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Reviewed Group Results

Reviewed Group Results. for the year ended 31 March 2009. Agenda. Introduction Factors effecting our performance Financial review Review of operations Prospects. Business of Brait. Introduction.

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Reviewed Group Results

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  1. Reviewed Group Results for the year ended 31 March 2009

  2. Agenda • Introduction • Factors effecting our performance • Financial review • Review of operations • Prospects

  3. Business of Brait • Introduction • Brait’s business is the structuring, raising and management of investment funds that are typically classified Alternative Assets. The current product-set includes private equity funds, mezzanine debt funds and a range of hedge funds 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 • Investors include leading global and South African institutions • Brait’s operations are organised in two segments – Private Capital and Public Markets

  4. Highlights • Introduction • Earnings • Profit from South African operations up by 42% to R241.9 million (2008: 41% decrease) • Group profit from operations decreased by 21% to R237.3 million (2008: 31% decrease) • Headline earnings from continuing operations decreased by 34% to R166.6 million (2008: 8% decrease) • Attributable earnings decreased by 58% to R166.6 million (2008: 16% increase) • Return on equity 13% (2008: 30%)

  5. Highlights (continued) • Introduction • NAV robust at 1 436.4 cents per share, increased by 0.3% (2008: 19% increase) • Assets under Management (fee earning) decreased by 9% from R11.6 billion to R10.5 billion (2008: 20% increase) • Cash generated of R415.1 million (2008: R117.4 million) compared to cash applied of R279.3 million (2008: R101 million) • Strong cash position of R430.1 million (2008: R417.7 million) • Annual dividend distribution increased by 19% to 178.90 cents per share (2008: 13% increase)

  6. Factors effecting our performance • Introduction • Operating Environment • Market conditions • Global recessionary conditions • Economic uncertainty • Value Drivers • Investment product performance • Assets Under Management • Private Equity Fund-to-Fund • cycle • New product development • Deployment of capital in • Proprietary Investing

  7. Financial Review

  8. Key Performance Measures • Financial Review

  9. Return on Equity • Financial Review

  10. Attributable Earnings • Financial Review

  11. Assets Under Management growth • Financial Review

  12. Investment Product Performance • Financial Review

  13. Net Asset Value • Financial Review

  14. Dividends per share (excluding special dividends) • Financial Review

  15. Abridged group income statement for the year ended 31 March • Financial Review

  16. Geographic analysis of income from continuing operations • Financial Review Net1 and Pangea reduced international profits. Solid performance from South African operations and underlying investee companies.

  17. Net Contributions • Financial Review Net contributions from international operations negative due to global equities market. Net1’s actual operating results showed 20% growth.

  18. Brait’s effective investment in underlying portfolio companies • Financial Review

  19. Group Income Statement • Financial Review

  20. Fund Management Income (Note 1): • Financial Review Negatively impacted by loss of net R2.5 billion AUM from Brait Absolute. Performance fees from CMT boosted fee income

  21. Fund Management Income • Financial Review

  22. Fund Management Expenses (Note 2): • Financial Review Total increase of R21.3 million (10%) is in line with inflation. Communication and computer costs increased due to risk and operations management system in hedge fund business

  23. Investment Income (Note 3): • Financial Review

  24. Investment Income • Financial Review

  25. Investment Expenses (Note 4): • Financial Review • Brait’s share of Brait IV Debt Facility Trust ‘s interest paid • Relates to loan impairment provision on investee companies.

  26. Finance Costs (Note 5) • Financial Review • Overall increase in line with movement in Prime rate of interest as Preference Shares dividend is 78% of Prime.

  27. Capital Items (note 6)Capital items comprise: • Financial Review • Cash Proceed of R299m reduced by R88 cost for new hedge per cash flow. • Write-down of 32.3% in Sitogo due to lower profit forecasts for 2009 and 2010.

  28. Taxation (note 7) • Financial Review • Group effective up from 8% to 23% due to current tax paying position and international losses with no deferred tax credit.

  29. Dividend Policy • Financial Review • The Board maintains and is committed to the view that dividend distributions are an important part of longer-term shareowners wealth creation • Dividend Policy: • Pay annual dividends equaling 12.5% of opening NAV • Arrived at to be 50% of targeted ROE of 25% • Provided that solvency is not impaired and the ability to finance its business plan is maintained • Reasons for Policy: • provide more consistent annual dividend distributions • to link the distribution to NAV which is a more stable measure of long-term valuegenerations • Key measures for Brait are Investment product performance, NAV and Cash as earnings tend to be cyclical

  30. Allocation of Capital • Financial Review

  31. Cash flow from operating and investing activities • Financial Review

  32. Review of Operations Private Capital

  33. Private Capital • Review of Operations

  34. Private Capital • Review of Operations • Highlights • Strong operational performance from all large investment exposures especially Pepkor, Net 1,Consol and DGB. Average EBITDA growth > 20% • Solid investment performance in Brait III and IV • Finalisation of two substantial portfolio investments • Mezzanine Partners I achieved full investment, and 1st investment in Mezzanine Partners II • AEP I became fully committed

  35. Return on Capital Employed • Review of Operations - Private Capital

  36. Profit from Operations • Review of Operations - Private Capital

  37. Assets under Management • Review of Operations - Private Capital

  38. Fair value of fund portfolio investments (converted at year-end exchange rates) • Review of Operations - Private Capital

  39. Capital Invested • Review of Operations - Private Capital

  40. Sectoral Analysis • Review of Operations - Private Capital

  41. Brait effective investment in underlying portfolio • Review of Operations - Private Capital

  42. Investors Investees 3rd party capital invested Diversified across various industries in corporate SA Brait capital invested Team capital invested Funds • Review of Operations - Private Capital Business Model Value Drivers Investment Performance Manager • Managed: • Over 10 years • Illiquid • Discretionary • Economic effect on Brait: • Up to 2% management fee p.a. • Potential 10% capital • participation • >30% IRR on invested capital Fund-of-Fund Cycle Brait IV more than 82% invested Market Conditions • Improved buying environment • More challenging capital raising

  43. Proprietary Investing • Review of Operations - Private Capital Business Model Value Drivers • Deployment of balance sheet capital of • R50m or less per transaction. • Economics derived from investment gains. Investment Returns Deployment Rate • Last investment made 3 years ago, but improved prospects Market Conditions • Improved buying environment • Increased competition

  44. Sponsored Funds • Review of Operations - Private Capital Business Model Value Drivers • Sponsorship of niched investment managers, • in return for interests in Manco and funds Investment Performance • Strong performance from Medu Capital (Medu I IRR – 60%+) • Weak performance from Molash R34m write-down AUM • MolashI closed at R170m Relationships • Reduced plan for new relationships

  45. Mezzanine Debt • Review of Operations - Private Capital Business Model Value Drivers • Joint Venture between OMIGSA, Management and • Brait in Mezzanine Partners. • Economics derived from share in Manco and funds. Investment Performance • On-track for JIBAR + 9% target (currently tracking 23% IRR) • MP I fully invested. MP II achieves a first closing of R400m AUM Market Conditions • Benefits significantly from sub-prime fallout and tightening credit conditions.

  46. Fund-of-Funds • Review of Operations - Private Capital Business Model Value Drivers • Investment Management of unlisted fund-of-funds. • Invests in Brait sponsored and third party funds. • Economics derived from management fees and • performance fees. Funds Under Management • Final close achieved at R630m • Rapid deployment of commitments. • Investment performance too early to determine, but prospective promising Investment Performance Market Conditions • Market conditions challenging

  47. Strategic Initiatives • Review of Operations - Private Capital • Launch Brait V • Drive value in existing portfolio • Invest remainder of Brait IV • Invest R50m p.a. in each of Proprietary Investing and Sponsored Funds

  48. Review of Operations • Public Markets

  49. Brief overview of the Brait Public Markets Model • Review of Operations - Public Markets Investors Manager Investments • Diversified across asset classes according to investment strategy: • Listed Equities • Bond and Credit Markets • Exchange Traded & OTC Derivatives • Hedge Funds 3rd party capital invested • Management of Funds: • Open ended • Monthly liquidity • Discretionary Brait capital invested Team capital invested • Economic effect on Brait: • Management Fee: up to 2% p.a. • Performance Fee: between 10% & 30% of out performance • Investment gains on capital invested

  50. Public Markets • Review of Operations • Highlights • Revenue and profit from operations have significantly increased • Strong investment performance from CMT products - Brait Multi-Strategy, Brait Matrix Fund & Brait Ruby Fund • Improved performance from Brait Absolute, especially in the last half of the year, showing the ability to preserve capital; but still below target • Launch of Brait Matrix Fixed Income Fund with R170m on 1 October 2008 • Assets under management have decreased • Strengthening of the Multi-Management investment team

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