CF Venture Fund Ltd. has achieved a modest net profit after tax of Rs. 10.3 million during the financial year ended March 31, 1998, up from Rs. 6.3 million earned the previous year, mainly from interest income generated by short-term investment, the company's chairman, Mr. Chandra Wijenaike has reported.

The Hatton National Bank and Central Finance and its associates are the major shareholders of the CF Venture Fund Ltd. The company has either controlling stakes or major holdings in over a dozen non-quoted companies dealing in aquarium fish, prawn culture, rubberised coir, barbecue briquettes, computer software, recycled papercraft and coconut cream. It is also involved in setting up a 2.5 MW mini hydro project in Watawala due to be commissioned early next year.

Describing the year under review as ``one of consolidation'' for the company, he said the management had been as cautious as reasonably possible in its investment decisions to minimise the risks associated with venture capitalism. They had re-thought their investment strategies and adjusted to the current environment.

Wijenaike said that their fund, once strongly agri-oriented has now diversified into new sectors like power. They were also looking at strengthening the manufacturing and service sectors. Owing to the lack of proper exit options, they have now decided to focus more on medium to large-scale projects.

``We are confident that the company is moving in the right direction. Our strategy of concentrating on export oriented investments with a high component of local value addition has paid off as these companies have a better chance of being resilient to and benefit from any devaluation in our currency,'' Wijenaike said.

CF also follows a ``hand-on'' style of investment management which has now become the benchmark for investment management in Sri Lanka, he said.

The chairman reported that the year under review had seen the management team turning around a number of companies in which they had invested and they expect a dividend income from these companies in the next two years.

Wijenaike noted that their projection at launch four years ago was that income would generally commence on or about the fourth year. Even though the fourth year was fiscal 1997/98 , and they had made their assertion at a time the economy was booming, they had been able to give their shareholders even a small return from the second year onwards despite the subsequent economic downturn. They were now proposing a first and final dividend of 6% for fiscal 1997/98.

CF Vetnure Fund has an issued capital of Rs. 150 million. Its investment portfolio was valued on the balance sheet at Rs. 115.2 million. Provision of Rs. 17.3 million had been made in the year under review for reduction in value of investment. The previous year's provision was Rs. 17 million.

The directors of the company are Messrs. C. Wijenaike, T.M. Dunuwille, M.T.L. Fernando, M.L. Mack, R.T. Wijetillake, D.G.K.E. Weerapperuma, J.K. Weeratunge, S.V. Wanigasekera, E.H. Wijenaike, E.M. Wijenaike, D.N. Daluwatte and G.S.N. Pieris.