RNS Number:3927L
Brait S.A.
30 May 2000
ANNUAL HIGHLIGHTS
Earnings per share
up 22% to 252,7 cps
Fourth consecutive
year of real earnings
growth - compound
growth rate of 71%
Dividend per share
up 25% to 75 cps
Return on
shareholders funds
23%
Registered office
Brait S.A.
69, route d'Esch, L-2953, Luxembourg
Brait South Africa Limited
174 Oxford Road
Melrose 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:
TRG plc, Bourne House
34 Beckenham Road, Beckenham, Kent, BR3 4TU, UK
South Africa:
Mercantile Registrars Limited
10th Floor, 11 Diagonal Street
Johannesburg 2001
South Africa
Internet: http://www.brait.com
(Copies of the group annual report for the year ended 31 March 2000 are
available at any of the above addresses)
Directors: ME King*, RT Dalais*, AC Ball*, JE Bodoni+,
CL Clucas*, FZ Haller#, RJ Koch**, JP Montanana**,
DH Rabin*, AM Rosenzweig*, CJ Tayelor*, PL Wilmot*.
+ Luxembourger # USA **British *South African
AUDITED GROUP RESULTS
for the year ended 31 March 2000
Group profile
Brait is an international investment and merchant-banking group listed on the
Luxembourg, London and Johannesburg Stock Exchanges. It employs 231 people and
has shareholders' funds exceeding R1.1 billion (approximately US$ 168 million),
the majority being invested in South Africa. Its earnings are drawn from:
- fees from private equity funds management;
- fees from advisory services;
- returns on the group's principal investments;
- direct returns from investment of the group's capital;
- margin income from money market, corporate banking and asset-based finance
activities; and
- trading in equity and capital markets.
Group results
Earnings per share have increased by 22% from 206.8 cents per share to 252.7
cents per share for the year. Attributable earnings increased by 20% to
R232.0 m from R192.7m. This result continues Brait's record of uninterrupted
earnings growth over the last four years since actual and pro-forma results have
been available. While satisfactory, it has still to reflect the group's desired
functional earnings mix. What is important, is that these results demonstrate
the resilience of Brait's strategies and adaptability of its people to deliver
under difficult conditions.
Banking and treasury operations reported strong earnings growth particularly
from its equity trading and investment banking activities. The new
micro-lending operation also contributed meaningfully in its first full year of
business.
Investing activities had another positive and increased impact on earnings this
year. This has come about from a much greater and more concerted effort by
Brait to leverage off its relationships and back its advice with its own
capital.
Advisory services grew significantly during the year and although there was a
meaningful increase in the number of advisory mandates and deals, net earnings
was down in line with the marked decline and competition in South African M&A
activity this year.
Funds management earnings, which are primarily derived from private equity, were
below expectation. While management fee income was broadly in line with
targets, carried interest participations were disappointing as reversals
occurred when recent listings and small capitalization stocks were down rated on
the JSE from their opening levels at the beginning of the year.
Operating highlights
Private Equity Funds
Preliminary closings in respect of South African Private Equity Fund III and
Brait Technology and Innovation Fund I had been completed by 31 March 1999.
Final closing commitments were achieved during the current year in respect of
these funds: South African Private Equity Fund III at $420m and Brait Technology
and Innovation Fund I at R305m. The raising of such blind pools of capital in
these market conditions is regarded as being a very satisfactory accomplishment.
Investment activity has been sound with a particularly strong final quarter of
the financial year.
Disposals and Unbundlings
After a strategic review of the asset management business it was decided to
dispose of it during the year. The property portfolio was further rationalised
and at year-end R30 million (1999 : R86 million) of assets remained in this
portfolio. In August 1999 it was decided to end the investment programme at
CapeStar Growth Investments Limited, resulting in an unbundling of its assets.
ipac
The unit trust business was augmented by a joint venture partnership with ipac
Securities of Australia. ipac is a globally successful financial planning and
client portfolio management firm providing financial solutions to both the
retail and institutional markets. Brait believes this business can be equally
replicated in South Africa with the combination of its skills and capital and
ipac's systems and business model.
Brait securities
The group responded opportunistically to an approach to integrate our securities
business into a venture led by E-trade of the USA. This transaction did not
ultimately close and the business has been absorbed on a repositioned basis into
the group.
New economy investing
Brait has taken itself to the forefront of investment in new economy businesses,
whilst at the same time recognising that market enthusiasm for such investments
will mean that more traditional businesses periodically get under-recognised and
provide attractive investment opportunities. Nevertheless, an analysis of the
earnings for Brait to March 2000 shows that a significant percentage of these
earnings can be attributed to investments in, or client mandates from, companies
that would be categorised as new economy businesses.
Acquisition of the corporate advisory business of Rabin, Van Den Berg &
Pelkowitz
In order to meet the group's advisory services demands, the corporate advisory
business of Rabin, Van Den Berg & Pelkowitz was acquired with effect from 1
March 2000. Brait is delighted to have the team on board and can report a very
pleasing start to the integration with its existing advisory businesses.
Brait's advisory services now comprise a full range of corporate finance,
structuring, systems, taxation and transaction execution services for listed and
unlisted companies.
Internationalisation of Brait
In line with the group's strategy of further internationalisation, Brait has
added substantially to its Mauritian operations, commenced operations in
Australia to develop its private equity business there, and made a first
investment, web-angel, in the United Kingdom, which will precede the
establishment of a formal presence there.
Dividend
The board has proposed a dividend declaration equivalent to 75 South African
cents per share for the period ended 31 March 2000. We have taken taken opinion
on the pending South African legislation on foreign dividends and hold the view
that most of our shareholders will be exempt from any taxation arising
therefrom. Should the South African draft legislation differ from our
anticipated position prior to the AGM, to be held on 27 June 2000 at which the
proposed dividend needs to be approved, the directors may reconsider their
recommendation. In this event the board would examine other means for
distributing cash to shareholders. Payment of the dividend in respect of the
year ended 31 March 2000 is expected to be made on 14 July 2000.
The year ahead
While management is confident that the group will again produce improved results
in the current year, the full effect of successful investments by our private
equity arm will probably only be felt in the following years. The positive
inference from this is that the group has excellent longer-term growth potential
from its pre-eminent private equity business, which has some R4,6 billion under
management. The group's financial position remains strong with capacity to
pursue new opportunities as and when they arise.
For and on behalf of the board
ME King AC Ball
Chairman Group chief executive
22 MAY 2000
Group Income Statements for the twelve months ended 31 March 2000
2000 1999 Change
Rm Rm %
Revenue 473,0 312,6 51
Operating expenses (240,5) (175,0)
Profit from operations 232,5 137,6 69
Finance costs (7,3) -
Income from associates 7,3 14,3
Income from joint ventures 1,9 -
Disposal of subsidiaries 10,0 -
Disposal of investments - 60,7
Discontinued operations - 4,3
Profit before taxation 244,4 216,9 13
Taxation (12,4) (23,9)
Profit after taxation 232,0 193,0
Minority interest - (0,3)
Attributable earnings 232,0 192,7 20
Earnings per share (cents)
- basic 252,7 206,8 22
- diluted 250,0 206,8 21
Dividend per share (cents)
- proposed/(1999:paid) 75,0 60,0 25
Group balance sheets
at 31 March 2000
2000 1999 Change
Rm Rm %
Shareholders' funds
Share capital and premium 832,7 832,7
Non-distributable reserves 37,0 35,8
Foreign currency translation reserve 23,9 11,2
Distributable reserves 208,9 33,2
Total shareholders' interest 1 102,5 912,9
Outside shareholders' interest 0,2 0,8
1 102,7 913,7 21
Liabilities
Long term liabilities 53,4 92,7
Current liabilities 1 733,4 2 077,0
Total liabilities 1 786,8 2 169,7 (18)
Assets
Long term assets 1 182,5 1 586,0
Current assets 1 707,0 1 497,4
Total assets 2 889,5 3 083,4 (6)
1 102,7 913,7
Net asset value per
ordinary share (cents) 1 201,0 994,4 21
Salient features at 31 March 2000
2000 1999 Change
%
Operating income (Rm) 244,4 216,9 13
Funds management 36,6 40,8
Advisory services 23,4 33,7
Investing 55,2 40,1
Banking and treasury 129,2 102,3
Attributable earnings (Rm) 232,0 192,7 20
Earnings per share - basic (cents) 252,7 206,8 22
Earnings per share - diluted (cents) 250,0 206,8 21
Dividend per share (cents) 75,0 60,0 25
Tangible net asset value per share
(cents) 1 184,2 987,0 20
Return on shareholders' funds (%) 23 23
Four year compound growth in EPS (%) 71 91
Brait's banking capital adequacy ratio (%) 31 25
Market capitalisation - 31 March (Rm) 2 057 3 454 (40)
Shares in issue (m) 93,5 93,5
Shares in issue - excl.
treasury shares (m) 91,8 91,8
Group Statement of changes in equity
for the year ended 31 March 2000
2000 1999
Rm Rm
Balance at beginning of year 912,9 538,7
Ordinary shares issued - 254,4
Net exchange rate adjustments 12,7 8,9
Attributable earnings 232,0 192,7
Treasury shares - (80,5)
Dividends (55,1) -
Transfer to other reserves - (1,3)
Balance at end of year 1 102,5 912,9
END
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