Core Purpose, Vision and Values

Transcription

1 Core Purpose, Vision and Values The History of Brait Launch of Brait Private Equity Fund I Launch of Brait Private Equity Fund II The Brait Group established from the merger of the merchant banking interests of Capital Alliance Holdings and the private equity interests of the Capital Partners Group with Tolux S.A., an investment holding company, listed in Luxembourg, London and Johannesburg. Tolux renamed Brait S.A. Launch of Brait Fund III and the Brait Technology and Innovation Fund. Advisory and investing operations established in Mauritius. 2 Restructure of the Brait Group into strategic business units comprising advisory services, investment banking, lending, private equity and trading. Acquisition of the corporate advisory business of Rabin van der Berg and Pelkowitz, which as a result extended the Group s geographic reach by representation in London and Durban. Brait enters into a private equity joint venture in Australia with a local brokerage firm. 21 Brait Specialised Funds established. 22 Decision made to cancel banking licence. 23 Deregistered as a bank. Restructure of Group s business units into Private Equity, Specialised Funds and Corporate Finance. 24 Sale of 26% shareholding of Brait South Africa Limited to Sitogo Holding Limited, the Group s BEE empowerment partner. 26 Launch of Brait Private Equity Fund IV. 28 Decision taken to discontinue Corporate Finance operations. Reorganisation of Group s business units into Private Capital, Public Markets and Treasury Capital.

2 Core Purpose, Vision and Values_continued 2 The Business of Brait Brait is an international investment group. Its business is the structuring, raising and management of investment funds classified as Alternative Assets. The current product-set includes private equity funds, 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. Investors include leading global and South African institutions. Brait s business is segmented between Private Capital operations, which incorporate all activities in the private capital markets, and Public Markets operations, which incorporates all activities in the public or highly traded securities markets. Our Value Proposition Our reason for existence is that we make a return on the capital we manage that meets or exceeds performance expectations. We are able to do this by delivering repeatable alpha to our capital providers through value recognition and conversion. Vision We aspire to be the most respected manager of alternative assets in our area of operation, as evidenced by the long-term relationships we develop with investors, both in South Africa and globally, and by the calibre of people who develop long-term careers at Brait and the consistent meeting and exceeding of our investment promise. Values The values that guide our actions and behaviour and which we believe to be fundamental to our future success are: Partnership We believe in long-term and enduring relationships that require reciprocal value-add, the meeting or exceeding of expectations, integrity and respect. We believe in shared reward that is fair in relation to contributions. Performance We believe that our environment is competitive, and that to thrive, we need to set and meet ambitious goals, for ourselves and for the outcomes for which we are accountable. Pioneering We aim to discover new ideas, themes and new ways of achieving investment outcomes. We like to move speedily and thoughtfully to convert on these. Independence is critical to this.

3 Group Activities Brait Group Activities 3 Private Capital Private equity funds Proprietary investing Public Markets Multi-management Capital management Sponsored funds Mezzanine debt Fund of private equity funds Annual Highlights cents Dividends per Share (Excluding Special Dividends) 178,9 15,34 133,34 119,32 89,89 Rm ,7 Attributable Earnings Growth 393, 338,8 3,8 26% 26% 3% 31,4 267,9 238,2 166,6 339, % 4 Mar 5 Mar 6 Mar 7 Mar 8 Mar Mar 5 Mar 6 Mar 7 Mar 8-51% Mar Profit Target Line (12,5% CAGR) Actual vs Target Relative Brait Share Price versus JSE General Financial Index Index (21 = 1) Mar 1 Sept 1 Mar 2 Sept 2 Mar 3 Sept 3 Mar 4 Sept 4 Mar 5 Sept 5 Mar 6 Sept 6 Mar 7 Sept 7 Mar 8 Sept 8 Mar 9 Brait share price JSE General

4 Annual Highlights_continued 4 Financial Earnings Profit from South African operations increased by 42% to R241,9 million (28: 41% decrease) Group profit from operations decreased by 21% to R237,3 million (28: 31% decrease) Headline earnings from continuing operations decreased by 34% to R166,6 million (28: 8% decrease) Attributable earnings decreased by 58% to R166,6 million (28: 16% increase) Return on equity 13% (28: 3%) NAV robust at 1 436,4 cents per share, increased by,3% (28: 19% increase) Assets under management (fee earning) decreased by 9% to R1,5 billion (28: 2% increase) Cash generated of R415,1 million (28: R117,4 million) compared to cash applied of R279,3 million (28: R11 million) Strong cash position of R43,1 million (28: R417,7 million) Annual dividend distribution increased by 19% to 178,9 cents per share (28: 13% increase) Strategic ROE of 13% for 29 and a five-year rolling return since 31 March 25 of 23%, slightly below the long-term target of 25% Attributable earnings compound annual earnings growth rate (CAGR), measured since 31 March 25, of (6%), as a result of a 51% fall in current year earnings below the 12,5% CAGR trend line (see graph on page 13) Assets under management decrease of 9% for 29, although the four-year CAGR from 31 March 26 is 5%, well ahead of the target CAGR objective of 2% Resilient performance of investment products in difficult market conditions, with all major products meeting or exceeding longer-term performance targets Balance sheet and liquidity strong Operational Private Capital Conclusion of an investment by Brait IV in Buildmax, a JSE-listed business well positioned to leverage off growth in infrastructure spending, and domestic demand for coal Follow-on investment made in Capital Africa Steel Acquisition of toehold position in a market-leading South African company AEP fully committed Mezzanine Partners completes an investment in a leading South African company and realises one if its investments Public Markets Management structure strengthened Improved performance of Brait Absolute South Africa Strong performance by CMT, with Brait Multi-Strategy fund yielding 29%, and all other products meeting or exceeding performance targets Treasury Treasury Capital had a strong performance as a result of BMS returns as well as positive foreign currency translation gains on US dollar cash and cash equivalents

5 Definitions Alpha The y-intercept of the linear regression line between the portfolio and the market. It is measured as the manager s return when the market return is zero. Alpha can be interpreted as the part of the total return generated by the manager that is independent of the market return. High alpha values are associated with high levels of manager skill. Assets under Management (AUM) Assets under management or fee earning funds under management represents the value of assets that the Group manages on behalf of its investors. This includes undrawn capital committed by the investors. Attributable Earnings Earnings attributable to shareholders funds. Average Shareholders Funds The average of the shareholders funds at the beginning and end of the financial year. Basic Earnings per Share (cents) Basic earnings per share are calculated by dividing basic earnings attributable to ordinary shareholders by the weighted number of shares in issue during the period. Average Cost of Funding The average cost of funding is calculated by expressing the finance charge, which includes interest expense and cumulative preference dividends, as a percentage of finance charge bearing liabilities. Beta The slope of the linear regression line between the portfolio and the market. Beta measures the proportion of the market risk and return captured by the portfolio. Black Economic Empowerment (BEE) Partners Means Sitogo Holdings (Proprietary) Limited, registration number 24/8117/7 and its ordinary shareholders collectively, Norho Financial Services (Proprietary) Limited, registration number 23/25829/7, Usante Capital (Proprietary) Limited, registration number 22/7226/7, Africa Vanguard Capital (Proprietary) Limited, registration number 22/19516/7 and Representative Investments (Proprietary) Limited, registration number 23/945/7. Cash and Cash Equivalents Cash and cash equivalents comprise cash on hand, deposits held with banks on call, investments in money market and funds invested with Brait s hedge fund products. Closing Price The closing market price of a Brait share on the JSE Limited at the Group s financial year-end. Diluted Basic Earnings per Share (cents) Diluted basic earnings per share are calculated by dividing basic earnings attributable to ordinary shareholders by the fully diluted number of ordinary shares in issue during the period. Diluted Headline Earnings per Share (cents) Diluted headline earnings per share are calculated by adjusting the basic attributable earnings by the after-tax effect of any changes in income and expenses that would result from the issue of shares from dilutive instruments. The resultant earnings are divided by the weighted average number of ordinary shares in issue, including all dilutive instruments, excluding the number of treasury shares. Direct Taxation Direct taxation includes normal South African and foreign jurisdiction taxation on income, withholding taxes, capital gains taxes (CGT) and secondary tax on companies (STC). Dividend Cover Diluted earnings per share divided by the total dividend per share. Dividend Yield Dividend per share expressed as a percentage of the closing share price per share. Earnings per Share Basic attributable earnings divided by the weighted average number of shares in issue, less the number of treasury shares, expressed in cents. Earnings Yield Basic earnings per share expressed as a percentage of the closing price per share. 5

6 Definitions_continued 6 Effective Tax Rate (%) The effective tax rate is the direct taxation charge per the income statement expressed as a percentage of profit before taxation. Fund Management Activities Fund management activities relate to Brait acting as the fund manager in its Public Markets business, and as general partner in its Private Equity funds on behalf of its investors. Inflows include management fees and fee income. Gearing Gearing represents the ratio of average total assets to average ordinary shareholders equity, and therefore indicates the extent to which the Group uses debt financing to fund assets. Group/Brait Means Brait S.A. and its subsidiaries and associates from time to time. Headline Earnings For the purposes of definition and calculation the guidance given on headline earnings, as issued by the South African Institute of Chartered Accountants (SAICA) in circular 8/27 of July 27 has been used. Headline earnings consist of basic earnings attributable to ordinary shareholders adjusted for goodwill impairments, profits or losses on disposal of fixed assets and interests in subsidiaries and associates. The gains or losses on the hedge of the net investments in a foreign operation are included in headline earnings. Headline Earnings per Share (cents) Headline earnings per share are calculated by dividing headline earnings by the weighted number of ordinary shares in issue during the period. Hedge of a Net Investment in a Foreign Operation A risk management technique used to insulate the Group s US dollar capital base invested in South Africa from potential currency risk specific to the rand. Holding Company/Company Means Brait S.A. a limited liability 1929 public holding company (Société Anonyme Holding) registration number B-13861, incorporated in accordance with the laws of Luxembourg. IFRS International Financial Reporting Standards, as adopted by the International Accounting Standards Board (IASB), and Interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) of IASB. Investment Management Activities Investment management activities entail Brait using its shareholders funds or Group capital to invest in its Public Markets or Private Capital products, either on its own or alongside third-party investors. Inflows include investment income and capital participations. Key Management Means directors of Brait S.A., Brait South Africa Limited and Brait International Limited. Net Asset Value (NAV) per Share (cents) Ordinary shareholders funds divided by the number of ordinary shares in issue (less the number of treasury shares). Price Earnings Ratio The closing price per share divided by the basic earnings per share. Return on Equity (ROE) (%) Movement in NAV (after adding back dividends) expressed as a percentage of average NAV. Shareholders Funds Ordinary share capital, share premium and all reserves. Ordinary share capital and share premium have been reduced by ordinary shares held in treasury. Treasury Shares Brait S.A. ordinary shares held by the company and/or its subsidiaries. Treasury Capital Treasury capital refers to both the function of managing the funding and capital requirements of the Group, including investment of surplus cash and cash equivalents, as well as the related treasury assets and borrowings. Weighted Average Shares in Issue The pro forma number of ordinary shares in issue at the beginning of the year, plus ordinary shares issued during the year, less treasury shares acquired during the year, weighted on a time basis for the period during which they have participated in the income of the Group.