Brait S.A. - Final Results
27 5월 1999 - 10:06PM
UK Regulatory
RNS No 8716h
BRAIT S.A.
27 May 1999
AUDITED RESULTS for the year ended 31 March 1999
ANNUAL HIGHLIGHTS
Attributable earnings up 80% to R192,7 million
Three year compound earnings per share growth 91%
Return on shareholders, funds 23%
Dividend of 60 cents per share proposed
Merger integration substantially complete
Two private equity funds raise additional R2 800 million
New unit trust operation attracts R340 million
Registered office
Brait S.A.
69, route d'Esch, L-2953, Luxembourg
Brait South Africa Limited
161 Rivonia Road, Morningside
Sandton 2196
Domiciliary and listing agent
Banque Internationale a Luxembourg
69, route d'Esch, L-2953 Luxembourg
Registrar
Banque Internationale a Luxembourg
69, route d'Esch, L-2953 Luxembourg
Transfer agents
United Kingdom:
IRG plc, Bourne House
34 Beckenham Road
Beckenham, Kent, BR3 4TU
South Africa:
Mercantile Registrars Limited
10th Floor
11 Diagonal Street
Johannesburg 2001
South Africa
Internet: http://www.brait.com
(Copies of the group annual review and financial statements for the year ended
31 March 1999 are available at any of the above addresses)
GROUP INCOME STATEMENTS for the twelve months ended 31 March 1999
1999 1998 Change
Rm Rm %
Operating income 216,9 135,9 +60
Funds management 40,8 55,1
Advisory 33,7 1,7
Investing 40,1 (10,4)
Banking and treasury 102,3 89,5
Taxation 23,9 28,6
Net operating income
after taxation 193,0 107,3
Attributable to outside
shareholders 0,3 -
Attributable earnings 192,7 107,3 +80
Earnings per share - basic
and diluted (cents) 206,8 124,5 +66
Dividend per share (cents) 60,0 -
GROUP BALANCE SHEETS
at 31 March 1999
1999 1998 Change
Rm Rm %
Shareholders, funds
Share capital and premium 832,7 379,3
Non-distributable reserves 35,8 37,1
Foreign currency
translation reserve 11,2 2,3
Distributable reserves 33,2 120,0
Total shareholders' interest 912,9 538,7
Outside shareholders' interest (0,8) 0,1
Shareholders' interest 913,7 538,6 +69
Liabilities
Long term liabilities 92,7 78,2
Current liabilities 2 077,0 1 442,9
Total liabilities 2 169,7 1 521,1
Assets
Long term assets 1 586,0 758,9
Current assets 1 497,4 1 300,8
Total assets 3 083,4 2 059,7 +50
913,7 538,6
Net asset value per
ordinary share (cents) 995,2 625,1 +59
NOTES
1. The financial statements have been prepared in accordance with
International Accounting Standards.
2. Brait S.A. changed its financial year-end to 31 March during the year. The
group results have been presented for the twelve month period ended 31 March
1999.
3. The functional currency used for the preparation of the group
results is South African rands.
GROUP CASH FLOW STATEMENT
for the twelve months ended 31 March 1999
1999
Rm
Cash flows from operating activities (172,5)
Cash flows from funding activities 159,6
Cash flows from investment activities 120,8
Net increase in cash and cash equivalents 107,9
Cash and cash equivalents at beginning of year 65,4
Cash and cash equivalents at end of year 173,3
FINANCIAL PERFORMANCE
at 31 March 1999
Change
1999 1998 %
Attributable earnings (Rm) 192,7 107,3 +80
Earnings per share - basic and
diluted (cents) 206,8 124,5 +66
Dividend per share (cents) 60,0
Tangible net asset value
per share (cents) 987,8 604,2 +63
Return on shareholders, funds(%) 23 22
Three year compound growth in
earnings per share (%) 91
Brait Merchant Bank - capital
adequacy (%) 25 19 +33
Market capitalisation -
31 March (Rm) 3 454,0
Shares in issue (m) 93, 5 86,2
Shares in issue - excluding
treasury shares (m) 91,8 86,2
GROUP PROFILE
Brait is an international investment and merchant banking group
listed on the Luxembourg, Johannesburg and London Stock
Exchanges. It employs 201 people and has shareholders' funds
exceeding R900 million (approximately US$150 million). Its
earnings, which are predominantly derived from its South African
operations, incorporate:
- fees from private equity management and recurring income from
asset and specialised fund management activities;
- fees from advisory services;
- direct investment returns from the group's capital investment
in private equity and other investment risk managed by Brait;
- trading in equity and capital markets; and
- margin income from money market, corporate banking and asset-
based finance activities.
GROUP RESULTS
In July 1998, the group announced a profit forecast for the year
to 31 March 1999 of R186,7 million or 199,8 cents per share in
its listing particulars. Within weeks of that forecast, the Asian
contagion struck emerging markets the world over. The effect on
South African markets, where the majority of the group's
operations are based, was devastating. Equity prices plunged,
interest rates spiralled and business confidence fell to an all
time low. Notwithstanding these adverse conditions we have
exceeded our forecast with earnings of R192,7 million, up some
80% on R107,3 million for 1998.
Our private equity operations raised an additional R2 800 million
of commitments and have again contributed meaningfully to the
group's results in a period during which equity markets have
suffered exceptional weakness and affected earnings. Income is likely to
improve as a result of increased volume of capital commitments and gains
arising from Brait's participation in value appreciation from investments
made in these funds.
Earnings from the group's other fund management operations increased
considerably during the year. Brait Asset Managers reported a profit for the
first time on the back of funds growth of more than 30%. The new South African
unit trust management business exceeded its earnings expectations and posted a
profit in its first full year of operations, while the operations of African
Alliance, our African unit trust and fund management, associate, also delivered
a healthy profit increase.
Advisory income grew significantly this year and met our ambitious targets.
Corporate finance has established itself as one of the leaders in its sector
and has had a rewarding year. Project finance has begun to make a strong
contribution to earnings and has a number of deals in the pipeline which look
promising for next year. The group's new transaction execution team, which
provides commercial and legal support for the group and third party deals,
also made a valuable contribution in its first full year of operations. Taken
together, advisory fees have grown rapidly to a position where they constitute a
material 16% of the group's profit before tax. This is a low risk activity
utilising the Brait brand and intellectual capital with a limited draw on the
group's financial resources.
Banking and treasury operations reported sound earnings growth despite the
trading losses reported earlier in the year.
Corporate banking increased its loan book and profit margins. The new
asset-based finance team has already made a contribution to the bottom line and
treasury had an excellent year. With the exception of bond trading, the trading
operations performed well under difficult market conditions. Brait Securities
reported record earnings for the year with greater emphasis on equity execution.
Income from strategic and principal investing has increased significantly,
primarily from the net effect of Brait's restructuring and listing of its
interest in Decillion, and disposals of investments in Fincorp, Brait S.A.'s
equity portfolio and the group's property trading and broking activities.
DEVELOPMENTS
The group has come together, as a cohesive unit since the merger in
August. In particular, considerable progress has been made in the sharing
of skills and products, and managing relationships and deal flows to
optimise value for Brait, its shareholders, investors and clients alike.
The relationship between the private equity and merchant banking business
has already shown results and significant potential exists for both these
aspects of the group. We find strong market acceptance of the Brait name,
as well as a growing understanding from our client base and shareholders
of the strategy and benefits inherent in the merger. Noteworthy milestones
during the year include:
- Raising of the South African Private Equity Fund 111 which has to date
secured commitments in excess of R2 500 million (US$420 million). Soon after
the year-end the first closing of the Brait Technology and Innovation Fund I
was announced with commitments of some R250 million to date, targeting
investments in technology and innovation. These funds, together with the
existing funds, position Brait as South Africa's pre-eminent private equity
manager with some R4 200 million of commitments under management.
- Disposal of operations which were incorporated into the group at the time of
the merger but which are no longer core to its strategy. These include the
group's investments in Fincorp and its property development, broking business
under the Seeff franchise and mortgage origination activities.
- Participation in the repositioning of Brait's interest in Decimax and the
successful and profitable listing of Decillion.
-Achievement of profitability at Brait Asset Managers following attainment of
critical mass, and 30% growth in total funds under management.
- Successful first year of operation for Brait's unit trust management business
in which R340 million of funds were attracted, a sound maiden profit recorded
and all performance benchmarks exceeded.
- A secure capital adequacy ratio of 25,5% at Brait Merchant Bank following an
additional R255 million capitalisation during the year.
YEAR 2000 COMPLIANCE
As a consequence of the group's Year 2000 compliance review, it is in a
position to report that the final target date for compliance of all internal
systems is June 1999. The group has already achieved compliance on its core
internal systems. Based on the reviews and procedures carried out to date, it is
not expected that the group will suffer any material liability from problems
associated with the Year 2000 issue, nor is it expected that any of the group's
businesses or its results will be materially adversely affected. The board and
the audit committee have been kept informed of progress in this regard.
The direct and indirect costs incurred to date, including the replacement or
upgrading of non-compliant software and hardware, have been expensed against
income and have not been material in the context of the group's results.
DIVIDEND
The board has proposed an annual dividend declaration equivalent to 60 South
African cents per share for the period ended 31 March 1999. In terms of the
articles of association of the company, shareholders are required to approve
the declaration of the dividend which will be tabled at the annual general
meeting of shareholders to be held in Luxembourg on 3 August 1999. Payment of
the dividend in respect of the year ended 31 March 1999 is expected to be made
in early August once shareholders have given their approval.
CONCLUSION AND PROSPECTS
This has been a year of building a foundation for a new and exciting
group. We believe strongly in our values and are determined to manage our
relationships with our stakeholders for mutual benefit.
In the long term, we expect to grow and deliver to our stakeholders a return
well in excess of our risk-adjusted cost of capital.
Under current conditions, we anticipate growth across all important benchmarks
in the year ahead.
END
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