| Fri 29 Oct 2010, 8:00 | | BAT - BRAIT S.A. Societe Anonyme - Unaudited group results for the six months |
|
BAT
BRAIT
BAT - BRAIT S.A.,Societe Anonyme - Unaudited group results for the six months
ended 30 September 2010 and cash dividend declaration
BRAIT S.A.,Societe Anonyme
(incorporated in Luxembourg)
(RC Luxembourg B-13861)
JSE Code: BAT
Issuer code: BRAIT
ISIN code: LU0011857645
("Brait" or "the Company")
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010 AND CASH
DIVIDEND DECLARATION
Key Highlights
Earnings
- Attributable earnings increased by 50% to R116 million (2009: 6% increase).
- Profit from operations increased by 22% to R154 million (2009: 14%
decrease).
Other Financial Highlights
- Interim dividend distribution 74.24 cents per share ( 2009: 89.77 cents per
share).
- Dividend per share diluted by the issue of 8.5 million Sitogo unwind
shares.
- Return on equity 17% (2009: 11%).
- NAV at 1 331 SA cents per share, increased by 1% (2009: 7% decrease).
- Total Assets under Management increased by 11% from R13.4 billion to R14.9
billion (2009: 9% decrease).
Operational and Strategic Highlights
- Strong operational performance from Brait III and IV portfolio companies.
- Mature balance sheet should see significant realistions in the next 6-12
months.
- Initial R925 million local commitments secured for Brait V.
- Mezzanine Partners has first closing on 3rd fund.
- Public Markets` Capital Management Team offshore feeder fund achieved new
inflows of US$20 million.
- Overall Hedge Funds AUM remained stable at R4.4 billion (2009: R4.2
billion).
- Successful unwind of the Sitogo BEE transaction.
Supplementary US$ information*
Unaudited Audited
Year Six months six months year
ended ended
31 March 30 Sept 30 Sept 30 Sept 30 Sept 31 March
2010 2009 2010 2010 2009 2010
US$m US$m US$m R`m R`m R`m
34,1 15,6 20,7 Profit from 154,3 126,2 267,3
operations
23,6 17,2 14,7 Private capital 109,0 139,5 185,6
8,2 1,4 5,9 Public markets 43,8 11,0 64,0
2,3 (3,0) 0,1 Treasury capital 1,5 (24,3) 17,7
(6,6) (3,3) (3,6) Finance costs (26,9) (27,2) (52,1)
0,4 (0,1) - Capital items - (0,7) 3,1
27,9 12,2 17,1 Profit before 127,4 98,3 218,3
taxation
(4,2) (2,6) (1,6) Taxation (11,7) (21,0) (32,7)
23,7 9,6 15,5 Profit for the 115,7 77,3 185,6
period /
attributable
earnings / headline
earnings
PERFORMANCE
MEASURES
Headline earnings
per share (cents)
22,3 9,0 14,5 - Basic 107,4 72,8 174,8
22,1 8,9 14,3 - Diluted 106,6 72,7 173,2
Attributable
earnings per share
(cents)
22,3 9,0 14,5 - Basic 107,4 72,8 174,8
22,1 8,9 14,3 - Diluted 106,6 72,7 173,2
23,74 11,85 10,74 Dividends per share 74,24 89,77 179,54
(cents)
11,85 11,85 10,74 - Interim 74,24 89,77 89,77
proposed/paid
11,89 - - - Final paid - - 89,77
176,2 175,1 191,0 Net asset value per 1 331,0 1 314,9 1 302,4
share (cents)
13,7% 5,5% 14,0% Return on Equity 16,8% 10,6% 12,8%
FINANCIAL
STATISTICS
301,2 279,6 358,6 Market 2 498,7 2 099,5 2 226,3
capitalisation
110,5 110,5 119,0 Shares in issue (m) 119,0 110,5 110,5
Weighted average
shares in issue (m)
106,1 106,1 107,7 - Basic 107,7 106,1 106,1
107,2 106,4 108,5 - Diluted 108,5 106,4 107,2
272,6 253,0 301,4 Closing share price 2 100,0 1 900,0 2 015,0
(cents per share)
Rand/US$ exchange
rates
0,1353 0,1332 0,1435 - Closing 6,9678 7,5086 7,3926
0,1274 0,1231 0,1346 - Average 7,4309 8,1226 7,8740
*The disclosure above is for information purposes and does not form part of the
Group financial statements
Group Statements of Comprehensive Income
for the six months ended 30 September
Supplementary US$ information
Unaudited Audited
Year six months year
ended ended
31 March 30 Sept 30 Sept 30 Sept 30 Sept 31 March
2010 2009 2010 2010 2009 2010
US$m US$m US$m R`m R`m R`m
27,5 10,4 16,2 Fund management 120,4 84,1 216,0
income
(29,1) (9,3) (18,6) Fund management (75,6) (228,1)
expenses (138,1)
(1,6) 1,1 (2,4) (Loss)/profit from (17,7) 8,5 (12,1)
fund management
operations
36,4 14,0 23,3 Investment income 173,4 113,6 285,4
(1,4) 0,2 (0,5) Finance costs (3,9) 1,4 (11,1)
35,0 14,2 22,8 Profit from 169,5 115,0 274,3
investment
operations
0,7 0,3 0,3 Income from 2,5 2,7 5,1
associates
34,1 15,6 20,7 Profit from 154,3 126,2 267,3
operations
(6,6) (3,3) (3,6) Finance costs (26,9) (27,2) (52,1)
0,4 (0,1) - Capital items - (0,7) 3,1
27,9 12,2 17,1 Profit before 127,4 98,3 218,3
taxation
(4,2) (2,6) (1,6) Taxation (11,7) (21,0) (32,7)
23,7 9,6 15,5 Attributable 115,7 77,3 185,6
earnings
Other
comprehensive
income
(18,0) (14,9) (6,1) Net translation (42,8) (112,1) (133,4)
adjustments
5,7 (5,3) 9,4 Total 72,9 (34,8) 52,2
comprehensive
income/(loss) for
the year
23,74 11,85 10.74 Dividends per 74,24 89,77 179,54
share (cents)
11,85 11,85 10.74 - Interim 74,24 89,77 89,77
proposed/paid
11,89 - - - Final paid - - 89,77
22,3 9,0 14,5 Basic attributable 107,4 72,8 174,8
earnings per share
(cents)
22,1 8,9 14,3 Diluted 106,6 72,7 173,2
attributable
earnings per share
(cents)
22,3 9,0 14,5 Basic headline 107,4 72,8 174,8
earnings per share
(cents)
22,1 8,9 14,3 Diluted headline 106,6 72,7 173,2
earnings per share
(cents)
Abridged Group Statements of Financial Position
as at 30 September
Supplementary US$ information
Unaudited Audited
31 30 30 30 Sept 30 Sept 31
March Sept Sept March
2010 2009 2010 2010 2009 2010
US$m US$m US$m R`m R`m R`m
ASSETS
247,3 238,9 274,1 Non-current assets 1 910,0 1 793,5 1 828,6
240,2 230,8 271,0 Investments 1 888,6 1 732,9 1 775,5
7,1 8,1 3,1 Other 21,4 60,6 53,1
51,6 56,3 35,9 Current assets 249,8 422,5 381,4
1,8 0,1 0,1 Finance costs 0,5 0,5 13,4
11,8 9,2 9,3 Accounts receivable 65,0 68,8 86,8
and other current
assets
38,0 47,0 26,5 Cash and cash 184,3 353,2 281,2
equivalents
298,9 295,2 310,0 Total assets 2 159,8 2 216,0 2 210,0
EQUITY AND LIABILITIES
187,0 185,8 222,4 Equity and reserves 1 549,1 1 395,1 1 382,5
68,3 88,8 79,6 Non-current 554,8 666,8 505,2
liabilities
54,8 53,9 64,6 Redeemable preference 450,0 405,0 405,0
shares
- 22,8 - Financial liability - 170,9 -
13,5 12,1 15,0 Other non-current 104,8 90,9 100,2
liabilities
43,6 20,6 8,0 Current liabilities 55,9 154,1 322,3
11,5 13,0 7,5 Accounts payable 52,6 97,9 85,4
6,1 6,1 - Redeemable preference - 45,0 45,0
shares
24,1 - - Financial liability - - 178,1
1,9 1,5 0,5 Other 3,3 11,2 13,8
298,9 295,2 310,0 Total equity and 2 159,8 2 216,0 2 210,0
liabilities
176,2 175,1 191,0 Net asset value per 1 331,0 1 314,9 1 302,4
ordinary share (cents)
Abridged Group Statements of Changes in Equity
for the six months ended 30 September
Unaudited Audited
six months year
ended
30 Sept 30 Sept 31 March
2010 2009 2010
R`m R`m R`m
Balance at beginning of 1 382,5 1 524,0 1 524,0
period
Net translation adjustments (42,8) (112,1) (133,4)
Sale of treasury shares 18,9 - -
Issue of shares - Sitogo 169,6 - -
unwind
Attributable earnings 115,7 77,3 185,6
Share entitlements 0,9 0,9 1,8
Ordinary dividends paid (95,7) (95,0) (195,5)
Balance at end of period 1 549,1 1 395,1 1 382,5
Abridged Group Cash Flow Statements
for the six months ended 30 September
Unaudited Audited
six months year
ended
30 Sept 30 Sept 31 March
2010 2009 2010
R`m R`m R`m
Cash flows from:
Cash (utilised in)/generated by (6,2) (10,7) 27,9
operations
Dividends received 12,4 3,1 12,7
Interest received 14,7 15,8 17,3
Finance costs and other interest paid (29,7) (31,8) (61,8)
Taxation paid (4,3) (5,8) (19,5)
Change in working capital (38,4) (65,7) (11,3)
Cash utilised in operating activities (51,5) (95,1) (34,7)
Cash flows generated from investing 53,4 195,0 174,2
activities
Cash generated from operating and 1,9 99,9 139,5
investing activities
Dividends paid (95,7) (95,0) (195,5)
Cash inflows from financing activities 11,2 2,2 -
Net (decrease)/ increase in cash and (82,6) 7,1 (56,0)
cash equivalents
Effects of exchange rate changes on (14,3) (84,0) (92,9)
cash and cash equivalents
Cash and cash equivalents at beginning 281,2 430,1 430,1
of period
Cash and cash equivalents at end of 184,3 353,2 281,2
period
Group Segmental Reports
for the six months ended 30 September
Unaudited Audited
six months year
ended
30 Sept 30 Sept 31 March
2010 2009 2010
R`m R`m R`m
BUSINESS ANALYSIS
Segment income from continuing
operations
Fund management income 120,4 84,1 216,0
- Private capital 48,9 58,6 107,5
- Public markets 70,9 23,2 106,0
- Treasury capital 0,6 2,3 2,5
Investment income 173,4 113,6 285,4
- Private capital 138,8 147,6 235,9
- Public markets 21,1 14,4 41,0
- Treasury capital 13,5 (48,4) 8,5
Total segment income from 293,8 197,7 501,4
continuing operations
Segment result from operations 154,3 126,2 267,3
- Private capital 109,0 139,5 185,6
- Public markets 43,8 11,0 64,0
- Treasury capital 1,5 (24,3) 17,7
Finance costs (26,9) (27,2) (52,1)
Capital items - (0,7) 3,1
Profit before taxation 127,4 98,3 218,3
Segment assets and liabilities
Segment assets 2 159,8 2 216,0 2 210,0
- Private capital 1 763,3 1 608,4 1 636,5
- Public markets 141,4 201,5 174,9
- Treasury capital 255,1 406,1 398,6
Total assets per balance sheet 2 159,8 2 216,0 2 210,0
Segment liabilities 610,7 820,9 827,5
- Private capital 48,4 79,1 79,0
- Public markets 6,7 9,5 13,2
- Treasury capital 555,6 732,3 735,3
Total liabilities per balance 610,7 820,9 827,5
sheet
Group Segmental Reports (continued)
for the six months ended 30 September
Unaudited Audited
six months year ended
30 Sept 30 Sept 31 March
2010 2009 2010
R`m R`m R`m
BUSINESS ANALYSIS (continued)
Segment net assets 1 549,1 1 395,1 1 382,5
- Private capital 1 714,9 1 529,3 1 557,5
- Public markets 134,7 192,0 161,7
- Treasury capital (300,5) (326,2) (336,7)
Total net assets per balance 1 549,1 1 395,1 1 382,5
sheet
GEOGRAPHICAL ANALYSIS
Segment income from operations
Fund management income 120,4 84,1 216,0
- International 8,8 10,9 19,1
- South Africa 111,6 73,2 196,9
Investment income 173,4 113,6 285,4
- International 78,1 (21,9) 15,8
- South Africa 95,3 135,5 269,6
Total segment income from 293,8 197,7 501,4
operations
Segment result from operations 154,3 126,2 267,3
- International 68,3 (10,0) (2,4)
- South Africa 86,0 136,2 269,7
Finance cost (26,9) (27,2) (52,1)
Capital items - (0,7) 3,1
Profit before taxation 127,4 98,3 218,3
Segment assets
- International 626,9 799,3 569,6
- South Africa 1 532,9 1 416,7 1 640,4
Total assets per balance sheet 2 159,8 2 216,0 2 210,0
1.Basis for preparation
The financial statements of the Group are prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the
European Union, on the going concern principle, using the historical cost
basis, except where otherwise indicated. The abridged financial statements
are presented in accordance with IAS 34 (Interim Financial reporting). The
accounting policies and methods of computation are consistent with those
applied in the annual financial statements for the year ended 31 March 2010.
The impact of the change in the accounting policy for performance fees on
the results for the six months ended 30 September 2009 was not material and
amounted to R10.1 million gross and R6.7 million net of incentive fees.
2.Presentation currency
The Group has two functional currencies: SA rand (rand) for its South
African operations and US dollar (US$) for its international operations. The
Group`s financial statements are prepared, consistent with the annual
financial statements ended 31 March 2010, using rand as its presentation
currency.
3.Supplementary dollar information
The statements of financial position and statements of comprehensive income
of the Group have also been presented in US$ for the convenience of non-
South African stakeholders in the Group. The supplementary US$ results have
been converted from the rand results using a closing rate of R6.9678 to US$1
(September 2009: R7.5086 and March 2010: R7.3926) for the statements of
financial position and an average rate of R7.4309 to US$1 (September 2009:
R8.1226 and March 2010: R7.8740) for the statements of comprehensive income.
Management Commentary
The Business of Brait
Brait is an international investment Group that manages third party capital
committed by a combination of international and South African investors. Its
business is the raising and management of investment funds classified as
Alternative Assets. The current product set includes private equity,
mezzanine debt funds and a range of hedge fund solutions. Additionally Brait
deploys its capital in proprietary investment programmes in these product
areas. These investments are made predominantly in South Africa and its
region.
Brait`s operations are organised into three business units - Private
Capital, incorporating all activities in the private equity and debt
markets; Public Markets, incorporating all activities in the public or
highly traded securities markets; and Treasury Capital, incorporating all
activities related to managing the Group`s cash and funding requirements.
Operating Environment
The past six months continued to be challenging, both on the South African
and international fronts. The anticipated recovery of the US economy has
failed to materialise, with the US unemployment rate remaining near 10%.
This in turn has forced the Fed to keep interest rates at a near zero level,
which has resulted in the continued availability of cheap money in the
developed economies. This has seen record high capital inflows to emerging
markets in search of yields, resulting in currencies for these economies
strengthening to record levels. The South African Rand has reached levels
below 6.9 to the US dollar as foreign inflows have been invested in the
local bond and equity markets. The strong Rand has kept inflation below 4%,
well within the 3-6% target band for the SARB, largely driven by the low
cost of imports, particularly fuel. On the negative side, the South African
economy, like most emerging market economies, largely depends on the
production and export of resources and a strong currency negatively impacts
returns. This has had a dampening effect on economic growth.
Financial markets, particularly those in South Africa, have been buoyant,
both in equities and bonds, evidenced by the increase in the ALSI and ALBI
from 3,250.110 and 312.306 at 1 April 2010 to 3,381.140 and 341.196 at 30
September 2010 respectively. Our investment teams have been able to
capitalise on these developments and this is evidenced in our investment
product performance.
For the investment management world, the capital raising environment has
continued to be challenging. In South Africa pension fund investors await
clarity on Regulation 28 of the Pension Funds Act, and internationally,
investors are proceeding more cautiously.
Value Drivers
In addition to conditions in the operating environment, Brait`s performance
is affected by the following core value drivers:
- Assets under Management ("AUM");
- Investment product performance;
- Private Equity Fund-to-Fund cycle; and
- New product developments.
A summary of Brait`s results as measured by these key value drivers is as
follows:
Assets under Management
The level and growth of AUM is an important variable in driving the level of
management and performance fees as well as capital participation returns.
Despite the challenging fundraising environment, Brait is pleased to report
that the total AUM has increased from R13.4 billion at 30 September 2009 to
R14.9 billion at 30 September 2010 (31 March 2010: R13.6 billion). The
following notable achievements were recorded for Brait:
Initial R925 million local commitments secured for Brait V;
Mezzanine Partners achieved a first closing on its third fund in excess of
R500 million;
Public Markets` Capital Management Team ("CMT") offshore feeder fund
received US$20 million new inflows;
Overall Hedge Funds AUM remained stable at R4.4 billion (2009: R4.2
billion). Encouraging inflows to the CMT`s Brait Matrix Fixed Income Fund
and Brait Multi Strategy Fund ("BMS Fund") were offset by redemptions from
Brait Solutions` Brait Absolute Fund;
Partial realisations of Brait III`s Wilderness Holding investment following
its IPO on 8 April 2010, as well as the full realisation of Brait IV`s
toehold position.
A significant portion of the Group`s AUM is in the form of USD commitments
and this was negatively impacted by the strong Rand. The main focus for the
remainder of the year will continue to be driving product performance while
seeking to attract additional inflows.
Investment product performance
The Group`s investment products continued to do well despite the challenging
economic environment. Key highlights include:
Brait III and IV portfolio companies continued to achieve strong operational
performance. It was pleasing to note that Brait`s investments in Brait IV
posted a net positive return for the period, and it is anticipated that we
should start to see value extraction from the Fund going forward.
Public Markets` funds continue to exceed performance targets, with CMT`s BMS
Fund and Matrix Fixed Income Fund achieving net returns of 10.9% and 17.1%
respectively for the six month period, well on track to exceed their target
returns for the year. The continued stellar performance of CMT`s Fixed
Income disciplines is particularly noteworthy.
Within the proprietary investments portfolio, despite strong operational
performance in a number of the Group`s investee companies, the strong Rand
negatively impacted the mark to market valuation of some of the underlying
investments.
The Sponsored Funds` programme, where Brait sponsors niche investment firms,
continues to perform well, with Medu Funds I and II as well as the Molash
Fund posting positive returns during the period under review. The intensive
portfolio work by the Molash investment team continued over the past six
months to good effect;
Mezzanine Partners Fund 2 has not suffered any further deterioration in
performance since year-end, while Fund 1 remains on track to achieve its
target gross returns of JIBAR + 9%. The new Fund achieved a first closing of
over R500 million as well deploying funds into its first investment during
the period under review.
Alternative Equity Partners, the Group`s fund of private equity funds,
continues to focus on driving value from its R630 million portfolio fund.
Private Equity Fund-to-Fund cycle
Management have communicated to the market over the past few years to expect
low profitability for FY2009 and FY2010 due to the fund-to-fund cycle gap
which potentially causes a lull in value extraction between funds. There was
a 6-7 year gap between Brait III and IV resulting in the value being
substantially extracted from Brait III before Brait IV has an income
statement impact. Whilst there are many factors determining the timing of
fund raising, the strongest consideration will continue to be the interests
of the investors in the funds themselves. The initial R925 million local
commitments for Brait V are a positive step in shortening the fund to fund
cycle, although the current fundraising environment remains challenging.
New Product Development
Mezzanine Partners has launched its third fund with initial commitments of
over R500 million. This is in line with its strategy to offer a new credit
offering to complement its mezzanine debt products.
Other than this, the Group`s main efforts over the six months have been
concentrated on raising Brait V as well as intensive efforts on the private
equity portfolio companies by the investment teams.
Financial Results
The Group`s attributable earnings of R115.7 million (2009: R77.3 million)
were 50% up on prior period.
Profit from operations for the Group of R154.3 million (2009: R126.2
million) was 22% up on the prior period. This was largely driven by a 298%
increase in Public Markets` profit from operations, which increased to R43.8
million from R11.0 million in the prior period. This was driven by both a
change in accounting policy on performance fees (as reported in the results
for the year ended 31 March 2010) to an accrual basis rather than actual
crystallisation of fees, as well strong product performance from CMT`s BMS
Fund and Fixed Income products.
The profit from operations for Private Capital declined by 22% from R139.5
million in the prior period to R109.0 million as at 30 September 2010. This
was largely due to the strong Rand which had the effect of reducing the Rand
value of USD management fees and valuations in certain of the underlying
investments.
The Group`s NAV per share increased by 1% to 1331 cents (2009: 7% decrease).
Treasury Capital recorded an operating profit of R1.5 million (2009: R24.3
million loss) on the back of solid returns on surplus cash invested in our
hedge fund products.
Fund management loss R17.7 million (2009: R8.5 million profit)
Management fees decreased by 12.4% to R65.4 million (2009: R75.1 million) as
a result of the impact of the strong Rand on the US dollar Brait III and IV
commitments. Realisations from Brait III since 30 September 2009 further
reduced the management fee base. In addition, redemptions from Public
Markets` Brait Absolute negatively impacted the average AUM for the period.
Public Markets` performance fees were R50.8 million for the period, compared
to R5.7 million in the prior period as CMT`s Fixed Income Funds recorded
superior performances compared to the prior period.
Fund management expenses R138.1 million (2009: R75.6 million)
The above increase is attributable to a number of factors, including Public
Markets` performance fee-linked bonuses, which have been accrued for the
first interim results due to the change in accounting policy reported at 31
March 2010. In addition to the impact of normal salary increments, the
current costs reflect a more even accrual of certain expenses, unlike the
prior year where a disproportionate share of the expenses was incurred in
the second half of the year. Management expects expense levels in the second
half to be comparable to the current period.
Investment income R173.4 million (2009: R113.6 million)
Strong operational performance in the Brait III and IV private equity
portfolio companies translated into positive investment income for the Group
and the commencement of value extraction from Brait IV. Treasury Capital`s
surplus cash invested in the hedge fund products benefited from BMS Fund`s
and Brait Matrix Fixed Income Fund`s performances during the period under
review.
Investment expenses R3.9 million (2009: R1.4 million profit)
The prior period`s net result benefited from the reversal of impairment
provisions.
Finance costs R26.9 million (2009: R27.2 million)
The finance costs relate to the preference dividends on the R450m redeemable
preference shares and interest paid on the overdraft facility held by the
Group.
Taxation R11.7 million (2009: R21.0 million)
The Group`s taxation is largely driven by its long-term investment
activities, which are taxed at capital gains tax rates. The lower effective
tax charge for the current period was further influenced by a larger
proportion of impairments arising from the South African operations.
Management expect the average tax charge for the year to be around 14%.
Capital items R nil (2009: R0.7 million expense)
The capital items previously related to the hedge costs on Brait South
Africa Limited`s ("BSAL") Net Asset Value ("NAV") as well as the charges
relating to Brait`s BEE transaction with Sitogo.
The hedging of BSAL`s NAV was discontinued in October 2009, as reported in
the prior period, and the Sitogo BEE transaction was terminated, with an
effective date of 31 March 2010 (see further comments below).
Sitogo Unwind
Brait has successfully completed the buy-back of its 26% holding in BSAL
sold to Sitogo in September 2004 as part of its BEE transaction. This was in
line with the planned liquidity mechanism provided for in the initial
transaction agreements. Sitogo acquired its original interest based on a
Tangible Net Asset Value ("TNAV") formulation, and had a put option on
substantially the same terms as at 31 March 2010. Sitogo exercised this put
option on 22 June 2009. Upon conclusion of this buy back, Brait owns 100% of
BSAL.
The terms of the Sitogo exit arrangements were laid out in the original
agreement entered into in September 2004. As a result of this formulation,
the parties agreed to a net cash amount payable to Sitogo of R102 000 000
after the payment of R68 500 000 to Old Mutual as the primary financiers.
The Company issued 8.5 million Brait shares to Sitogo on 24 August 2010 as
the estimated shares required to settle the R170.5 million cash liability.
On 2 September 2010, Deutsche Bank placed the 8.5 million shares under an
accelerated book build and achieved a price per share of R19.75. The total
net proceeds from the placement were R165.5 million, with Brait contributing
a further R5.0 million to settle the cash liability of R170.5 million.
Following the completion of the placement, the Sitogo shares were listed on
6 September 2010 with the simultaneous transfer to the investors who bought
the shares from the placement being booked on the same day. The cash
settlements to Sitogo and Old Mutual were effected on 13 September 2010.
The financial impact on Brait of the unwind of the BEE transaction is an
accretion to current shareholders of R169.6 million of reserves, which
represents the 26% BSAL equity bought back.
Brait`s BEE Status
Brait has been advised by its empowerment rating agency that it will be
credited with ownership points for a period of two years following Sitogo`s
exit.
Group Cash and Funding Position
Management believe that the Group is adequately funded, especially given the
mature balance sheet which, depending on prevailing market conditions,
should see significant realisations in the next 6-12 months.
In addition to shareholders` equity of R1.549 billion, the Group has R450
million redeemable preference shares in issue and a R150 million overdraft
facility. The preference shares were rolled-over in July 2010 with maturity
dates between 2013 and 2015 and the overdraft facilities have been increased
from R100 million to R150 million. The Group has also kept the option to
early settle its current facilities from future realisation of investments.
Brait Luxembourg Restructure
The Luxembourg authorities have, with effect from 31December 2010, changed
the current laws relating to the current corporate regime under which Brait
SA operates. This will result in the company becoming a fully taxable
entity, known as a Societe de Participations Financieres ("Soparfi").
Management are pleased to report that the Group has completed a restructure
of its group companies such that the tax treatment in respect of dividends
is likely to remain unchanged for the foreseeable future.
Group Outlook
The operating environment continues to pose uncertainties, especially given
the global economic outlook. The South African economy appears to have
resumed a moderate growth path following the effects of the Global Financial
Crisis, although the impact of the continued strength of the Rand on levels
of economic activity remains a concern.
As expressed in the statement for the year ended 31 March 2010, Brait has
emerged from a challenging two year period in a strong and robust position,
well primed for growth, not with-standing the lower inflation environment
currently prevailing in South Africa. The ability to capitalise on this
position remains significantly dependent on market conditions and investor
appetite for our investment products.
Dividend
The Board believes that dividend distributions are an important part of long-
term shareholders` wealth creation. Because of the cyclical nature of short-
term earnings and cash flow, the Group`s current dividend payment policy is
committed to signaling performance against its long-term targets rather than
matching short-term cyclical performances.
The Board`s current dividend policy is to pay annual dividends totaling
12,5% of Brait`s opening net asset value, provided the Board is satisfied
that this does not impair its solvency, or its ability to finance its
business plan. This is arrived at by considering an appropriate payout ratio
to be 50% of current targeted ROE.
An interim dividend of 74.24 cents per share (2009: 89.77 cents per share)
has been declared. The interim dividend is based on 50% of the 12.5% of
opening NAV taking into account the dilution by the 8.5 million Sitogo
shares issued on 24 August 2010.
The interim dividend will be paid to shareholders on Monday, 6 December
2010. The record date for the dividend is the close of business on, Friday,
3 December 2010. The last day to trade "cum dividend" will be Friday, 26
November 2010 and the share will commence trading "ex dividend" on Monday,
29 November 2010. Share certificates may not be dematerialised between
Monday, 29 November 2010 and Friday, 3 December 2010, both days inclusive.
Shareholders who receive their dividends in US$, are advised that the
interim dividend is 10.74 US cents per share (2009:11.85 US cents per
share), and has been determined using the Rand/US$ exchange rate in
Luxembourg at 12:00 on 26 October 2010.
Non-resident shareholders 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
AC Ball
Chief Executive Officer
29 October 2010
Administration
Registered of?ce
180, rue des Aubepines
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 Internationalea,
Luxembourg 69,
route d`Esch, L-2953,
Luxembourg
Tel: +352 45901
Fax: +352 45902010
Transfer agent/registrar
South Africa
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Tel: +27 11 370 5000
Fax: +27 11 668 5200
Legal advisors to the Company
Maitland
58, rue Charles Martel L-2134
Luxembourg
Tel +352 40 25 05 1
Fax: +352 40 25 05 66
Independent auditors
Deloitte 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 00118576455
Directors
PJ Moleketi (Chairman)+*, AC Ball (Chief Executive Officer)*, JE Bodoni+#,
BI Childs(B), JA Gnodde*, C Keogh+(B), RJ Koch+(B), AM Rosenzweig+**, CS
Seabrooke+*, S Sithole, HRW Troskie+**, SJP Weber#.
+Non-executive, *South African, #Luxembourgish, (B)British, **Dutch,
Zimbabwean
Luxembourg
29 October 2010
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 29/10/2010 08:00:06 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.
