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BAT
BRAIT
Brait - Unaudited group results for the six months ended 30 September 2006
and dividend announcement
Brait S.A.
Societe Anonyme
("Brait" or "the Company")
(Incorporated in Luxembourg)
Registration number: RC Luxembourg B-13861
Registered office: 180 rue des Aubepines, L-1145, Luxembourg
Share code: BAT
ISIN code: LU0011857645
Brait S.A., Societe Anonyme, Incorporated in Luxembourg (R C Luxembourg B-13861)
Partnerships based on passion, energy and a pioneering spirit of enterprise
highlights
UNAUDITED GROUP RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
Highlights
* Earnings summary
Profit from operations up by 16% to US$27,0 million (ZAR184 million, up by 22%)
Attributable earnings down by 8,9% to US$18,4 million (ZAR125 million, down by
4%)
Headline earnings down by 8% to US$18,6 million (ZAR127 million, down by 3%)
* Return on US dollar equity 11,9% (ZAR equity 57,4%)
* Interim dividend distribution retained at 7,85 US cents per share (59,40 SA
cents per share, up by 15,3%)
* NAV at 153,2 US cents per share, up by 5,6% for the half year after adding
back dividends (1 190,5 SA cents per share, up by 31,8% after dividends)
* Growth in Assets under Management (fee earning) from US$1,05 billion to
US$1,27 billion (ZAR6,46 billion to ZAR9,89 billion)
Salient features
for the six months ended 30 September
Supplementary Rand information (Note 1)
Audited Audited
year Unaudited Unaudited year
ended six months six months ended
31Mar 30 Sept 30 Sept 30 Sept 30 Sept 31 Mar
2006 2005 2006 2006 2005 2006
ZAR"m ZAR"m ZAR"m US$"m US$"m US$"m
Profit from
338,6 150,6 184,1 operations 27,0 23,3 52,9
250,2 98,8 98,1 Private equity 14,4 15,3 39,1
5,8 5,8 (4,1) Corporate finance (0,6) 0,9 0,9
8,3 1,9 6,1 Specialised funds 0,9 0,3 1,3
74,3 44,1 84,0 Group investments 12,3 6,8 11,6
(15,4) (9,7) (21,1) Finance costs (3,1) (1,5) (2,4)
12,2 1,3 (23,2) Capital items (3,4) 0,2 1,9
Profit before
335,4 142,2 139,8 taxation 20,5 22,0 52,4
(17,3) (5,8) (8,2) Taxation (1,2) (0,9) (2,7)
Profit after
318,1 136,4 131,6 taxation 19,3 21,1 49,7
(17,3) (5,8) (6,1) Minority interest (0,9) (0,9) (2,7)
Attributable
300,8 130,6 125,5 earnings 18,4 20,2 47,0
PERFORMANCE
Headline earnings
per share
291,7 144,6 124,7 - Basic (cents) 18,3 22,4 45,8
256,7 126,9 119,2 - Diluted (cents) 17,5 19,6 40,3
Attributable
earnings
per share
331,9 144,6 123,5 - Basic (cents) 18,1 22,4 51,9
292,1 126,9 117,9 - Diluted (cents) 17,3 19,6 45,6
Dividends per
119,32 51,51 59,40 share 7,85 7,85 18,24
51,51 51,51 59,40 - Interim (cents) 7,85 7,85 7,85
67,81 - Final (cents) 10,39
Net asset value
per
961,6 907,2 1 190,5 share (cents) 153,2 142,4 155,7
45,4% 14,3% 57,4% Return on equity 11,9% 37,1% 45,9%
FINANCIAL
STATISTICS
Market
2 536,9 1 661,5 2 163,7 capitalisation 278,5 260,9 410,8
Shares in issue
101,5 90,3 101,8 (m) 101,8 90,3 101,5
Weighted average
shares
in issue
90,6 90,3 101,6 - Basic (m) 101,6 90,3 90,6
103,0 102,9 106,4 - Diluted (m) 106,4 102,9 103,0
Closing share
2 500,0 1 840,0 2 125,0 price 273,5 288,9 404,8
ZAR/US Dollar
exchange rates
6,1765 6,3700 7,7693 - closing 0,1287 0,1570 0,1619
6,3979 6,4587 6,8116 - average 0,1468 0,1548 0,1563
Note 1:
The disclosure above is for information purposes and does not form part of the
group financial statements.
Abridged Group Income Statements
for the six months ended 30 September
Supplementary Rand information
Audited Audited
year Unaudited Unaudited year
ended six months six months ended
31 Mar 30 Sept 30 Sept 30 Sept 30 Sept 31 Mar
2006 2005 2006 2006 2005 2006
ZAR"m ZAR"m ZAR"m Notes US$"m US$"m US$"m
284,8 119,5 210,5 Revenue 30,9 18,5 44,5
315,4 130,5 95,5 Other income 14,0 20,2 49,3
Total revenue
600,2 250,0 306,0 and income 44,9 38,7 93,8
Operating
(272,5) (104,6) (129,4) expenses (19,0) (16,2) (42,6)
Income from
10,9 5,2 7,5 associates 1,1 0,8 1,7
Profit from
338,6 150,6 184,1 operations 3 27,0 23,3 52,9
(15,4) (9,7) (21,1) Finance costs (3,1) (1,5) (2,4)
12,2 1,3 (23,2) Capital items 4 (3,4) 0,2 1,9
Profit before
335,4 142,2 139,8 taxation 20,5 22,0 52,4
(17,3) (5,8) (8,2) Taxation (1,2) (0,9) (2,7)
Profit for
318,1 136,4 131,6 the period 19,3 21,1 49,7
Attributable
to:
- Minority
17,3 5,8 6,1 shareholders 0,9 0,9 2,7
- Equity
300,8 130,6 125,5 holders of 18,4 20,2 47,0
the parent
Dividends per
119,32 51,51 59,40 share (cents) 7,85 7,85 18,24
Basic
attributable
earnings
per share
331,9 144,6 123,5 (cents) 18,1 22,4 51,9
Diluted
earnings per
share
292,1 126,9 117,9 (cents) 17,3 19,6 45,6
Abridged Group Balance Sheets
as at 30 September
Supplementary Rand information
Audited Unaudited Unaudited Audited
31 Mar 30 Sept 30 Sept 31 Mar
2006 2005 2006 2006 2005 2006
ZAR"m ZAR"m ZAR"m Notes US$"m US$"m US$"m
ASSETS
Non-current
945,5 870,8 1 113,4 assets 143,3 136,7 153,1
898,0 817,9 1 057,4 Investments 136,1 128,4 145,4
Other non-
current
47,5 52,9 56,0 assets 7,2 8,3 7,7
Current
904,8 332,4 918,3 assets 118,2 52,2 146,5
Cash and cash
518,2 101,9 63,7 equivalents 8,2 16,0 83,9
Other current
386,6 230,5 854,6 assets 110,0 36,2 62,6
Non-current
assets held
- 51,0 15,0 for sale 5 1,9 8,0 -
1 850,3 1 254,2 2 046,7 Total assets 263,4 196,9 299,6
EQUITY AND
LIABILITIES
Equity and
975,8 819,2 1 212,2 reserves 156,0 128,6 158,0
Non-current
612,7 166,3 617,7 liabilities 79,5 26,1 99,2
Redeemable
preference
450,3 - 456,9 shares 6 58,8 - 72,9
Other non-
current
162,4 166,3 160,8 liabilities 20,7 26,1 26,3
Current
261,8 187,2 216,8 liabilities 27,9 29,4 42,4
Liabilities
directly
associated
with
non-current
assets held
- 81,5 - for sale - 12,8 -
Total equity
and
1 850,3 1 254,2 2 046,7 liabilities 263,4 196,9 299,6
Net asset
value per
ordinary
961,6 907,2 1 190,5 share (cents) 153,2 142,4 155,7
Abridged Group Cash Flow Statements
for the six months ended 30 September
Unaudited Audited
six months year
ended
30 Sept 30 Sept 31
March
2006 2005 2006
US$"m US$"m US$"m
Cash flows from:
Operating activities 12,8 (2,3) 5,7
Dividends received 1,2 0,6 1,7
Interest received 3,1 9,6 5,5
Finance costs (3,1) (1,5) (2,4)
Capital items (0,5) 0,2 (3,5)
Taxation paid (1,0) - (2,2)
Change in treasury funds (56,7) - -
Change in working funds (12,8) (6,5) (2,5)
Cash (applied in)/generated from operating
activities (57,0) 0,1 2,3
Cash flows (applied in)/generated from
investing activities (2,9) 7,6 22,0
Cash flows (applied in)/generated from
operating and
investing activities (59,9) 7,7 24,3
Dividends paid (11,4) (9,1) (19,8)
Cash flows from financing activities (2,0) (0,4) 61,7
Net (decrease)/increase in cash and cash
equivalents (73,3) (1,8) 66,2
Effects of exchange rate changes on cash and
cash equivalents (2,4) - (0,1)
Cash and cash equivalents at beginning of
period 83,9 17,8 17,8
Cash and cash equivalents at end of period
8,2 16,0 83,9
Group statements of changes in equity
as at 30 September
Audited
Unaudited year
ended
30 Sept 30 Sept 31
March
2006 2005 2006
US$"m US$"m US$"m
Balance at beginning of period 158,0 115,1 115,1
Net translation adjustments (7,1) (1,0) 0,7
Restructuring of subsidiary - - (0,3)
Bonus shares issued - - 12,3
Treasury shares - 2,2 (12,3)
Delivered share scheme shares 0,2 - 9,4
Attributable earnings 18,4 20,2 47,0
Foreign currency adjustment on capital loan (2,7) (0,6) 0,2
Share entitlements 0,2 0,4 0,7
Ordinary dividends paid (11,4) (9,1) (19,8)
Ordinary shareowners" interest 155,6 127,2 153,0
Sale of interest in subsidiary - - 1,8
Acquisition of subsidiary 0,3 - -
Minority arising from acquisition of
subsidiary - 0,5 -
Restructuring of subsidiary (0,3) - (0,3)
Net translation adjustment minority interest (0,5) - 0,8
Earnings attributable to minority shareowners 0,9 0,9 2,7
Balance at end of period 156,0 128,6 158,0
Group Segmental Reports
for the six months ended 30 September
Supplementary Rand information
Audited Audited
year Unaudited Unaudited year
ended six months six months ended
31 Mar 30 Sept 30 Sept 30 Sept 30 Sept 31 Mar
2006 2005 2006 2006 2005 2006
ZAR"m ZAR"m ZAR"m US$"m US$"m US$"m
BUSINESS ANALYSIS
Segment income
284,8 119,5 210,5 Revenue 30,9 18,5 44,5
70,4 32,3 77,0 - Private equity 11,3 5,0 11,0
- Corporate
50,5 22,6 - finance - 3,5 7,9
- Specialised
25,0 4,5 22,1 funds 3,3 0,7 3,9
- Group
138,9 60,1 111,4 investments 16,3 9,3 21,7
315,4 130,5 95,5 Other income 14,0 20,2 49,3
293,7 115,6 79,7 - Private equity 11,7 17,9 45,9
- Corporate
(0,6) - - finance - - (0,1)
- Specialised
16,6 12,3 2,1 funds 0,3 1,9 2,6
- Group
5,7 2,6 13,7 investments 2,0 0,4 0,9
Total segment
600,2 250,0 306,0 income 44,9 38,7 93,8
338,6 150,6 184,1 Segment result 27,0 23,3 52,9
250,2 98,8 98,1 - Private equity 14,4 15,3 39,1
- Corporate
5,8 5,8 (4,1) finance (0,6) 0,9 0,9
- Specialised
8,3 1,9 6,1 funds 0,9 0,3 1,3
- Group
74,3 44,1 84,0 investments 12,3 6,8 11,6
(15,4) (9,7) (21,1) Finance costs (3,1) (1,5) (2,4)
12,2 1,3 (23,2) Capital items (3,4) 0,2 1,9
Profit before
335,4 142,2 139,8 taxation 20,5 22,0 52,4
1 867,6 1 203,9 1 966,7 Segment assets 253,1 189,0 302,4
- Private equity
735,0 598,8 875,6 112,7 94,0 119,0
- Corporate
1,9 8,3 (0,8) finance (0,1) 1,3 0,3
- Specialised
470,0 143,3 155,4 funds 20,0 22,5 76,1
- Group
660,7 453,5 936,5 investments 120,5 71,2 107,0
(17,3) 50,3 80,0 Other 10,3 7,9 (2,8)
Total assets per
balance
1 850,3 1 254,2 2 046,7 sheet 263,4 196,9 299,6
Segment
266,1 202,5 226,9 liabilities 29,2 31,8 43,2
59,3 24,8 49,7 - Private equity 6,4 3,9 9,6
- Corporate
16,1 1,9 1,6 finance 0,2 0,3 2,6
- Specialised
6,8 2,5 2,3 funds 0,3 0,4 1,1
- Group
183,9 173,3 173,3 investments 22,3 27,2 29,9
608,4 232,5 607,6 Other 78,2 36,5 98,4
Total liabilities
per
874,5 435,0 834,5 balance sheet 107,4 68,3 141,6
1 601,5 1 001,4 1 739,8 Segment net assets 223,9 157,2 259,2
675,7 574,0 825,9 - Private equity 106,3 90,1 109,4
- Corporate
(14,2) 6,4 (2,4) finance (0,3) 1,0 (2,3)
- Specialised
463,2 140,8 153,1 funds 19,7 22,1 75,0
- Group
476,8 280,2 763,2 investments 98,2 44,0 77,1
(625,7) (182,2) (527,6) Other (67,9) (28,6) (101,2)
Total net assets
per
975,8 819,2 1 212,2 balance sheet 156,0 128,6 158,0
GEOGRAPHICAL
ANALYSIS
Segment income
284,8 119,5 210,5 Revenue 30,9 18,5 44,5
138,9 54,3 125,3 - International 18,4 8,4 21,7
145,9 65,2 85,2 - South Africa 12,5 10,1 22,8
315,4 130,5 95,5 Other income 14,0 20,2 49,3
60,9 116,9 25,6 - International 3,8 18,1 9,5
254,5 13,6 69,9 - South Africa 10,2 2,1 39,8
Total segment
600,2 250,0 306,0 income 44,9 38,7 93,8
338,6 150,6 184,1 Segment result 27,0 23,3 52,9
73,7 136,3 96,0 - International 14,1 21,1 11,5
264,9 14,3 88,1 - South Africa 12,9 2,2 41,4
(15,4) (9,7) (21,1) Finance costs (3,1) (1,5) (2,4)
12,2 1,3 (23,2) Capital items (3,4) 0,2 1,9
Profit before
335,4 142,2 139,8 taxation 20,5 22,0 52,4
Segment assets
850,3 802,6 1 134,3 - International 146,0 126,0 137,7
1 000,0 451,6 912,4 - South Africa 117,4 70,9 161,9
Total assets per
1 850,3 1 254,2 2 046,7 balance sheet 263,4 196,9 299,6
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 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 ZAR7,7693 to US$1
(2005: ZAR6,3700 to US$1) for the balance sheets and an average rate
of ZAR6,8116 to US$1 (2005: ZAR6,4587 to US$1) for the income
statements.
Audited
Unaudited year
six months ended
30 Sept 30 Sept 31 March
2006 2005 2006
US$"m US$"m US$"m
3. Profit from operations includes:
Dividends received 1,2 0,6 2,3
Interest received 15,6 9,8 23,3
Depreciation (0,3) (0,3) (0,6)
Related party transactions
- Interest received 0,1 0,4 1,0
- Interest paid (0,2) (0,6) (1,2)
- Fees paid (0,4) (0,3) (0,6)
- Key management (1,2) (1,0) (5,0)
4. Capital items comprise:
Currency hedge gain/(cost) 0,9 (0,5) (2,2)
Fair valuation adjustment of
financial liability (4,1) 0,7 (1,4)
Loss on diluted interest in
subsidiary (0,2) - -
Profit on disposal of interest in
subsidiary - - 2,9
Profit on disposal of property,
buildings and fittings - - 2,8
Realisation of translation - - (0,2)
adjustment
Total (3,4) 0,2 1,9
5. Non-current assets held for sale
During the period a decision was
taken to dispose of the group"s
South African micro-lending
operations and as a consequence, the
investment in Capital Alliance
Finance (Pty) Limited was revalued
and classified as "Non-current
assets held for sale and
Discontinued Operations" in terms of
IFRS 5. (2005: The group"s
Johannesburg property and buildings,
including fittings, situated at 9
Fricker Road, Illovo were sold
during the previous financial year.)
- 1,9 8,0
6. Redeemable cumulative preference shares
In March 2006 a subsidiary of the group,
Brait South Africa Limited, raised
US$73 million (ZAR450 million) preference
share capital 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 premuim of ZAR999,99 per
share. These shares carry a dividend of 78%
of the South African prime rate and are
redeemable in four tranches on 31 July of
each year commencing in 2010 until 2013.
These shares are redeemable at the option
of
Brait South Africa Limited. 58,8 - 72,9
7. Investments
Included in investments, are investments in
unlisted associates:
- carrying value 8,4 8,7 11,6
- directors" valuation 8,4 8,7 11,6
8. Related party balances
- Liabilities (13,8) (13,1) (14,5)
- Assets 8,9 19,0 11,5
9. Contingent liabilities, commitments and
subordinated loans
9.1 Contingencies
Sureties and guarantees 0,1 2,7 0,2
9.2 Commitments
Commitments to invest in funds and
proprietary investments 53,2 13,1 34,9
Other 0,6 - 1,1
Rental commitments 3,7 3,9 5,1
Within one year 0,5 0,6 1,1
Between one and five years 3,2 3,3 4,0
9.3 Subordinated loans 3,9 5,6 5,3
10. Interest-bearing liabilities
All liabilities are interest bearing except
for US$15,5 million
(2005: US$23,5 million) in respect of
accounts payable, accruals,
and deferred taxation.
11. Headline earnings
Attributable earnings 18,4 20,2 47,0
Headline earnings adjustment 0,2 - (5,5)
- Loss/(profit) on disposal of interest in
subsidiary 0,2 - (2,9)
- Profit on sale of non-current assets held
for sale - - (2,8)
- Realisation of translation adjustment - - 0,2
Headline earnings 18,6 20,2 41,5
12. Subsequent events
No events have taken place since 30 September 2006 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 is 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$156,0 million at 30 September 2006.
Brait"s earnings are derived from:
* Private equity management fees and investment returns;
* Alternative funds" management fees and investment returns;
* Corporate and debt advisory services; and
* Group investment returns.
Financial results
Earnings
* Profit from operations - US$27,0 million
Profit from operations has increased from US$23,3 million to US$27,0 million for
the period. The major contribution to the earnings increase has come from Group
Investments.
* Finance costs - US$3,1 million
In March 2006, Brait raised ZAR450 million preference share capital to fund its
internal group strategy.
The increased finance charge represents the cost of funding this capital.
* Capital items - US$3,4 million net loss
Net currency hedge profit
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 net gain on the hedge is US$0,9 million after recognising the majority of
the five year call option premium in the current period and setting off currency
losses on ZAR investments by the group.
Fair value adjustment of financial liability
The sale of 26% of Brait South Africa during 2004 to the group"s BEE partner 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 loss of this financial
instrument for the period was US$4,1 million and substantially equates to the
portion of earnings that would have been recognised as belonging to minority
shareholders had the sale been recognised as such.
Return on equity - 11,9%
The annualised US dollar return on average shareowners" funds was 11,9% compared
with the 37,1% achieved in the previous period. The group"s net asset value in
US dollars increased by 5,9% after adding back dividends paid. The decline in
the return on equity and the relative low increase in the group"s net asset
value in US dollars is primarily due to foreign currency translation
adjustments.
In ZAR terms, the impact of the foreign currency movement during the period
caused the return on equity to increase to 57,4% compared with 14,3% achieved in
the previous period. Similarly, the group"s ZAR net asset value increased by
32,2% over the six months after adding back dividends.
Segmental review
Private Equity
Private Equity has delivered profit from operations of US$14,4 million (2005:
US$15,3 million) for the first half of the financial year. This result has been
derived from a strong investment performance in proprietary investing and also a
marked increase in fees from funds under management, but has been offset by a
negative growth in fund investment performance following the decline in the
listed Net 1 market value between 1 April 2006 and 30 September 2006. The net
impact on earnings for the period due to the Net 1 fair value decline was
approximately US$7,0 million, although the decline has been partially reversed
since the period end.
The economic base for earnings growth from Private Equity has improved with the
successful fund raising progress made to date on Brait IV, which has exceeded
Brait"s goal of raising US$500 million. Further commitments are expected prior
to the final closing of the fund in December 2006.
Specialised Funds
Specialised Funds income, which consists largely of fees earned from the
management of third-party capital in the group"s hedge funds, increased by 38%
to US$3,6 million from US$2,6 million in the previous year, while operating
earnings increased by 200% to US$0,9 million from US$0,3 million the previous
year. This result was driven by the markedly higher asset base within our
flagship fund of hedge funds, Brait Absolute SA Fund (Brait Absolute), which
earned higher management fees, but was off-set by conservative exposure, and
therefore performance, during volatile market conditions in the period under
review.
The focus on building performance consistency through investment process
enhancements and robust infrastructure has enabled us to support the development
of customized institutional client solutions across an increased range of
products. To this end the period was significant for a strategic drive to
strengthen our in-house investment team, enhance the risk and IT infrastructure,
and develop new products, distinct in their performance target, risk appetite,
investment strategy, and client appeal. They have found support from domestic
and international institutional and HNW investors.
Assets under management improved by 5% since 31 March 2006 to US$539 million, as
the industry paused for breathe after spectacular recent gains. We have spread
these assets across 21 hedge funds, chosen for their ability to balance risk
against investment opportunity - particularly given the concern that many hedge
fund strategies carry too much market exposure, as a legacy of the gains offered
to single strategy funds by following a high beta strategy since March 2003.
Brait Absolute has therefore been positioned as a low-risk, cash alternative for
institutional investors, and continues to provide almost neutral equity market
exposure along with both cash and bond out performance. Returns during the
period were lower than historical precedent, but remain very attractive on a
risk-adjusted basis.
Brait Absolute SA Fund (Brait Absolute) continues to outperform three-year
rolling return objectives, returning 6,9% above cash and 9,3% ahead of
inflation, whilst limiting volatility to 2,9%. Brait Absolute"s correlation and
beta to the All Share Index remained low at 0,39 and 0,07 respectively.
Corporate Finance
The operational loss from Corporate Finance for the period was US$0,6 million
(2005 profit: US$0,9 million). Minimal fee income has been accrued as the
majority of current work in progress is outcome based and, until such time as
these conditions have been fulfilled, no revenue has been recognised. The
Specialised Debt team is well advanced on some sizeable mandates which, if
concluded, could have a material impact on the business unit"s results in the
next half year or the period thereafter.
Group Investments
Profit from operations from the group"s strategic investments has increased by
80,9% to US$12,3 million from US$6,8 million and return on capital employed is
28,1% for the period.
Bayport, an important contributor to Group Investments, maintained its profit
growth, increasing its contribution to Brait"s attributable earnings by 36,3%
from US$1,1 million to US$1,5 million. Bayport has grown its advances book from
US$33,8 million to US$41,9 million and continues to expand its micro-lending and
financial services operations in Sub-Saharan Africa.
The group"s South African micro-lending interests held through Capital Alliance
Finance remained profitable and is generating surplus cash. Negotiations are
currently underway to realise its interest and, as a consequence, Brait has
reclassified its investment in Capital Alliance Finance as a "Non-current asset
held for sale". In terms of IFRS 5 (Non-current Assets Held for Sale and
Discontinued Operations), the carrying amount of this investment was revalued
prior to its reclassification as held for sale, resulting in a fair value uplift
of US$2,2 million.
During the previous financial year the group established, as a joint venture, an
independent mezzanine fund management business. At 30 September 2006, the fund
had concluded investments of US$10,3 million with undrawn committed capital of
US$29,0 million.
Prospects
Brait"s growth potential is based on some solid platforms: Third party fund
raising in Brait IV, even though not yet complete, is likely to be at the top
end of expectations and will provide a strong impetus for long term earnings
growth in Private Equity. The group has significant proprietary capital for
investment into its Private Equity and Specialised Funds operations and to seed
new strategic growth opportunities elsewhere in the group. Brait Specialised
Funds has established a leading position in its market and has the potential to
continue its significant expansion.
Expectations for the macro economic outlook in South Africa as well as the
investment markets are positive. It should be recognized though, that Brait"s
earnings are dependent on specific investment performance and the irregular
ocurrance of transactions may cause lumpy revenue recognition over short term
cycles. In this context, Brait may not achieve an increase in its US dollar
attributable earnings for the full year. Nonetheless, as long as positive
fundamental market characteristics continue, the prospects for delivering on ROE
and earnings growth targets in Brait remain encouraging over the longer term
cycle.
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 signaling 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 7,85 US cents per share which equates to
a dividend cover of 2,2 times on diluted attributable earnings per share.
South African resident shareowners registered on the South African register are
advised that the dividend is 59,40 cents per share, and has been determined
using the ZAR/US Dollar average buy/sell rate, as at 12h00 (SA time) on 31
October 2006.
The interim dividend will be payable to shareowners on Monday, 27 November 2006.
The record date for the dividend is the close of business on Friday, 24 November
2006. The last day to trade "cum dividend" will be Friday, 17 November 2006 and
the share will commence trading "ex dividend" on Monday, 20 November 2006. Share
certificates may not be dematerialised or rematerialised between Monday, 20
November 2006 and Friday, 24 November 2006, both days inclusive.
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
3 November 2006
Administration
Registered office
Brait S.A.
180, rue des Aubepines
L-1145, Luxembourg
Tel: +352 269255 2180
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
a 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: 0944 208 639 2157
Fax: 0944 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
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 2180
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=#, BI Childs@, JA
Gnodde*, RJ Koch=@, AM Rosenzweig=**, CJ Tayelor*, HRW Troskie=**, SJP Weber#,
PL Wilmot=*
=Non-executive, *South African, #Luxembourgish, @British, **Dutch,
Financial information for the period ended 30 September 2006 is also available
on the Brait website at www.brait.com
Date: 03/11/2006 09:00:29 AM Produced by the JSE SENS Department
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