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BAT
BRAIT
BAT - Brait S.A. Societe Anonyme - Interim results for the six months ended
30 September 2007 and dividend declaration
Brait S.A.Societe Anonyme
(Incorporated in Luxembourg)
(RC Luxembourg B-13861)
Share code: BAT & ISIN: LU0011857645
("Brait" or the "Company")
KEY PERFORMANCE MEASURES
- Earnings
Profit from operations up 12% to US$28,9 million (ZAR205,1 million, up 16,6%)
Headline earnings up 13,4% to US$21,1 million (ZAR149,7 million, up 18,2%)
Attributable earnings up 109,8% to US$38,6 million (ZAR273,9 million, up 118,2%)
- includes gain on realisation of equity holding in Bayport
- Return on USD equity 35,8% (ZAR equity 25,1%)
- Interim dividend distribution up 14,7% to 9,00 US cents per share
(59,07 SA cents per share, down 0,6%)
- NAV at 180,0 US cents per share, up 17,5% (1 236,4 SA cents per share, up
3,9%)
- Assets under management (fee earning) up 14,2% from US$1,3 billion to US$1,5
billion (up 8,6% from ZAR9,7 billion to ZAR10,5 billion)
SALIENT FEATURES
for the six months ended 30 September
Supplementary Rand information#
Audited Unaudite Unaudite Audite
d d d
year six six year
ended months months ended
31 30 Sept* 30 Sept 30 Sept 30 Sept* 31
March March
2007 2006 2007 2007 2006 2007
ZARm ZARm ZARm US$m US$m US$m
Profit from
475,4 175,9 205,1 operations 28,9 25,8 67,5
Private
248,5 98,1 144,0 equity 20,3 14,4 35,3
Corporate
45,1 (4,1) 16,3 finance 2,3 (0,6) 6,4
Specialised
43,7 6,1 14,2 funds 2,0 0,9 6,2
Group
138,1 75,8 30,6 investments 4,3 11,1 19,6
Finance
(45,1) (21,1) (24,8) costs (3,5) (3,1) (6,4)
(21,8) (15,0) 108,5 Capital items 15,3 (2,2) (3,1)
Profit before
408,5 139,8 288,8 taxation 40,7 20,5 58,0
(48,6) (8,2) (14,9) Taxation (2,1) (1,2) (6,9)
Profit for
359,9 131,6 273,9 the period 38,6 19,3 51,1
Minority
(21,1) (6,1) - interest - (0,9) (3,0)
Attributable
338,8 125,5 273,9 earnings 38,6 18,4 48,1
PERFORMANCE
MEASURES
Headline
earnings per
share (cents)
314,1 124,7 141,1 - Basic 19,9 18,3 44,6
301,5 119,2 139,8 - Diluted 19,7 17,5 42,8
Attributable
earnings per
share (cents)
330,4 123,5 258,2 - Basic 36,4 18,1 46,9
317,0 117,9 255,3 - Diluted 36,0 17,3 45,0
Dividends per
133,34 59,40 59,07 share (cents) 9,00 7,85 18,24
- Interim
59,40 59,40 59,07 proposed/paid 9,00 7,85 7,85
73,94 - Final paid 10,39
Net asset
value per
1 208,0 1 190,5 1 236,4 share (cents) 180,0 153,2 166,5
Return on
equity
41,3% 57,4% 25,1% - Annual 35,8% 11,9% 24,7%
- Long term
(since April
29,6% 29,6% 30,2% 2003) 34,5% 33,9% 33,9%
FINANCIAL
STATISTICS
Market
capitalisa-
3 084,6 2 163,7 2 730,8 tion 397,4 278,5 425,2
Shares in
105,6 101,8 106,0 issue (m) 106,0 101,8 105,6
Weighted
average
shares in
issue (m)
102,5 101,6 106,1 - Basic 106,1 101,6 102,5
106,9 106,4 107,3 - Diluted 107,3 106,4 106,9
Closing share
price (cents
2 920,0 2 125,0 2 575,0 per share) 374,8 273,5 402,5
ZAR/USD
exchange
rates
7,2550 7,7693 6,8712 - closing 0,1455 0,1287 0,1378
7,0435 6,8116 7,0952 - average 0,1409 0,1468 0,1420
*As restated - Refer note 13.
#The disclosure above is for information purposes only.
Abridged Group income statements for the six months ended
30 September
Supplementary Rand information
Audited Unaudit Unaudited Audit
ed ed
year ended six six year
months Note months ended
31 March 30 30 Sept 30 30 31
Sept* Sept Sept* March
2007 2006 2007 2007 2006 2007
ZARm ZARm ZARm US$m US$m US$m
517,7 210,5 134,1 Revenue 18,9 30,9 73,5
Other income
276,1 95,5 153,3 21,6 14,0 39,2
Total
revenue and
other income
793,8 306,0 287,4 40,5 44,9 112,7
Operating
(333,2) (129,4) (83,7) expenses (11,8) (19,0) (47,3
)
Income from
associates
14,8 (0,7) 1,4 0,2 (0,1) 2,1
Profit from
operations 28,9 25,8 67,5
475,4 175,9 205,1 3
Finance
(45,1) (21,1) (24,8) costs (3,5) (3,1) (6,4)
Capital
(21,8) (15,0) 108,5 items 4 15,3 (2,2) (3,1)
Profit
before
408,5 139,8 288,8 taxation 40,7 20,5 58,0
(48,6) (8,2) (14,9) Taxation (2,1) (1,2) (6,9)
Profit for
359,9 131,6 273,9 the period 38,6 19,3 51,1
Attributable
to:
- minority
21,1 6,1 - shareowners - 0,9 3,0
- equity
holders of
338,8 125,5 273,9 the parent 38,6 18,4 48,1
Dividends
per share
133,34 59,40 59,07 (cents) 9,00 7,85 18,24
- Interim
proposed/
59,40 59,40 59,07 paid 9,00 7,85 7,85
- Final paid
73,94 10,39
Basic
attributable
earnings per
330,4 123,5 258,2 share 36,4 18,1 46,9
(cents)
Diluted
attributable
earnings per
317,0 117,9 255,3 share 36,0 17,3 45,0
(cents)
*As restated - Refer note 13.
ABRIDGED GROUP BALANCE SHEETS AS AT 30 SEPTEMBER
Supplementary Rand information
Audited Unaudited Unaudited Audited
31 March 30 Sept* 30 Sept 30 Sept 30 Sept* 31 March
2007 2006 2007 2007 2006 2007
ZARm ZARm ZARm Note US$ US$m US$m
m
ASSETS
Non-current
1 064,3 672,8 1 357,1 assets 197,5 86,6 146,7
980,9 616,8 1 333,7 Investments 5 194,1 79,4 135,2
Other non-
current
83,4 56,0 23,4 assets 3,4 7,2 11,5
Current
1 257,3 1 547,6 801,2 assets 116,6 199,2 173,3
Cash and
cash
571,0 693,0 707,1 equivalents 6 102,9 89,2 78,7
259,7 440,5 - Investments 7 - 56,7 35,8
Loans and
321,4 309,2 3,4 advances 0,5 39,8 44,3
105,2 104,9 90,7 Other 13,2 13,5 14,5
Non-current
assets held
- 15,0 - for sale - 1,9 -
2 321,6 2 235,4 2 158,3 Total 314,1 287,7 320,0
assets
EQUITY AND
LIABILITIES
Equity and
1 276,1 1 212,2 1 311,2 reserves 190,8 156,0 175,9
Non-current
635,6 617,7 655,3 liabilities 95,4 79,5 87,6
Redeemable
preference
449,9 456,9 458,3 shares 7 66,7 58,8 62,0
Other non-
current
185,7 160,8 197,0 liabilities 28,7 20,7 25,6
Current
409,9 405,5 191,8 liabilities 27,9 52,2 56,5
Loans and
240,8 274,2 3,7 advances 0,5 35,3 33,2
169,1 131,3 188,1 Other 27,4 16,9 23,3
Total
equity and
2 321,6 2 235,4 2 158,3 liabilities 314,1 287,7 320,0
NET ASSET
VALUE PER
ORDINARY
1 208,0 1 190,5 1 236,4 SHARE 180,0 153,2 166,5
(CENTS)
*As restated - Refer note 13.
ABRIDGED GROUP CASH FLOW STATEMENTS
for the six months ended 30 September
Unaudited Audited
six months year ended
30 Sept 30 Sept* 31 March
2007 2006 2007
US$m US$m US$m
Cash flows from:
Operating activities 2,6 12,8 29,8
Dividends received 0,3 1,2 7,4
Interest received 4,1 3,1 3,6
Finance costs (3,5) (3,1) (6,4)
Currency hedge (4,1) (0,5) (0,4)
Taxation paid (0,1) (1,0) (2,8)
Change in working funds 3,9 2,2 (15,1)
Cash generated from operating
activities 3,2 14,7 16,1
Cash flows generated from investing
activities 37,1 (2,9) 4,2
Cash flows generated from operating
and investing activities 40,3 11,8 20,3
Dividends paid (17,9) (11,4) (23,4)
Cash flows from financing
activities (1,0) (2,0) (3,7)
Net increase/(decrease) in cash and
cash equivalents 21,4 (1,6) (6,8)
Effects of exchange rate changes on
cash and cash equivalents 2,8 (2,4) (7,7)
Cash and cash equivalents at
beginning of year 78,7 93,2 93,2
Cash and cash equivalents at end of
period 102,9 89,2 78,7
*As restated - Refer note 13.
GROUP STATEMENTS OF CHANGES IN EQUITY
for the six months ended 30 September
Unaudited Audited
30 Sept 30 Sept* 31 March
2007 2006 2007
US$m US$m US$m
Balance at beginning of period 175,9 158,0 158,0
Net translation adjustments 3,6 (9,8) (8,5)
Treasury shares (1,8) - (7,7)
Delivered share scheme shares 0,8 0,2 6,8
Attributable earnings 38,6 18,4 48,1
Share entitlements 0,1 0,2 0,5
Ordinary dividends paid (17,9) (11,4) (23,4)
Ordinary shareowners` interest 199,3 155,6 173,8
Sale of interest in subsidiary -
minority interest adjustment (8,5) - -
Acquisition of subsidiary - 0,3 0,4
Restructuring of subsidiary - (0,3) (0,4)
Net translation adjustment
minority interest - (0,5) (0,9)
Earnings attributable to minority
shareowners - 0,9 3,0
Balance at end of period 190,8 156,0 175,9
GROUP SEGMENTAL REPORTS
for the six months ended 30 September
Supplementary Rand information
Audited Unaudited Unaudited Audited
year six six year ended
ended months months
31 March 30 Sept* 30 Sept 30 30 Sept* 31 March
Sept
2007 2006 2007 2007 2006 2007
ZARm ZARm ZARm US$m US$m US$m
BUSINESS
ANALYSIS
Segment
income
517,7 210,5 134,1 Revenue 18,9 30,9 73,5
- Private
173,3 77,0 63,9 equity 9,0 11,3 24,6
- Corporate
55,6 - 18,4 finance 2,6 - 7,9
-
74,0 22,1 31,9 Specialised 4,5 3,3 10,5
funds
- Group
214,8 111,4 19,9 investments 2,8 16,3 30,5
276,1 95,5 153,3 Other income 21,6 14,0 39,2
- Private
207,1 79,7 132,0 equity 18,6 11,7 29,4
- Corporate
- - - finance - - -
-
15,5 2,1 7,8 Specialised 1,1 0,3 2,2
funds
- Group
53,5 13,7 13,5 investments 1,9 2,0 7,6
Total
segment
793,8 306,0 287,4 income 40,5 44,9 112,7
Segment
475,4 175,9 205,1 result 28,9 25,8 67,5
- Private
248,5 98,1 144,0 equity 20,3 14,4 35,3
- Corporate
45,1 (4,1) 16,3 finance 2,3 (0,6) 6,4
-
43,7 6,1 14,2 Specialised 2,0 0,9 6,2
funds
- Group
138,1 75,8 30,6 investments 4,3 11,1 19,6
Finance
(45,1) (21,1) (24,8) costs (3,5) (3,1) (6,4)
Capital
(21,8) (15,0) 108,5 items 15,3 (2,2) (3,1)
Profit
before
408,5 139,8 288,8 taxation 40,7 20,5 58,0
Segment
2 219,4 2 155,4 2 049,0 assets 298,2 277,4 305,9
- Private
1 017,9 875,6 1 068,5 equity 155,5 112,7 140,3
- Corporate
69,7 (0,8) 20,6 finance 3,0 (0,1) 9,6
-
166,1 55,2 147,0 Specialised 21,4 7,1 22,9
funds
- Group
965,7 1 225,4 812,9 investments 118,3 157,7 133,1
102,2 80,0 109,3 Other 15,9 10,3 14,1
Total assets
per balance
2 321,6 2 235,4 2 158,3 sheet 314,1 287,7 320,0
Segment
411,4 415,6 191,6 liabilities 27,9 53,5 56,7
- Private
82,7 49,7 76,3 equity 11,1 6,4 11,4
- Corporate
10,2 1,6 4,1 finance 0,6 0,2 1,4
-
13,8 2,3 6,8 Specialised 1,0 0,3 1,9
funds
- Group
304,7 362,0 104,4 investments 15,2 46,6 42,0
634,1 607,6 655,5 Other 95,4 78,2 87,4
Total
liabilities
per balance
1 045,5 1 023,2 847,1 sheet 123,3 131,7 144,1
*As restated - Refer note 13.
BUSINESS
ANALYSIS
(continued)
Segment net
1 808,0 1 739,8 1 857,4 assets 270,3 223,9 249,2
- Private
935,2 825,9 992,2 equity 144,4 106,3 128,9
- Corporate
59,5 (2,4) 16,5 finance 2,4 (0,3) 8,2
-Specialised
152,3 52,9 140,2 funds 20,4 6,8 21,0
- Group
661,0 863,4 708,5 investments 103,1 111,1 91,1
(531,9) (527,6) (546,2) Other (79,5) (67,9) (73,3)
Total net
assets per
balance sheet
1 276,1 1 212,2 1 311,2 190,8 156,0 175,9
GEOGRAPHICAL
ANALYSIS
Segment income
517,7 210,5 134,1 Revenue 18,9 30,9 73,5
- Inter-
228,9 125,3 27,7 national 3,9 18,4 32,5
- South Africa
288,8 85,2 106,4 15,0 12,5 41,0
Other income
276,1 95,5 153,3 21,6 14,0 39,2
- Inter-
102,9 25,6 7,1 national 1,0 3,8 14,6
- South Africa
173,2 69,9 146,2 20,6 10,2 24,6
Total segment
income
793,8 306,0 287,4 40,5 44,9 112,7
Segment result
475,4 175,9 205,1 28,9 25,8 67,5
- Inter-
143,7 87,8 30,5 national 4,3 12,9 20,4
- South Africa
331,7 88,1 174,6 24,6 12,9 47,1
Finance cost
(45,1) (21,1) (24,8) (3,5) (3,1) (6,4)
Capital items
(21,8) (15,0) 108,5 15,3 (2,2) (3,1)
Profit before
taxation
408,5 139,8 288,8 40,7 20,5 58,0
Segment assets
- Inter-
906,3 1 323,0 685,2 national 99,7 170,3 124,9
- South Africa
1 415,3 912,4 1 473,1 214,4 117,4 195,1
Total assets
per balance
sheet
2 321,6 2 235,4 2 158,3 314,1 287,7 320,0
*As restated - Refer note 13.
NOTES TO THE FINANCIAL STATEMENTS
for the six months ended 30 September
1. Basis for preparation
The financial statements of the group are prepared in accordance with
International Financial Reporting Standards (IFRS). The abridged financial
statements are presented in accordance with IAS 34. The accounting policies and
methods of computation are consistent with those applied in the previous year.
2. Supplementary Rand information
The balance sheets and income statements of the group have also been presented
in Rands for the convenience of South African stakeholders in the group. The
supplementary Rand results have been converted from the US$ functional results
using a closing rate of ZAR6,9 to US$1 (2006: ZAR7,8 to US$1) for the balance
sheets and an average rate of ZAR7,1 to US$1 (2006: ZAR6,8 to US$1) for the
income statements.
Unaudited Audited
six year ended
months
30 Sept 30 Sept* 31 March
2007 2006 2007
US$m US$m US$m
3. Profit from operations include:
Dividends received 0,2 1,2 6,2
Interest received 4,1 15,6 30,5
Depreciation (0,1) (0,3) (0,9)
Fair value gains on financial
assets and instruments
- Realised 20,5 5,3 11,5
- Net unrealised 1,1 8,7 27,7
Related party transactions
- Interest received 0,1 0,1 0,3
- Interest paid (0,2) (0,2) (0,4)
- Fees paid (0,4) (0,4) (1,5)
- Key management (includes
directors` remuneration) (1,4) (1,2) (5,3)
4. Capital items comprise:
Net currency hedge (2,6) 0,9 (0,9)
Fair valuation adjustment of
financial liability (0,9) (4,1) (6,9)
Fair valuation adjustment of
financial asset 1,3 1,2 4,4
Loss on restructuring of
subsidiary - (0,2) (0,1)
Gain on realisation of interest in
subsidiary 17,5 - -
Gain on realisation of investment - - 0,4
Total capital items 15,3 (2,2) (3,1)
5. Investments
Listed 36,3 11,2 11,7
Unlisted* 157,8 68,2 123,5
194,1 79,4 135,2
*Included in unlisted investments,
are investments in associates:
- carrying value 1,4 8,4 1,9
- directors` valuation 1,4 8,4 6,8
6. Cash and cash equivalents
Bank balances 44,8 32,5 23,0
Short-term treasury instruments 58,1 56,7 55,7
102,9 89,2 78,7
*As restated - Refer note 13.
7. Redeemable cumulative preference shares
Balance at historical exchange rate
72,9 72,9 72,9
Cumulative effects of exchange rate
changes taken to equity (6,2) (14,1) (10,9)
Closing balance 66,7 58,8 62,0
Brait South Africa Limited raised
US$72,9 million (ZAR450 million)
of preference share capital during FY06
to provide additional capital
to leverage the group`s internal growth
strategy. 450 000 (four
hundred and fifty thousand) cumulative
redeemable preference
shares were issued at a par value of
ZAR0,01 and a premium of
ZAR999,99 per share. These shares carry
a dividend of 78% of the South African
prime rate of
interest ruling from time-to-time and
are redeemable in four
tranches on 31 July of each year
commencing in 2010 until 2013.
Brait South Africa Limited has an option
to effect early redemption.
8. Related party balances
- Liabilities (27,3) (13,8) (36,9)
- Assets 10,0 8,9 11,5
9. Contingent liabilities, commitments and
subordinated loans
9.1 Contingencies
Sureties and guarantees 0,7 0,1 0,1
9.2 Commitments
Commitments to invest in funds and
proprietary investments 47,4 53,2 60,7
Other 0,5 0,6 1,0
Rental commitments 3,3 3,7 3,5
Within one year 0,9 0,5 0,8
Between one and five years 2,4 3,2 2,7
9.3 Subordinated loans - 3,9 3,3
10. Interest-bearing liabilities
-All liabilities are interest bearing
except for US$19,6 million (2006:
US$15,5 million)
in respect of accounts payable,
accruals, provisions and deferred
taxation.
11. Headline earnings
Attributable earnings 38,6 18,4 48,1
Headline earnings adjustment (17,5) 0,2 (2,4)
- Loss on restructuring of subsidiary
- 0,2 0,1
- Gain on realisation of interest in
subsidiary (17,5) - -
- Gain on realisation of non-current
assets held for sale - - (2,5)
Headline earnings 21,1 18,6 45,7
12. Restatements
12.1 Sitogo`s earnings previously equity accounted now recorded as a fair value
adjustment to the financial asset.
12.2 Treasury capital previously disclosed under "Investments" now disclosed
under "Cash and cash equivalents"
13. Subsequent events
No events have taken place since 30 September 2007 and the date of the release
of this report, which would have a material impact on either the financial
position or operating results of the group.
Commentary
GROUP PROFILE
Brait, an international investment and financial services group focused on
private equity, specialised funds, corporate finance and strategic investments.
It is listed on the Luxembourg, London and the JSE Limited, with shareowners`
funds of US$190,8 million at
30 September 2007.
Brait`s earnings are derived from:
- Private equity management fees and investment returns
- Specialised funds management fees and investment returns
- Corporate and debt advisory services
- Group investment returns.
FINANCIAL RESULTS
Earnings
- Profit from operations - US$28,9 million
Profit from operations has increased from US$25,8 million to US$28,9 million
for the period. Private Equity continued to be the major contributor with
increases recorded in Corporate Finance and Specialised Funds.
The operating result from Group Investments has decreased following the
realisation of Brait`s interest in Bayport with effect from 1 April 2007, as
well as other non-recurring items included in the previous period.
- Finance costs - US$3,5 million
Finance costs relate to the funding cost on the ZAR450 million
preference share capital raised in March 2006 to fund Brait`s internal
growth strategy.
- Capital items - US$15,3 million net profit
Gain on realisation of investment in subsidiary - US$17,5 million
In line with its new capital deployment strategy focusing on its core
operations, Brait has realised its micro-lending interest in Bayport yielding
a gain of US$17,5 million.
Net currency hedge - US$2,6 million loss
Brait has consistently applied its policy of hedging the group`s South African
tangible assets into US dollars, which is the functional currency of Brait S.A.
The total net loss on the revaluation of the currency hedges is US$2,6 million.
Fair value adjustment of financial liability - US$0,9 million loss.
The sale of 26% of Brait South Africa in the 2005 financial year to the group`s
black economic empowerment partner [Sitogo Holdings (Proprietary) Limited] has
not been recorded as a sale as it has given rise to a financial instrument which
has been disclosed in terms of IAS 32 (Financial Instruments: Disclosure and
Presentation) and measured in terms of IAS 39 (Financial Instruments:
Recognition and Measurement). The fair value adjustment of the financial
instrument for the six months was a loss of US$0,9 million and substantially
equates to the portion of earnings that would have been recognised as being
attributable to the minority shareowners had the sale been recognised as such.
Fair value adjustment of financial asset - US$1,3 million gain
Pursuant to the sale of 26% of Brait South Africa, an equity investment by Brait
S.A. in Sitogo Holdings has given rise to a financial instrument, which has been
disclosed in terms of IAS 32 and measured in terms of IAS 39. The fair value
adjustment of the financial instrument for the six months was an unrealised gain
of US$1,3 million and equates to the increase in fair value attached to the
specific class of shares held.
Return on equity - 35,8% (24,2% excluding the gain on sale of the realisation of
Bayport)
The annualised US dollar return on average shareowners` funds for the period was
35,8%. Excluding the gain on the realisation of the group`s Bayport interests,
the return on shareholder funds reduces to 16,7%, compared to the 11,9% recorded
in the previous period. The group`s net asset value in US dollars increased by
18,7% since March 2007 after adding back dividends paid. The increase in the
return on equity and in the group`s net asset value in US dollars is primarily
due to earnings growth and the gain on the realisation of the Group`s micro-
lending interests.
In South African rand terms, ROE was 25,1% and NAV growth was 12,7% since March
2007 (after adding back dividends). The lower ROE and NAV growth compared to the
results in US dollars terms are largely due to the impact of the rand
strengthening during the period.
Segmental review
Private Equity
Private Equity`s earnings for the first half of the financial year have been
driven primarily by value recognition in Brait III, further growth in the
group`s proprietary investing income and management fees earned on Brait IV.
Revenue and other income of US$27,6 million was recognised during the period, a
20% increase on the US$23,0 million recognised in the prior comparable period.
Profit from operations increased from US$14,4 million for the six months to 30
September 2006 to US$20,3 million for the first half of the 2008 year. Return on
equity for the half year was 29,7% on average capital employed of US$136,7
million.
Some of the notable investment transaction highlights during the half year
period were:
- the successful IPO of Kelly Group in early April 2007 on the JSE Limited and
the partial realisation of Brait III`s investment in Kelly Group;
- drawdown on the first Brait IV investment for Consol;
- the conclusion of the second Brait IV investment for Nature`s Choice;
- Brait IV Premier Foods transaction completed subject to regulatory approval;
and
- realisation of the group`s proprietary investment in Isegen.
Investment progress on Brait IV is ahead of expectations and the team has a
developed pipeline of attractive investment opportunities. Brait`s proprietary
investment programme has delivered a strong performance in the first half year.
Specialised Funds
Brait Specialised Funds is the largest institutional fund of hedge fund business
in South Africa, with more than five years experience in seeding and supporting
emerging hedge fund managers.
Specialised Funds earnings for the first half of the financial year increased by
55,6% to US$5,6 million from US$3,6 million from the prior comparable period.
Operating profits increased by 122,2% to US$2,0 million from US$0,9 million.
These increases were due to an increase in assets under management by 24,1%
since 31 March 2007 to US$809,4 million, and due to satisfactory investment
performances. Return on equity for the half year was 19,3% on average capital
employed of US$20,7 million.
Brait Absolute SA Fund`s assets increased by 23,7% since 31 March 2007 from
US$633,8 to US$783,8 million, spread across twenty-two hedge funds, chosen by
our multi-management team for their ability to balance risk against investment
opportunity. Brait Specialised Funds has secured an additional ZAR4 billion in
capacity with underlying managers, and plan to add to this during the year as
the Fund searches for new sources of alpha.
Investment performance during the year was satisfactory, with Brait Absolute
continuing to outperform its three-year rolling return objective, returning 6,6%
above cash and 8,5% ahead of inflation while limiting volatility to 3,0% p.a.
Brait Absolute`s correlation and beta to the All Share Index remained very low
at 0,34 and 0,08 respectively.
Corporate Finance
The operating profit from Advisory Debt Services for the period increased to
US$2,3 million compared to a loss of US$0,6 million in the previous period. The
debt team, which had left Brait with effect from 1 April 2007, continues to work
with Brait in executing various mandates.
Group Investments
Profit from operations from the group`s strategic investments for the period has
decreased by 61,3% to US$4,3 million from US$11,1 million and delivered a return
of 8,9% for the period on average capital employed of US$97,1 million.
With effect from 1 April 2007 and in line with the group`s capital deployment
strategy, Brait realised its micro-lending and financial services operations in
Bayport yielding a gain of US$17,5 million. The proceeds of US$31,3 million
includes full loan repayments of US$13,8 million and will initially be invested
as Treasury capital with various Brait Specialised Funds products pending
further deployment in line with the group`s strategic initiatives.
In November 2005 the group established, as a joint venture, an independent
mezzanine fund management business. At 30 September 2007, the Fund had concluded
investments with an aggregate amount of US$40,4 million. A further investment of
US$10,9 million was concluded in October 2007.
PROSPECTS
The first half of the financial year has been an important period in which
quality investment opportunities have been secured by Brait`s Private Equity
operations and significant commitments of new capital secured by its Specialised
Funds business. These developments have further enhanced Brait`s leadership
position in these areas and added to the group`s annuity earnings platform and
its potential for medium to long term investment income growth.
Macro-economic fundamentals in South Africa as well as the outlook for
investment markets are positive. Brait has taken advantage of this by investing
in sectors which benefit from the growth resulting from these positive macro-
economic conditions. It should be recognised, however, that Brait`s earnings are
dependent on specific investment performance and the irregular occurrence of
transactions which, despite the long term growth expected, may cause lumpy
revenue recognition over the short term.
As long as positive fundamental market characteristics continue, the prospects
for delivering on ROE and earnings growth targets in Brait remain encouraging
over the long term.
DIVIDEND
The board holds the view that dividend distributions are an important part of
long-term shareowners` wealth creation and an indication of the health of the
group. Because of the cyclicality of short-term earnings, the group`s dividend
payment policy is committed to signalling performance against long-term growth
targets of the group rather than matching short-term cyclical performances.
After taking these factors into account and also after taking into consideration
the present financial and cash position of the group, the board proposes to pay
an interim dividend of 9,00 US cents per share which equates to an increase of
14,7% compared to the prior year interim dividend of 7,85 US cents per share.
The interim dividend will be paid to shareowners on Monday, 3 December 2007. The
record date for the dividend is the close of business on Friday, 30 November
2007. The last day to trade "cum dividend" will be Friday, 23 November 2007 and
the share will commence trading "ex dividend" on Monday, 26 November 2007. Share
certificates may not be dematerialised or rematerialised between Monday, 26
November 2007 and Friday, 30 November 2007, both days inclusive.
South African resident shareholders registered on the South African register are
advised that the dividend is 59,07 SA cents per share, and has been determined
using the ZAR/USD average buy/sell rate, as at 12:00 (SA time) on 30 October
2007.
Non-resident shareowners registered on the South African register, who prefer
their dividends to be paid in US dollars, are advised to inform their
CSDPs/brokers accordingly and provide their banking details to their
CSDPs/brokers by the required deadline in terms of their agreements entered into
with their CSDPs/brokers.
For and on behalf of the board
ME King AC Ball
Chairman Group Chief Executive
6 November 2007
ADMINISTRATION
Registered office
Brait S.A.
180, rue des Aub?pines
L-1145, Luxembourg
Tel: +352 269255 3297
Fax: +352 269255 3642
Brait South Africa Limited
9 Fricker Road
Illovo Boulevard, Illovo, Sandton
South Africa
Tel: +27 11 507 1000
Fax: +27 11 507 1001
Listing agent
Dexia Banque Internationale ? Luxembourg
69, route d`Esch
L-2953, Luxembourg
Tel: +352 45901
Fax: +352 45902010
Transfer agent/Registrar
United Kingdom
Capita IRG plc
Bourne House
34 Beckenham Road
Beckenham
Kent, BR3 4TU
United Kingdom
Tel: +44 208 639 2157
Fax: +44 208 639 2342
South Africa
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street
Johannesburg, 2001
or
PO Box 61051, Marshalltown, 2107
Tel: +27 11 370 5000
Fax: +27 11 668 5200
Legal advisors to the company
Elvinger, Hoss & Prussen
2, Place Winston Churchill
L-1340, Luxembourg
Tel: +352 446 6400
Fax: +352 44 2255
Independent auditors
Deloitte & Touche S.A.
560, rue de Neudorf
L-2220
Luxembourg
Domiciliary agent and registrar
Experta Luxembourg S.A.
180, rue des Aubepines
L-1145, Luxembourg
Tel: +352 269255 3297
Fax: +352 269255 3642
JSE and LSE issuer name and code
Issuer long name - Brait S.A.
Issuer code - BRAIT
Instrument alpha code/
Ticker symbol - BAT
ISIN - LU 0011857645
Directors
ME King (Chairman)+*, AC Ball*, PAB Beecroft+^, JE Bodoni+#,
AD Campbell*, BI Childs^, JA Gnodde*, RJ Koch+^, MS Masithela*,
AM Rosenzweig+**, HRW Troskie+**, SJP Weber#, PL Wilmot+*,
+Non-executive, *South African #Luxembourgish ^British **Dutch
Financial information for the six months ended 30 September 2007 is also
available on the Brait website at www.brait.com
Date: 06/11/2007 09:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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