CEO Dillie Malherbe admitted last week that the radical shift in market conditions for technology companies since VenFin’s inception in September 2000 had resulted in many challenges as well as questions about the rationale for the group’s continued existence.
However, he said that the board had recently decided to confirm its mandate and strategy and that there were also, at present, no plans to delist the company and run it on a private basis.
He reported, though, that its focus was likely to shift away from start-up opportunities towards businesses that had survived the technology bubble, as well as ‘rerated’ larger opportunities.
The company also did not discount the prospect of possible disposals of smaller contributors so as to allow the company to concentrate on investments that could have a ‘material impact’ on VenFin.
This meant that its positions in operations such as technology company Inala, of Midrand, accounting-software company FRS and sports-branding and entertainment company Sail could well be re-evaluated.
Malherbe added that it would continue to be circumspect in doing deals, revealing that, of the 200 enquiries brought to it over the last year, it had only conducted seven detailed assessments and pursued two new investments.
“We are under no pressure to do deals, but our board has indicated that it will continue to support us in pursuing strategic opportunities.” Its biggest disappointment for the year came in the form of its security solutions provider, Intervid, which has been hit by managerial power struggles and financial underperformance.
Malherbe said VenFin “shared the blame” for failing to act decisively, but added that strong action was being taken to tackle the problems in the business. However, he added that VenFin still saw a future for the company given the fundamentals of the industry, but he acknowledged that the road back to financial health would be a slow one. Intervid aside, Malherbe insisted that other parts of the portfolio were performing well, particularly its investment into mobile phone network provider Vodacom, which is by far the biggest part of its portfolio. In fact, the Vodacom investment contributed more than half of the R665-million-worth of headline earnings reported by VenFin last week. Overall its headline earnings fell by 5,9% during the 12 months to June 2003, from R707-million for the 15 months to June 2002 – the group changed its year-end to June, from March, in 2002.
VenFin also viewed its 1999 investment into privately-owned telecoms solutions company PsiTech as another success. The company contributed R27-million to headline earnings in 2003, more than double its 2002 contribution of R11-million, and VenFin is confident of more to come.
VenFin’s 32% interest in PsiTech has been valued at R96-million.
VenFin was also optimistic about its investments in auto-recovery firm Tracker, in which it has a 23% interest, and e-TV, where it has a 33% stake.
In the longer-term, management at VenFin is likely to pay more attention to increasing the net asset value of the business, which is a key indicator of performance for an investment holding company. Commenting on prospects, Malherbe said that, given VenFin’s long-term outlook, there were a number of opportunities emerging for new technology investments both locally and abroad.