NTERIM REPORT TO SHAREHOLDERS FOR THE PERIOD ENDED 30 SEPTEMBER 1999

THE FOLLOWING ARE THE UNAUDITED RESULTS OF THE GROUP FOR THE PERIOD ENDED 30 SEPTEMBER 1999 TOGETHER WITH THE COMPARATIVE FIGURES:
SUMMARISED GROUP INCOME STATEMENTS SIX MONTHS YEAR ENDED ENDED 30 SEPTEMBER
31 MARCH 1999 1998 1999 R’000 R’000 R’000 OPERATING LOSS (1 097) (3 095) (5 297) INVESTMENT INCOME 44 231 5 926 20 617 INCOME BEFORE TAXATION 43 134 2 831 15 320 TAXATION 13 583 2 054 10 633 NET INCOME 29 551 777 4 687 SHARE OF ASSOCIATED COMPANIES’ (LOSS)/INCOME (61 597) 13 055 (1 145) PREFERENCE DIVIDENDS ACCRUED (5 521) (11 406) (33 381) (LOSS)/INCOME ATTRIBUTABLE TO ORDINARY SHAREHOLDERS BEFORE NON-RECURRING ITEMS (37 567) 2 426 (29 839) NON-RECURRING ITEMS 346 741 42 500 67 637 INCOME ATTRIBUTABLE TO ORDINARY SHAREHOLDERS 309 174 44 926 37 798 ATTRIBUTABLE (LOSS)/EARNINGS PER SHARE (CENTS) – BEFORE NON-RECURRING ITEMS (10,1) 0,7 (8,4) – AFTER NON-RECURRING ITEMS 83,3 12,9 10,6 WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES ON WHICH THE ATTRIBUTABLE EARNINGS PER SHARE HAS BEEN CALCULATED (‘000) 371 039 347 477 355 892 ACTUAL NUMBER OF ORDINARY SHARES IN ISSUE AT END OF PERIOD (‘000) 371 039 353 157 365 321 SUMMARISED GROUP BALANCE SHEET RESTATED 30 SEPTEMBER 31 MARCH 1999 1999 R’000 R’000 FUNDS EMPLOYED ORDINARY SHAREHOLDERS’ INTEREST 1 959 902 2 994 665 OUTSIDE SHAREHOLDERS’ INTEREST AND PREFERENCE SHARES 75 375 271 068 LOANS PAYABLE 41 285 82 285 CURRENT LIABILITIES 29 556 275 414 2 106 118 3 623 432 EMPLOYMENT OF FUNDS FIXED ASSETS 144 151 INVESTMENTS 2 061 634 3 618 093 – ASSOCIATED COMPANIES 524 951 2 072 589 – NON-CONSOLIDATED SUBSIDIARY 150 250 191 250 – OTHER INVESTMENTS 1 386 433 1 354 254 CURRENT ASSETS 44 340 5 188 2 106 118 3 623 432 NET ASSET VALUE PER SHARE (CENTS) – INVESTMENTS AT CARRYING VALUE 5,28* 8,20 – INVESTMENTS AT MARKET/DIRECTORS’ VALUATION AT 21 DECEMBER 1999 7,50* 9,30 *AFTER UNBUNDLING NOTES 1. EVENTS AND DEVELOPMENTS THE GROUP’S INVESTMENTS HAVE PERFORMED EXTREMELY WELL DURING THE PERIOD UNDER REVIEW DESPITE THE TURBULENT ECONOMIC AND MARKET CONDITIONS THAT HAVE PREVAILED THE GROUP HAS DISPOSED OF ITS INVESTMENT IN DATATEC LIMITED AND HAS UTILISED THE PROCEEDS TO LIQUIDATE THE DEBT IN THE GROUP, RECAPITALISE CURRENT INVESTMENTS AND FACILITATE FURTHER ACQUISITIONS WHEN APPROPRIATE OPPORTUNITIES ARISE. THE GROUP UNBUNDLED ITS INVESTMENTS IN UNIBANK INVESTMENT HOLDINGS LIMITED AND SOFTLINE LIMITED BY DISTRIBUTING THE SHARES IN THESE COMPANIES TO ITS SHAREHOLDERS. THIS REPRESENTED R1,035 BILLION IN VALUE ON THE DATE OF THE UNBUNDLING, WHICH WAS EQUIVALENT TO R2,80 PER HCI SHARE. HCI ACQUIRED A CONTROLLING INTEREST IN RED PEPPER PICTURES (PROPRIETARY) LIMITED DURING THE PERIOD. RED PEPPER PICTURES IS AN AWARD-WINNING TELEVISION PRODUCTION COMPANY FOCUSING ON THE ESTABLISHMENT OF A ONE-STOP SHOP FOR THE TELEVISION AND ADVERTISING INDUSTRY. 2. UNLISTED INVESTMENTS THE GROUP’S MAJOR UNLISTED INVESTMENT, BEING ITS 5% INTEREST IN VODACOM GROUP (PROPRIETARY) LIMITED, CONTINUES TO PERFORM BEYOND EXPECTATION. CELLULAR TELEPHONY CONTINUES TO BE A RAPIDLY EXPANDING INDUSTRY IN SOUTHERN AFRICA. MIDI TV (PROPRIETARY) LIMITED HAS BEEN THROUGH AN EXCEPTIONALLY DIFFICULT PERIOD AS A RESULT OF THE NON-PERFORMANCE OF 45% OF ITS SHAREHOLDERS. YOUR DIRECTORS REMAIN OF THE VIEW THAT E-TV IS AN INVESTMENT WHICH WILL, IN TIME, BRING VERY SATISFACTORY RETURNS TO THE COMPANY PROVIDED THE LICENSE OF THE STATION IS SUITABLY AMENDED TO ALLOW CHANGES IN OWNERSHIP COMMENSURATE WITH SUCH SHAREHOLDERS’ PERFORMANCE OF FUNDING OBLIGATIONS. APPLICATION HAS BEEN MADE TO THE INDEPENDENT BROADCASTING AUTHORITY FOR SUCH AMENDMENTS AND ITS OUTCOME IS IMMINENT. THE BUSINESS HAS SIGNIFICANTLY UNDERPERFORMED IN ITS FIRST YEAR ON AIR AND THIS HAS NECESSITATED HCI ASSERTING ITSELF OVER THE ASSET AND BRINGING IN A MORE WIDELY EXPERIENCED MANAGEMENT. IT IS ANTICIPATED THAT THE STATION WILL CONTINUE TO MAKE LOSSES FOR THREE FINANCIAL YEARS AND WILL MAKE SUBSTANTIAL CONTRIBUTIONS TO OUR COMPANY’S PROFITS THEREAFTER. IT IS YOUR DIRECTORS’ INTENTION TO SEEK A FINANCIAL PARTNER IN THIS BUSINESS TO MEET SOME OF THE OBLIGATIONS OF THE NON-PERFORMING SHAREHOLDERS. METTLE LIMITED’S RESULTS FOR THE PERIOD HAVE BEEN HIGHLY GRATIFYING, COMFORTABLY EXCEEDING THE TARGET SET AT THE BEGINNING OF THE FINANCIAL YEAR. METTLE LIMITED POSTPONED ITS LISTING ON THE JOHANNESBURG STOCK EXCHANGE PENDING AN IMPROVEMENT IN THE STOCK MARKET CLIMATE. THE IQ BUSINESS GROUP (PROPRIETARY) LIMITED HAS PERFORMED EXCEPTIONALLY WELL AND IS CURRENTLY BEING REVERSE LISTED BY A MERGER WITH SPICER HOLDINGS LIMITED. IT IS ANTICIPATED THAT HCI WILL CONTINUE TO HOLD ITS SPICER HOLDINGS LIMITED SHARES AND PLAY A STRATEGIC ROLE IN RELATION TO THAT COMPANY. 3. OPERATIONS AND RESULTS FOR THE PERIOD THE COMPANIES IN WHICH THE GROUP HAS INVESTED CONTINUE TO OFFER EXCITING PROSPECTS IN THEIR FIELDS. THE INVESTMENTS ARE CONSTANTLY REVIEWED AND NEW ONES SOUGHT TO COMPLEMENT THEM. THE DIRECTORS ARE CONFIDENT THAT THE GROUP WILL CONTINUE TO DELIVER SATISFACTORY GROWTH. EARNINGS PER SHARE INCORPORATE ONLY THE RESULTS OF THOSE COMPANIES EQUITY ACCOUNTED TOGETHER WITH INTEREST AND DIVIDENDS RECEIVED FROM INVESTMENTS. ACCORDINGLY, EARNINGS PER SHARE IS NOT INDICATIVE OF THE PERFORMANCE OF ALL THE UNDERLYING COMPANIES IN WHICH INVESTMENTS ARE HELD. THE HEADLINE LOSS HAS ARISEN DUE TO EQUITY ACCOUNTED LOSSES OF MIDI TV (PROPRIETARY) LIMITED AND THE NON-RECURRING ITEMS ARE MAINLY ATTRIBUTABLE TO THE SALE OF THE DATATEC LIMITED SHARES. YOUR DIRECTORS ARE SATISFIED THAT THE COMPANIES IN WHICH THE GROUP OWNS STRATEGIC STAKES WILL PROSPER IN THE YEARS AHEAD. 4. CHANGE IN ACCOUNTING POLICY THE UNBUNDLING WAS EFFECTED THROUGH AN APPLICATION OF RESERVES ARISING FROM A REVALUATION OF THE INVESTMENTS OF THE GROUP. THE GROUP HAS CHANGED ITS ACCOUNTING POLICY TO REFLECT INVESTMENTS AT FAIR VALUE. THIS REVALUATION WAS DONE ON 24 JUNE 1999. ACCORDINGLY, THE COMPARATIVE FIGURES IN THE GROUP BALANCE SHEET HAVE BEEN RESTATED. 5. DIVIDENDS THE DIRECTORS HAVE DECIDED NOT TO DECLARE A DIVIDEND FOR THE PERIOD ENDED 30 SEPTEMBER 1999. THE COMPANY REQUIRES ITS CASH RESOURCES FOR FURTHER INVESTMENTS. PAYMENT OF A DIVIDEND WILL BE CONSIDERED IN FUTURE YEARS OUT OF DIVIDENDS RECEIVED BY THE COMPANY FROM ITS INVESTMENTS WHEN CIRCUMSTANCES WARRANT. 6. PROSPECTS FOR THE FUTURE THE PROSPECTS FOR THE GROUP OVER THE COMING MONTHS REMAIN PROMISING. THE KEY FOCUS OF THE GROUP REMAINS CONCENTRATED ON THE EXPANSION AND CONSOLIDATION OF ITS INTERESTS IN THE MEDIA, BROADCASTING, INFORMATION TECHNOLOGY, FINANCIAL SERVICES AS WELL AS GAMING AND ENTERTAINMENT SECTORS. WITH PROSPECTS FOR GROWTH IN THE ECONOMY LOOKING BETTER, THE GROUP REMAINS CONFIDENT THAT INVESTMENT OPPORTUNITIES THAT MEET ITS INVESTMENT CRITERIA WILL CONTINUE TO PRESENT THEMSELVES.