For full unaudited results of the group please look under the Financial Section of our website, only the commentary is attached.



Vodacom Group (Pty) Ltd The group’s 5% interest in unlisted Vodacom Group (Pty) Ltd (“Vodacom”) remained unchanged during the period under review. Vodacom continued its exceptional performance during the period under review showing strong growth in all aspects of its business. Vodacom increased its headline earnings for the six months ended 30 September 2001 by 41% to R965,3 million. The company continues to remain the leading cellular network operator on the African continent with a subscriber base in excess of 5,8 million and a major share of its revenues from the South African market. Despite the entry of Cell C into the local cellular market, your directors remain confident that this investment will continue to deliver satisfactory returns in the future.

Midi TV (Pty) Ltd (“e-TV”) e-TV continued its satisfactory progress over the last year. Its audience share is now almost 16% during the evening and more on a 24-hour basis. Its revenues have been tracking its audience growth, though the current world economic slowdown is starting to make itself felt in the growth of the station. We believe the station remains on target to break even during the second half of our next financial year (2003). e-TV has successfully negotiated a put and call option in respect of Warner Bros. shares in the station as well as suitably adjusting its programme licensing arrangements, both of which are subject to Exchange Control approval. If forthcoming, the put and call option will be subject to ICASA approval. As previously announced this is not expected to have any negative effect on the station. HCI anticipates committing further resources to e-TV until its turnaround is effected. Regulatory difficulties in relation to ICASA remain outstanding and HCI remains committed to resolving the matter amicably with ICASA.

Gaming Progress towards the commencement of operations in the route business has continued slowly. We anticipate the roll-out will only effectively commence at the beginning of our next financial year. The group has decided to convert about half of it debts with Online Gaming Systems Limited (“OGAM”) to ordinary equity. This conversion will give the group about 81% of the ordinary equity. The investment remains speculative and the company continues to lose money. Nevertheless your directors believe there is great potential in Internet gaming and that this company has good prospects of concluding contracts which over time will make OGAM profitable.

Mettle Limited (“Mettle”) The Mettle listing was highly disappointing. Notwithstanding a comprehensive buyback plan of its own shares by Mettle, the share price fell to unacceptably low levels which began creating difficulties in the business. HCI has resolved to support the delisting of the company. It is anticipated Mettle may well become a subsidiary of HCI as a result of the delisting.


Business operations The business operations of HCI entail the making of investments in opportunities as identified by the board of directors and to add value to these investments over time. As such, HCI has consciously established itself and pursued an investment policy in terms of which it has endeavoured to maintain significant equity and capital participation in entrepreneurially run companies with significant growth potential. 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. Accounting policies

The accounting policies in respect of the financial year ended 31 March 2001 have been consistently applied to the results for the period ended 30 September 2001. The policies conform with South African Generally Accepted Accounting Practices.

Interim results Earnings per share incorporates only the results of those companies equity accounted together with interest and dividends received from investments. Accordingly, earnings per share is not always indicative of the performance and value of all the underlying companies in which investments are held.

Headline loss per share decreased from 20,7 cents to 7,44 cents mainly due to the improved performance from e-TV. The investment surplus arose mainly from the sale of certain of the group’s non-core investments. The group has historically not consolidated various investments in which it has a majority stake and this practice is continued in this interim report for the same reason as previously stated. However, a review of this practice will be made in our year-end accounts once the results of our application to regularise ownership in e-TV have been finalized and the results of the Mettle delisting proposal have been obtained.

DISTRIBUTIONS TO SHAREHOLDERS The directors have decided not to declare a dividend for the six months ended 30 September 2001. The company requires its cash resources for further investments.

PROSPECTS FOR THE FUTURE The prospects for the group over the next year remain concentrated on consolidating and extracting value from its interests in the various sectors invested. The group has invested in certain start-up businesses that have significant blue-sky potential. The directors are confident that the group will continue to deliver satisfactory returns in the near future.

STRATE The company’s shares commenced trading on the JSE Securities Exchange South Africa in uncertificated form on Monday, 3 September 2001 with the first electronic settlement under STRATE occurring on Monday, 10 September 2001. Those shareholders who have as yet not deposited their shares with a Central Securities Depository Participant or qualifying broker are reminded to do so. Enquirers in this regard may be referred to STRATE on 0800 004 727 or Mercantile Registrars Limited on (011) 370 – 5000.

Source: HCI