point of view, will it be

possible to determine what the Academy’s intervention has really achieved. It can already be stated, without any doubt, that

they have progressed immensely in the field of self-confidence and the development of other skills.

In 2007, a total of 280 learners received additional tuition at the Academy. It has been decided to reduce the number of

learners to 200 and to concentrate more on merit. Besides the academic focus, learners are also exposed to educational

excursions. During the past year these have included visits to the Jonkershoek Nature Reserve, the Waterfront Aquarium and

the MTN Science Centre in Canal Walk.

ORT SEED – VenFin has entered into a partnership agreement with ORT-Tech and the district office of the Western Cape

Department of Education to offer, through the ORT SEED programme, specialised training and support in curriculum

development at two Stellenbosch schools with the aim of implementing this programme in the tuition of mathematics, the

natural sciences, technology and literacy.

ORT-Tech will facilitate on-site curriculum development at Idas Valley and Rietenbosch Primary. Both schools will receive

supportive expertise and other resources, and act as anchor schools for an outreach programme to 15 primary schools in the

surrounding area.

SciMathUS – adjustments had to be made to this post-matric programme of the University of Stellenbosch as more routes have

become available to students, with lower qualifications than before, to access higher education.

For SciMathUS, which aims to assist talented black students from disadvantaged communities to gain access to mainstream

higher education, this has resulted in recruiting learners with lower Gr. 12 marks than previously. This challenge was accepted

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during the past year and most goals were reached, among which was a minimum of 80% of SciMathUS students who enrolled

for degree programmes in the natural sciences, applied natural sciences or economic and management sciences at the end

of their bridging year.

Fifty students entered the course in 2007 – 31 from the Western Cape and the rest from seven other provinces. Of these

students, 45 wrote the final examination in the higher grade, among whom were 15 who wrote mathematics at standard grade

in 2006. A pass rate of 83% was achieved in mathematics, 98% in the natural sciences and 80% in the new special

accounting course.

SciMathUS evaluates its curriculum on an ongoing basis in order to deliver students of quality – not only students who are

coached to improve their Gr. 12 results, but also students who are able to enter higher education successfully because of the

reasoning, analytical and problem-solving skills they have acquired.

Equip – after the problems experienced during the previous year, good progress has been made at the five schools in the

Stellenbosch area that VenFin sponsors as part of a school development programme of the National Business Initiative. Most

promising was the progress at the schools which presented the biggest challenges, namely Ikaya Primary and Kayamandi and

Stellenzicht secondary schools.

The Equip programme focuses primarily on school improvement programmes; learner development and mentorship; relationship

building, especially between school management bodies and teachers; leadership and management interventions; and learner

motivation.

Rally to Read – many poor schools in rural areas that suffer most because of the insufficient provision of much-needed

resources, would have been completely forgotten had it not been for Rally to Read’s literacy programme.

During the first ten years of this programme, more than R26 million was invested in literacy material for poor schools. Together

with this year’s contribution, the amount will exceed R30 million. The inaugural event in 1998 was modest, with 25 off-road

vehicles delivering books worth R100 000 to 13 schools in KwaZulu-Natal. During this year’s 11th rally, 450 vehicles

participated and schools in eight provinces were visited.

In addition to providing books and funding for a teacher development programme, science kits, stationery, sports equipment

and other useful items are donated to needy schools. VenFin is one of approximately 100 sponsors of the project.

Sport development

Western Cape Cricket Academy (Academy) – is an investment in young talent which has produced spectacular dividends. The

national training group currently boasts five former Academy players, while another five previously were included in the SA

team. In addition, the Cobras (WP/Boland) team presently have no fewer than 14 former Academy members in their side.

In just a little more than a decade, the Academy has grown into a catalyst for cricket development in the country. National

and provincial teams literally swarm with players who have honed their talents at the Academy. Initially it was only men’s

cricket which benefited, but now women’s cricket is gradually following suit. Five women have already played for South Africa,

while the captain of the SA U.19 team to New Zealand and Sri Lanka hails from the Academy.

The University of the Western Cape, which acts as a sponsorship facilitator for the Academy, also benefits from VenFin’s

annual contribution. During the past year it was able to improve its facilities to the extent that the Academy can now hold

practice sessions there.

SA Golf Development Board (SAGDB) – endeavours to make golf accessible to thousands of young South Africans who otherwise

would not have had the opportunity of participating. Quality training is provided across the country to players from

underprivileged areas with the aim of bringing them into the mainstream of junior golf.

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However, the transfer of the skills of the game is not the only facet of SAGDB’s activities. The unique values of the game are

also used to inculcate with young players life skills such as integrity, self-confidence and respect.

An important development this year has been the co-operation between the Professional Golfers’ Association (PGA) and

SAGDB to develop a mentorship programme in terms of which top coaches of the PGA and SAGDB hold sessions with

development coaches where expertise is shared. This promises to improve the quality of coaching in the country substantially

and will ensure that young players are taught the right techniques from the outset.

Health care

Wits/Donald Gordon Medical Centre (WDGMC) – the past year has seen this academic programme making significant progress in

the area of subspecialist training. The first fellow (subspecialist in training) was appointed in the department of Paediatric

Oncology, while the departments of Internal Medicine and Anaesthesiology were integrated into the academic training circuit

with the appointment of three registrars.

In March 2007, the Department of Geriatrics was established at the hospital, with the appointment of a consultant (a

qualified subspecialist) in geriatric medicine. This appointment saw the establishment of geriatrics for the first time in the

Wits Faculty of Health Sciences.

The integration of WDGMC as a fully fledged teaching hospital is now well under way. The positive impact of this integration

is being felt by the faculty as well as by patients using the facilities. The creation of such academic posts in the private sector

is also having a significant impact on the retention of skilled medical staff within South Africa.

Organ Donor Foundation of SA – the availability of life-sustaining organs is literally a matter of life and death. The Organ Donor

Foundation dedicates itself to the smooth transition of organs between donor and recipient. There are many grateful people

who can testify today that they have been given the chance of a new life thanks to the untiring efforts of the Foundation.

VenFin supports this humane effort by sponsoring four flights per year for the transport of critical organs. The staff of Falconair

play a vital role in this regard, which is greatly appreciated.

Environment

WWF South Africa (WWF-SA) – VenFin has supported South Africa’s largest conservation organisation which, during the past

four decades, has expanded its reach from a wildlife focus to a broader conservation focus in its pursuit of a world where

people live in harmony with nature.

During the past year, WWF-SA has enjoyed particular success in terms of conservation education with the Eco-Schools

Programme, a joint initiative with WESSA. The programme, which has been running for five years, comprises 887 registered

schools and incorporates conservation education in the school curriculum. Additionally, the six learners who received bursaries

from SACET (the South African Conservation Education Trust) successfully completed their studies at the South African

Wildlife College in 2007.

The Black Rhino Range Expansion Project released 11 black rhinos onto the Somkhanda Reserve, a piece of land recently

reclaimed by the Gumbi community who have committed themselves to using their land for conservation purposes.

Cultural development

Klein Karoo National Arts Festival (KKNK) – VenFin’s contribution to the festival is used for the development of the arts. It

includes a scholarship for the development of a career in the arts, workshops during the festival and an audience development

project which makes it possible for art, cultural and school groups to attend productions.

This year, the VenFin/Remgro scholarship has been awarded to a young pianist from Oudtshoorn who is currently a first-year

student at the SA College for Music in Cape Town. The scholarship was advertised at schools and libraries in the Eden District

Municipality.

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A new project which benefited from the sponsorship is the Klein Karoo Arts Academy which utilises the festival to teach

young people skills in the field of the arts – from discipline in the arts to technical expertise and art management. Five free

sessions were held and the themes varied from singing and rhythmic musical performances to community art and

cultural management.

Field Band Foundation – a combination of inadequate education, depressed socio-economic circumstances and low employment

prospects makes young people in disadvantaged communities increasingly vulnerable to temptations such as crime and

drugs.

Since its inception eleven years ago, the Foundation has endeavoured to do something about this situation. Taking the

historically inadequate education in South Africa into account, it was assumed that the sustainable development of young

people would be possible only if they themselves took responsibility for their learning and development.

Through music, the Field Band Foundation makes young people aware of their talents and capacity for development. While

the transfer of knowledge and skills is important, even more crucial is the development of self-confidence. What has already

been achieved by the Foundation, can be described as a moral re-development programme which empowers the youth to make

positive choices under difficult circumstances.

WAT – during its 80th birthday celebrations in 2006, the Dictionary of the Afrikaans Language (WAT) committed itself to

raising R20 million to complete the WAT series successfully. Good progress has been made to achieve this goal and VenFin

has pledged support for a second term of three years.

The main function of WAT is to document the Afrikaans vocabulary in the broadest sense. It also represents the crown jewel

of Afrikaans dictionaries, is accessible on the internet to some 300 000 students at South African universities, and is used

as an electronic aid for the teaching of Afrikaans at schools.

SUSTAINABILITY REPORT CONTINUED

VENFIN

ANNUAL REPORT

2008

FINANCIAL REPORT 2008

CONTENTS

Statement of responsibility by the

Board of Directors

Statement by the Company Secretary

Report of the independent auditor

Report of the Board of Directors

Accounting policies

Balance sheets

Income statements

Statements of changes in equity

Cash flow statements

Notes to the annual financial statements

Annexure A – Principal subsidiary companies

Annexure B – Principal investments

Annexure C – Significant associates

Analysis of shareholders

Dates of importance to shareholders

Administration

Notice to shareholders

Form of proxy

Attached

VENFIN

ANNUAL REPORT

2008

VENFIN

ANNUAL REPORT

2008

STATEMENT OF RESPONSIBILITY

BY THE BOARD OF DIRECTORS

The directors are responsible for the maintenance of adequate accounting records and the preparation and integrity of

the annual financial statements included in this Annual Report.

The annual financial statements are prepared, in accordance with International Financial Reporting Standards (IFRS)

and the requirements of the South African Companies Act, on the going concern basis and incorporate full and

responsible disclosure. The annual financial statements are based upon appropriate accounting policies and supported

by reasonable and prudent judgements and estimates.

The directors are satisfied that the information contained in the financial statements fairly represents the results of

operations for the year and the financial position of the group at year-end. The accuracy of the other information

included in the Annual Report was considered by the directors and they are satisfied that it is consistent with the

financial statements.

The directors are also responsible for the Company’s system of internal financial controls. The system was developed to

provide reasonable, but not absolute, assurance regarding the reliability of the financial statements, the safeguarding

of assets, and to prevent and detect misrepresentation and losses.

The directors are of the opinion that the group will continue as a going concern in the future.

The financial statements were audited by the independent auditor, PricewaterhouseCoopers Inc., to whom unrestricted

access was given to all financial records and related information. The directors are further of the opinion that all

statements that were made to the auditor during the course of the audit were valid and relevant. The auditor’s report is

presented on page 51.

Signed on behalf of the Board of Directors.

Johann Rupert

Jannie Durand

Chairman

Chief Executive Officer

Stellenbosch

29 August 2008

STATEMENT BY THE COMPANY SECRETARY

I, Mariza Lubbe, being the Company Secretary of VenFin Limited, hereby certify that all returns required of a public

company have, in respect of the year under review, been lodged with the Registrar of Companies and that all such

returns are true, correct and up to date.

Mariza Lubbe

Secretary

Stellenbosch

29 August 2008

VENFIN

ANNUAL REPORT

2008

VENFIN

ANNUAL REPORT

2008

REPORT OF THE INDEPENDENT AUDITOR

TO THE MEMBERS OF VENFIN LIMITED

We have audited the annual financial statements and group annual financial statements of VenFin Limited, which

comprise the directors’ report, the balance sheet and the consolidated balance sheet as at 30 June 2008, the income

statement and the consolidated income statement, the statement of changes in equity and the consolidated statement

of changes in equity, and the cash flow statement and the consolidated cash flow statement for the year then ended,

and a summary of significant accounting policies and other explanatory notes, as set out on pages 52 to 93.