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					Annual Report
2002
Brait S.A., Société Anonyme, Incorporated in Luxembourg (R C Luxembourg B-13861)




Annual Report 2002



Contents
Annual highlights 2
Financial performance 3
Profile 4
Group activities and structure 5
Group scorecard and performance
measurement 6
Chairman’s statement 8
Stakeholders 13
Group chief executive’s report 14
Functional review
   Funds Management 19
   Advisory Services 25
   Investing 27
   Group Capital 29
   Discontinuing operations 30
Financial report 32
Social responsibility 37
Employment report 38
Share analysis 40
Group value added statement 42
Time line 43
Board of directors 44
Board profile 45
Group statistics
   Financial definitions 47
   Five-year review 48
Group balance sheets –
   Five-year review 50
Group income statements –
   Five-year review 51
Financial statements 52
Administration 120
                       THE BUSINESS
                           OF BRAIT


Brait is an international investment banking
group focused on private equity and funds
management, advisory and specialised
finance services, and proprietary investing.
It is listed on the Luxembourg, London and
Johannesburg stock exchanges.


Our vision is to discover unexplored opportunities, and convert these into
shared financial reward. Our people – the force and energy behind this
vision – are united by a set of common values, rooted in:
   • integrity
   • partnering
   • mutual respect
   • dedication
   • passion
   • pioneering



                                             1
                                  Brait Annual Report 2002
ANNUAL HIGHLIGHTS
for the year ended 31 March 2002




FINANCIAL                                                      300


                                                               250
  • Earnings per share
                                                               200
    • continuing operations, 27% up
      at 210 cents
                                                   Cents
                                                               150
    • before realisation adjustment,
                                                               100
      unchanged at 200 cents
    • after realisation adjustment, down                        50
      56% to 89 cents
                                                                 0
  • Total dividend for year unchanged                                   96                          97                    98                          99                    00                           01                                     02
    at 60 cents per share
                                                                                Dividends                                                                                  Earnings
  • R100 million of provisions raised                                           Pre-adjusted earnings                                                                      Continuing operations
    against accelerated disposal of assets
  • Attributable earnings net of provisions                                               Earnings and dividends per share
    R80,4 million
  • Shareowners’ funds R1,2 billion

STRATEGIC
  • Application to deregister the
    banking licence
  • Reconfiguration of specialised                              140
    finance activity
  • Closure of Margin and Trading                               120
                                                                                                                                                                                                                    Brait share price (Rands)




    operations
  • Investment activity commences in                            100
                                                       Index




    specialised funds
                                                                 80

OPERATIONAL                                                      60


  • Solid progress in Funds Management                           40
                                                                      Mar ‘01
                                                                                Apr ‘01
                                                                                          May ‘01
                                                                                                    Jun ‘01
                                                                                                              Jul ‘01
                                                                                                                        Aug ‘01
                                                                                                                                  Sep ‘01
                                                                                                                                            Oct ‘01
                                                                                                                                                      Nov ‘01
                                                                                                                                                                 Dec ‘01
                                                                                                                                                                           Jan ‘02
                                                                                                                                                                                     Feb ‘02
                                                                                                                                                                                               Mar ‘02
                                                                                                                                                                                                          Apr ‘02




    business
  • Stronger performance from Investing
  • 48% growth in joint venture assets                                          JSE Financial
                                                                                Services Index
                                                                                                                                                                Brait share price

    under management                                                            Relative Brait share price versus
  • Strong group liquidity position                                              JSE Financial Services Index




                                              2
                                   Brait Annual Report 2002
FINANCIAL PERFORMANCE
for the year ended 31 March

                                                     Profit before     Realisation
                                                      adjustment      adjustments*
                                                             2002             2002            2002             2001
                                                               Rm               Rm               Rm              Rm                 %

Profit before taxation                                      176,8           (100,0)            76,8           186,4               (59)
– Continuing operations                                     240,6            (54,4)           186,2           154,7                20
 Funds Management                                             61,3                –            61,3             41,4
 Advisory Services                                            23,3                –            23,3             30,2
 Investing                                                    69,9            (20,0)           49,9              1,4
 Group Capital                                                86,1            (34,4)           51,7             81,7
– Discontinuing operations                                   (63,8)           (45,6)         (109,4)            31,7            (445)
Margin                                                         1,2            (45,6)          (44,4)            40,9
Trading                                                      (65,0)               –           (65,0)            (9,2)

Taxation                                                       3,5                               3,5             (3,9)          (190)
Minority interest                                              0,1                               0,1                –              –
Attributable earnings                                       180,4                              80,4           182,5               (56)
Share performance
Earnings per share (EPS)
– continuing operations – diluted (cents)                                                    210,4            165,4                27
– basic (cents)                                             200,2                             89,2            201,4               (56)
– diluted (cents)                                           200,0                             89,1            200,0               (55)
Dividends per share (cents)                                                                   60,0             60,0
Tangible net asset value per share (cents)                                                 1 276,0          1 285,4                (1)
Closing share price – 31 March (Rm)                                                           860             1 145               (25)
Financial statistics
Shares in issue (million)                                                                     93,48           93,48
Weighted average shares in issue
– basic (million)                                                                              90,1            90,6
– fully diluted (million)                                                                      90,2            91,2
Market capitalisation – 31 March (Rm)                                                           804           1 070               (25)
Average shareowners’ funds (Rm)                                                               1 193           1 153                 3
Return on shareowners’ funds
– continuing operations (%)                                                                      16               13
– total group (%)                                               15                                 7              16
Dividend cover                                                 3,3                               1,5             3,4
Six year (2001: five year) compound growth
in continuing operations EPS (%)                                                                 39               41
Six year (2001: five year) compound growth
in EPS (%)                                                      37                               20               47
Six year (2001: five year) compound growth
in EPS in real terms (%)                                        28                               12               37
Brait Merchant Bank
capital adequacy ratio (%)                                                                     22,0             23,6
Note: * Following the announcement of the group’s intention to deregister its banking licence, the board has approved an accelerated
        disposal of a large proportion of the assets in its banking structure and associated assets, some of which are held in the Group
        Capital and Investing segments. This action has necessitated an abnormal non-recurring adjustment to the carrying value of
        these assets at 31 March 2002.




                                                                      3
                                                        Brait Annual Report 2002
PROFILE
Brait is an international investment banking group focused        In our Investing activities, we leverage our skills, insights
on private equity and funds management, advisory and              and relationships by making proprietary investments in
specialised finance services, and proprietary investing. It is    our private equity funds, as co-investor in transactions
listed on the Luxembourg, London and Johannesburg                 completed by Brait’s advisory and private equity divisions,
stock exchanges, with shareowners’ funds of R1,2 billion          and in special opportunities involving both private and
(approximately US$104 million).                                   public companies.


As an international group, we operate in South Africa,            The group’s residual capital is invested predominantly in
sub-Saharan Africa, North America, Europe and Australia.          cash and short-term liquid assets. Traditionally these have
We provide a wide range of investment, advisory, and debt         been held for opportunistic investment and as cover
services to a substantial client base that includes listed and    against the wide range of risks managed by the group,
unlisted companies, financial and government institutions         particularly in its banking operations.
and high net worth individuals.
                                                                  Brait’s earnings are primarily derived from:
Our    Funds    Management         activities    involve   the    • fees from private equity and other funds management;
management of third-party capital in a fund format,               • fees from advisory and specialised finance services;
with particular focus on private equity and specialised           • returns on the group’s principal investments; and
funds. In addition, through joint venture partnerships            • returns from investment of group capital.
with African Alliance and ipac, Brait manages unit
trusts and other funds, with associated financial and
advisory services.


As a multi-disciplinary business, Brait’s advisory capability
effectively addresses client and group needs by seamlessly
providing    commercial,     legal,   tax,      research   and
negotiation support. The principal activities within
Advisory Services are mergers and acquisitions, corporate
finance and transactions execution support. Advisory
Services also includes a specialised finance offering which
has been reconfigured during the year to focus on
structuring and distributing of debt products. Activities
include structuring advice, syndicated senior lending,
mezzanine, securitisation and special debt situations.




                                                             4
                                                  Brait Annual Report 2002
GROUP ACTIVITIES AND STRUCTURE
                                                                EUROP E
                                                                • Funds Management
                                                                • Investing
                                                                • Advisory Services




NORTH AMERICA
• Investing
• Specialised funds management




                                                                                 AFRICA OTHER
                                                                                 • Funds Management
                                                                                 • Investing
                                                    SOUTH AFRICA                 • Advisory Services
                                                                                                           AUSTRALIA
                                                    • Funds Management
                                                    • Investing                                            • Funds Management
                                                                                                           • Investing
                                                    • Advisory and specialised
                                                      finance services




  Funds Management               Advisory Services                      Investing                      Group Capital
  Private equity funds           Corporate finance                      Strategic investments          Management of capital

  Unit trust funds               Legal, tax and                         Private equity                 Allocation of group capital
                                 commercial support
  Specialised funds                                                     Investment banking
  management                     Structuring

                                 Research and
                                 decision support

                                 Mergers and acquisitions

                                 Specialised finance




                                                                    5
                                                     Brait Annual Report 2002
GROUP SCORECARD AND
PERFORMANCE MEASUREMENT

Objective                                                                                     Measurement

To achieve a rand return on shareowners’ funds of 30%.                               35


                                                                                     30

Progress                                                                             25




                                                                           %
                                                                                     20

Brait has underperformed on its long-term ROE target.                                15

Earnings and ROE yields in the financial services sector                             10

has been under pressure. This has been addressed
                                                                                      5
                                                                                             98           99           00        01         02
through the proposed deregistration of the banking                                     Return on shareowners’ funds*               Long-term objective
                                                                                       Annually compounded return
structure which should lead to improved earnings and                                   on shareowners’ funds
                                                                                       * 2002 pre-realisation adjustment
capital efficiency. This action is expected to assist Brait to
                                                                                                Return on shareowners’ funds
reach its long-term ROE goal.


Objective                                                                           300


                                                                                    250


To grow earnings per share at a compound rate of 20% in                             200
                                                                           Cents




real terms.                                                                         150


                                                                                    100


Progress                                                                             50


                                                                                      0
                                                                                             97         98        99        00     01       02
Our real growth objective in earnings per share is on                                          Earnings per share                Pre-realisation
                                                                                               Real growth                       adjustment
track despite recent earnings pressures and should be                                          objective


accelerated by the restructuring process.                                                                Earnings per share



Objective
                                                                                   6 000

To double alternative asset funds committed every four                             5 000

years.                                                                             4 000
                                                                           Rm




                                                                                   3 000

Progress                                                                           2 000


                                                                                   1 000

Brait has a sound base of unspent commitments which
                                                                                      0
                                                                                             98           99           00        01         02
are ahead of the group’s goals and bodes well for
                                                                                               Funds committed               Funds committed
medium to longer term growth. New fund initiatives are                                                                       objective


also in progress.
                                                                                           Alternative assets – funds committed




                                                             6
                                                Brait Annual Report 2002
Objective                                                                                       Measurement

To grow alternative asset funds invested at 20% per annum.                          3 700

                                                                                    3 200


Progress                                                                            2 700

                                                                                    2 200




                                                                       Rm
                                                                                    1 700
Brait has to date exceeded its investment target of
                                                                                    1 200
committed funds.
                                                                                     700

                                                                                     200
                                                                                                98           99         00         01          02

                                                                                                     Invested                Investing objective




                                                                                               Alternative assets – funds invested




Objective                                                                            100


                                                                                      80

To improve earnings quality and mix.
                                                                                      60
                                                                     %




                                                                                      40

Progress                                                                              20


                                                                                       0
Discontinuing Trading operations has had the effect of
                                                                                     -20
                                                                                               98           99          00         01         02
materially improving the annuity nature of forward
                                                                                                 Funds Management              Advisory Services
earnings. The mix of annuity type income in Funds                                                Investing                     Group Capital
                                                                                                 Margin                        Trading
Management and Advisory operations has grown to 48%                                             Functional earnings contribution
                                                                                                 (2002 continuing operations)
of overall earnings.


Objective                                                                           1 400                                                              60

                                                                                    1 200                                                              50

To deploy capital more actively in our operations and                               1 000
                                                                                                                                                       40
                                                                     Capital (Rm)




                                                                                                                                                             ROE (%)




investment programmes.                                                                800
                                                                                                                                                       30
                                                                                      600
                                                                                                                                                       20

Progress                                                                              400

                                                                                      200                                                              10


                                                                                         0                                                             0
                                                                                                98           99         00          01         02
Brait has achieved a sound return on its actively
                                                                                    Actively invested capital                           Total capital
invested capital which has over time met the group’s 30%                            Return on actively invested capital                 Return on total capital*
                                                                                    * 2002 pre-realisation adjustment
long-term ROE target. The deregistration of the banking
                                                                                                          Deployment of capital
licence is expected to improve returns and efficiency of
the group’s capital.




                                                             7
                                                  Brait Annual Report 2002
CHAIRMAN’S STATEMENT


Group results and operating
environment

I advised at the half year that its was impossible to predict
with certainty the challenges and opportunities that faced
the Brait group in light of the volatile financial markets.
Since then, the uncertainty has continued to prevail but
there are signs that confidence may slowly be returning to
the economies and sectors that Brait serves.


The global retreat in economic activity in the year under
review contributed to a general decline in the demand for
financial and advisory services; this despite tentative signs
of an international market recovery towards the end of
the year. Brait has contended with the pressures of this
environment and in particular, the group’s South African
banking operations had their own unique challenges in its
market sector. The performance of operations under the
bank structure has had an adverse impact on the financial
results for the year, and the group has moved firmly to
restructure these divisions.


The results show reported earnings per share of
89 cents for the year to 31 March 2002,
down 56% against 200 cents per share
reported in the previous year. These results
should be seen in the context of the
realisation adjustments in the year of some
R100 million against potential losses
on the accelerated disposal of
the group’s lending book and
specific investments. Without these
adjustments, earnings per share would
have matched prior year results. Of more
importance are the results of continuing
operations which have grown by 27% to
210 cents per share.




                                                                          Mervyn King Chairman

                                                            8
                                               Brait Annual Report 2002
Macro-environment

In the broader context, this year was characterised by a                                        The precipitous fall of the rand against the US dollar in
global economic slowdown, sagging investor confidence and                                       December 2001 catapulted the currency into an
negative sentiment towards emerging markets. These trends                                       unenviable position of being the second worst performing
were compounded by the events of September 11, and in an                                        currency against the US dollar in that calendar year. Since
unprecedented move, the US Federal Reserve eased                                                then, however, the rand has clawed back a large part of
monetary policy eleven times during the year and embarked                                       the losses and is now one of the strongest performing
on a concerted programme of fiscal relaxation aimed at                                          international currencies in the 2002 calendar year. This
stimulating the world’s dominant economy. Despite these                                         behaviour serves to highlight the market volatilities in
efforts, responses have been slow and oil price inflation has                                   which the group operates and the resilience of the South
raised misgivings about an early turnaround in the USA.                                         African economy in the face of international market
European economies displayed similar symptoms of lethargy                                       uncertainty. Nonetheless, the challenges for South Africa
and this was aggravated by the continued recessionary spiral                                    continue, particularly the dilemma of rising inflation and
of the Japanese economy which is hamstrung by massive                                           insufficient GDP growth which is entrapping the economy
public debt levels and a protracted banking crisis.                                             and employment creation.




            6 600                                                 110 000
                                                                                                                   13
                                                                                                                                                                                                 12,75
            6 400                                                 105 000
                                                                                                                   12
                                                                            South Africa (Rm)




            6 200                                                 100 000
                                                                                                                   11                                                                                                                 11,34
USA ($bn)




                                                                                                    ZAR currency




            6 000                                                 95 000
                                                                                                                   10

            5 800                                                 90 000
                                                                                                                    9

            5 600                                                 85 000
                                                                                                                    8
                                                                                                                        8,01
            5 400                                                 80 000
                             99          00          01                                                             7
                                                                                                                        Apr ‘01
                                                                                                                                  May ‘01
                                                                                                                                            Jun ‘01
                                                                                                                                                      Jul ‘01
                                                                                                                                                                Aug ‘01
                                                                                                                                                                          Sep ‘01
                                                                                                                                                                                    Oct ‘01
                                                                                                                                                                                              Nov ‘01
                                                                                                                                                                                                        Dec ‘01




                                                                                                                                                                                                                                      Mar ‘02
                                                                                                                                                                                                                  Jan ‘02
                                                                                                                                                                                                                            Feb ‘02




                     USA ($bn)                South Africa (Rm)

                    Source: US Bureau of Economic Analysis
                            and South African Reserve Bank


                    Consumer expenditure (Real)                                                                                                                 Historic R/$




                                                                                                9
                                                                    Brait Annual Report 2002
CHAIRMAN’S STATEMENT CONTINUED




The investment environment which evolves from all of                                                group’s financial and human capital is adequately
this reflects a mood of uncertainty and anxiety. During                                             protected. Furthermore, Brait is committed to ensure it
the year the Dow and S&P 500 moved sideways while the                                               operates in accordance with an acceptable code of
Nasdaq recovered marginally but did not demonstrate                                                 ethics, good internal controls, sound risk management
any strong return of confidence to new economy stocks.                                              and is an equal opportunity employer. It has a developed
On the JSE, the recovery has been led by resources while                                            sense of stakeholder responsibility as reviewed later in
the rest of the market has been subdued. In general, the                                            this report.
investment climate was negative for Brait in the year.
Although investment opportunities are now more                                                      General overview of the year
attractive, exits have been difficult, with IPO and
merger and acquisition (M&A) activity muted. In this                                                Every year seems to have its own unique issues. This year
environment raising new third-party capital will have its                                           was no exception.
own challenges in the future with Brait needing to rely on
its own record and capabilities rather than wider market                                            First was the strategic decision taken to exit from the
momentum.                                                                                           group’s asset-based finance operation, followed by the
                                                                                                    flurry of activities affecting our South African banking
        200                                                                                         structure and the decision taken to apply for the
        180                                                                                         deregistration of the banking licence after year-end.
        160

        140                                                                                         Outside the banking structure the group has continued to
Index




        120                                                                                         make satisfactory operational progress in its core areas of

        100                                                                                         activity. Funds Management has had a sound year with

         80
                                                                                                    improved earnings despite subdued equity market
                                                                                                    conditions. Advisory Services has demonstrated that, even
         60
                                                                                                    in a declining transactional and M&A market, the
         40
                                                                May ‘01


                                                                          Oct ‘01
              Apr ‘99


                        Sep ‘99


                                  Feb ‘00


                                            Jul ‘00


                                                      Dec ‘00




                                                                                     Mar ‘02




                                                                                                    business is capable of generating satisfactory earnings on
                                                                                                    a small capital base. The newly restructured specialised
                        JSE ALSI Index                            Dow Index                         finance operation has made positive progress in
                        Nasdaq Index
                                                                                                    establishing itself as a debt advisory function as an
              Relative international market trends                                                  originator, structurer and distributor of debt products and
                                                                                                    services and is expected to make a positive contribution in
Licence to operate                                                                                  the near future. Investing activities have been rewarded by
                                                                                                    a shift in emphasis from new economy investments and
Brait S.A., as a European company, has complied with                                                the specific performance of some of these interests.
the corporate governance best practice in Europe. Brait                                             Group Capital has been kept liquid and carefully
has adopted an open governance process so as to                                                     managed as a hedge against the specific risks which the
provide its stakeholders with the assurance that the                                                group has faced during the year.




                                                                                               10
                                                                                    Brait Annual Report 2002
Dividend                                                        The year ahead
Since its inception in 1998 the group has applied a policy      The new financial year will initially be one of consolidation
of an annual dividend declaration to its members. This          for Brait. The group has the considerable task of realising
policy is founded on the view that the group needs a            some R1,5 billion of assets in the near term and
balance between the retention of earnings for investment        organisationally settling down into its reshaped structure
opportunities and the establishment of a record of              with a reduced staff complement. One of the biggest
consistent dividend servicing, which is an important part       challenges will be the retention and attraction of highly
of long-term shareowners’ wealth creation.                      skilled staff. The repricing of the group employee share
                                                                scheme in November 2000 has not been successful given
The board elected to declare an interim dividend of             subsequent weakness and a new equity alignment plan is
25 South African cents in November 2001 in view of the
                                                                in the process of being evaluated to protect the critical
strong cash generation from the group’s operations and
                                                                intellectual resources of the group. In the year ahead we
its healthy financial position. This was favourably received
                                                                will articulate the group’s strategy for the capital released
by shareowners and the board has resolved to continue
                                                                from discontinued assets once all depositors’ funds have
this policy. Shareowners can therefore expect to receive
                                                                been returned.
an interim and a final dividend in future, providing
the financial position of the company and market
                                                                Right now in these volatile markets it is impossible to
circumstances can support the declarations.
                                                                predict the additional challenges and opportunities which
                                                                face us going forward. What is clear though is that Brait
The articles of the company provide the board with the
                                                                is becoming more focused. Its strong balance sheet,
authority to declare an interim dividend, whereas the
                                                                integrated service offering and its international reach
board may propose a final dividend to shareowners in
                                                                should enable it to exploit change and create value for its
general meeting for their approval.
                                                                own financial reward as well as for its partners.

Accordingly, after consideration of the financial position
of the company at 31 March 2002, the board has taken            The board and appreciation
the decision to propose a final dividend of 35 South
African cents per share to the annual general meeting of        This has been another eventful year. The management

shareowners of Brait S.A. to be held on Wednesday,              team has had to rise to larger challenges than we
31 July 2001 in Luxembourg.                                     imagined at the beginning of the year and have had to
                                                                keep the spirit and competence of the group intact
In aggregate, the declaration of an annual dividend             through all of this. The group going forward is well
of 60 South African cents per share is unchanged                positioned to break free from the shackles of market
from the prior year and equates to a dividend cover of          deflation and the banking crisis, which have detracted
3,3 times (on earnings before realisation adjustment)           from its performance objectives for the last two years.
and a cover of 3,5 times on earnings of continuing              I record my appreciation for the commitment by
operations.                                                     Antony Ball and his team.




                                                               11
                                                   Brait Annual Report 2002
CHAIRMAN’S STATEMENT CONTINUED




I am fortunate to have been able to count on the
unstinting support of my board members whose wisdom
and contributions have been called upon frequently this
year. During the year Derek Rabin resigned from the
board. Having joined as a non-executive director in
1998, we now have his counsel as a senior executive.
He remains an executive director of Brait South
Africa Limited.


My thanks also go to our staff, strategic partners, investors
and all our stakeholders for their continued enthusiasm
and support. In particular we are saddened to be about
to say farewell to certain team members from our banking
administration, trading and lending operations whose
skills, efforts and loyalty were overtaken by the effects of
sentiment shifts beyond their or our control.


From the harsh environment in the investment markets we
serve and the painful decision to seek to terminate our
South African banking licence, I am confident that Brait
emerges stronger, more stable and relevant. We face an
improving prospect with top-class businesses fitter for the
experience of the difficult times past.




Mervyn King
Chairman


26 June 2002




                                                           12
                                                Brait Annual Report 2002
STAKEHOLDERS

We recognise the importance of building and cementing           ment with a balance of risk/return features and consistent
reciprocal relationships with our stakeholders. Brait’s         and sustainable returns and earnings they are unlikely to
direct stakeholders include shareowners, clients, investors     achieve themselves, or with our peer group. Brait has
and employees, while our indirect stakeholders include          committed itself to stringent standards of reporting
the communities in which we operate including the               transparency and disclosure. This practice is followed not
education fraternity as a source of future employees of         only for shareowners but also at client and investor levels.
the group. All our stakeholders play a role in the sustained    Investors in our private equity funds receive regular,
success of Brait’s business and we are committed to             transparent and full reporting disclosure with regard to
creating wealth and adding value for our stakeholders.          their investments. They are represented on advisory
                                                                boards and are regularly updated on the investment
Shareowners and providers of                                    strategy of these funds. All investments are fully discussed
capital                                                         with our investors at bi-annual meetings. The trust and
                                                                confidence of our investors in our private equity team is
Key performance measures for our shareowners are the            reflected by the historic record of growth in Brait’s funds
return of superior long-term sustainable growth in              under management and their repeated participation in
earnings and dividends and the consistent demonstration         Brait’s new fund offerings.
of exceptional returns on shareowners’ equity. 2002 has
been another year of earnings and share price pressures,        Employees
but important strategic decisions have been taken to
address these performance issues. On the positive side,         Our employees form the foundation of the Brait group
earnings of continuing operations have improved and the         and are the drivers behind our success. We reward our
group’s risk exposure has been conservatively managed           employees for their performance. We are focused on the
and the underlying strength of our private equity business      development of our deep pool of talented people and are
and the good standing of our client franchise has been          committed to education and training to improve and
enhanced.                                                       extend their skills. Recruitment and retention of good
                                                                people is important to the group, and our human capital
Clients                                                         base in continuing operations is stable. Employees are
                                                                treated with respect and are key partners to the business.
We adopt a partnership approach with our clients and
work hand in hand with them in the creation of shared           Community
value. Our approach and objectives fit those of our clients.
In fostering long-term relationships with our clients, we       Brait is committed to assisting less fortunate people in the
go the extra mile and respond quickly and innovatively          communities in which we operate and to developing
to client needs. Clients appreciate our integrated multi-       human capital. We recognise that we have a contribution
disciplinary service offering and our enthusiasm to             to make in uplifting communities in which we operate.
co-invest with them in support of our advice and ideas.         This is facilitated through the activities of the Brait
                                                                Foundation, which has a chief objective to promote,
Investors                                                       nurture and develop intellectual capital in these
                                                                communities and in working with academic institutions,
Our ability to find and convert opportunities into financial    including the grant of tertiary bursaries for employment
reward provides our investors in funds under manage-            equity candidates.




                                                               13
                                                   Brait Annual Report 2002
GROUP CHIEF EXECUTIVE’S REPORT


Results

The challenges faced by companies in our sector have
been well documented elsewhere. Of particular relevance
to Brait have been the crisis in second-tier banking,
reduced levels of corporate activity, the depreciation of the
rand and the associated volatility in the interest rate
market in South Africa.


It is in the context of these challenges that we report
earnings substantially in line with last year at 200 cents
per share before the effect of realisation adjustments
required on the accelerated realisation of discontinued
assets. More importantly for the future though, earnings
of continuing operations have grown by 26% this year to
210 cents per share.


Whilst more detailed reports for each of the functional
areas appear further in the annual report, I make the
following comments:
• whilst it is management’s goal to deploy capital more
  actively in operations and investment programmes, it
  was considered more prudent in the light of the second-
  tier banking challenges to concentrate conservatively on
  liquidity above profitability. Accordingly, cash flow was
  considerably improved and cash resources at year-end
  amounted to R314,2 million (2001: R107,1 million);
• the discontinuing operations of the group, being those
  which relied materially on the banking licence, made
  losses during the year, which detracted from the overall
  performance of the group;
• our Margin and Trading operations had a particularly
  weak year, as a result of poor performance in both
  equity and interest-rate trading, and due to a deterio-
  ration in the quality of the loan book, especially the
  asset-based finance portfolio;                                          Antony Ball
                                                                          Group chief executive




                                                           14
                                               Brait Annual Report 2002
• our Advisory Services business had a softer year                                          The review process is continuous and it is in this
     than its record 2001 performance, but performed                                        context that Brait recently announced its intention to
     commendably in a challenging environment;                                              apply for deregistration of the banking licence held by
• private equity showed improved earnings, with an                                          the group.
     improved quality of assets under management and
     better performing portfolio companies; and                                             There were weak performances in our Trading business,
• the group tax charge for the year reflects an abnormal                                    for the second year in a row, and also in our Margin
     contribution to income arising from the reversal of                                    business. Both these segments had historically depended
     deferred tax provisions which have been released as                                    on the banking structure. Management had come to the
     a result of the current year’s losses in the banking                                   conclusion that this dependency was flawed, and that it
     structure.                                                                             could successfully develop profitable trading and debt
                                                                                            businesses without a banking structure. Consequently,
                                                                                            from the commencement of the year, Brait set about

       100                                                                                  actively developing a specialised funds management
        80                                                                                  business (which gives shareowners a much enhanced
        60                                                                                  risk/return exposure to equity and interest rate markets)
        40                                                                                  and developing the debt business as originators,
        20                                                                                  structurers and arrangers, rather than holders of debt
Rm




         0                                                                                  assets. Parallel to this, management initially committed
        -20                                                                                 itself to making the banking structure work, by increasing
        -40                                                                                 the deposit base and lengthening the term. This was
        -60                                                                                 starting to bear fruit, but then the second-tier banking
                             continuing operations              discontinuing operations
        -80                                                                                 crisis occurred. This was initiated by the curatorship of
                Funds      Advisory      Investing   Group      Margin          Trading
              Management   Services                  Capital    Business
                                                                                            Saambou, followed by the A2 banking sector downgrade
                                        2002             2001                               by Fitch IBCA, and the irrecoverable withdrawal of
                                                                                            deposits from A1 bank, BoE. Deposit-taking took an
                                                                                            irretrievable setback following adverse ratings. These
                   Segmental profit before tax
                                                                                            events had material adverse consequence on all small
                                                                                            banks operating in South Africa. Brait took the view that
                                                                                            the cost of holding a banking licence exceeded its
Highlights of the year                                                                      benefits, based on:
                                                                                            • the combination of time and effort to rebuild the
STRATEGIC REVIEW                                                                                deposit base;
Each of Brait’s business units is reviewed relative to                                      • significant infrastructural costs associated with holding
the      group’s       strategic            theme,         financial           goals,           a banking licence; and
structures, capital and tools available to support them.                                    • financial risks placed on the group.




                                                                                           15
                                                                            Brait Annual Report 2002
GROUP CHIEF EXECUTIVE’S REPORT CONTINUED




        4 000               01/03/00 –                                                          22/04/02 –    40                               40 fund investments, and has seen a significant
                            PSG acquires TBB after                        Nedcor offer to BoE shareholders
                            threat of curatorship                                              6-8/05/02 –
                                                              Brait and CorpCapital return banking licences                                    improvement in the operational performance of these
                                                                                                                                               portfolio companies. The quarterly review completed at




                                                                                                                   Brait share price (Rands)
                                                                               09/02/02 –
        3 000                                             Saambou placed under curatorship                    30
                 01/02/99 –
                 NRB placed under
                 curatorship
                                                                                                                                               31 March 2002 showed that all portfolio companies in
                                                                        28/06/01 –
                                                     Regal placed under curatorship
                                                                                                                                               later stage funds were operating at levels ahead of budget
Index




        2 000                                                                                                 20
                                                                                                                                               or prior year results.

                      25/10/99 –
        1 000        TFS and FBD                                                                              10
                     placed under           16/07/01 –                                                                                         Limited further investment was made by the private
                      curatorship   RAD takeout by PSG
                                                                     15/01/02 –
                                                               UniFer suspended
                                                                                         14/03/02 –
                                                                                       SARB guarantees                                         equity funds under management, although numerous
                                                                                        BoE depositors
           0                                                                                                  0                                opportunities were carefully reviewed. The discipline of
                                1 January 1999 – 31 May 2002
                                                                                                                                               rigidly adhering to carefully thought-through investment
                         Financial Services Index                                       Brait                                                  requirements is considered by the fund investors to be
                Source: I-Net Bridge; BoE                                                                                                      paramount.

                Volatility in the financial services sector
                                                                                                                                               The environment for raising private equity funds is
                                                                                                                                               difficult, especially internationally. A significant slowdown
The cost of this decision amounts to approximately                                                                                             has been experienced in raising private equity funds. In
R165 million, of which R100 million relates to specific                                                                                        the USA, according to the latest KPMG/SAVCA survey,
provisions and fair value adjustments arising from the                                                                                         private equity funds raised in the first half of 2001 were
unwinding of bank structure positions and the accelerated                                                                                      down 34% compared to the same period in the previous
realisation of banking and related assets. The balance of                                                                                      year (using data from Venture Economics).
R65 million will be incurred in future financial periods and
relates to closure and associated costs. Whilst                                                                                                The specialised funds initiative, focusing on absolute
considerable, these costs are in line with the valuation                                                                                       return strategies in the public markets, recorded a
discounts attributed by analysts to the bank structure. The                                                                                    successful year. The Brait Absolute Fund, the pioneer
costs should also be considered in relation to the future                                                                                      fund-of-funds in this unit, successfully launched in
release of approximately R450 million of capital from the                                                                                      the year. An important goal is to raise third-party capital
bank structure, and the potential for consequent                                                                                               in the forthcoming financial year.
improvement in ROCE.
                                                                                                                                               ADVISORY SERVICES
Brait will continue to be able to offer its clients a full range                                                                               Our Advisory Services business recorded lower profitability
of investment banking products and services, including                                                                                         this year, largely due to declining business volumes. We
debt, and to give its shareowners access to investment                                                                                         have seen an improvement in deal flow and profitability
banking related exposure to equity and interest rate markets.                                                                                  since the beginning of this calendar year, and are
                                                                                                                                               confident of improved levels of profitability.
FUNDS MANAGEMENT
The focus in private equity has been on the enhancement                                                                                        The business is considerably enhanced strategically,
of existing portfolio companies. Brait currently manages                                                                                       having completed a number of high profile mandates,




                                                                                                                             16
                                                                                              Brait Annual Report 2002
and seeing success in joint venture relationships               by the Group Capital function. This segment once again
with Allco and Close Brothers. Its international merger         contributed significantly to results for the year on the back
and acquisitions operations have continued to grow and          of average capital of R744 million invested predominantly
a number of sizeable and newsworthy crossborder                 in preference shares and money market instruments.
mandates have been completed.                                   Before realisation adjustments, the average yield on funds
                                                                invested for the year was 11,6% (2001: 11,5%). As noted
Our specialised finance capability has built up a full range    earlier, this growth of low risk capital deployment was
of debt solutions for clients to lower their cost of capital    a temporary but necessary buffer against the risk of
with acceptable risk and is advisory in nature without          liquidity shocks threatening our then vulnerable banking
relying on a banking licence. The full spectrum service         operations.
comprises arranging of senior lending, securitisation,
structured finance and special situation lending.               DISCONTINUING OPERATIONS
Additionally, a successful non-recourse preference share        The group’s Trading operations, comprising trading in
book is run. This activity is expected to contribute            equities, interest rates, securities, treasury and money
positively to group earnings in the new year with limited       market instruments, have been discontinued either during
risk to the group’s balance sheet.                              the year or as part of the deregistration of the bank. This
                                                                also applies to the group’s Margin business, comprising
INVESTING                                                       asset-based finance and other balance sheet lending
In a difficult investing environment, we record improved        activities. As set out above, realisation adjustments have
returns, influenced by the realisation of the investment in     been raised in this financial year, and further closure
a Russian brewer to Heineken, and weakness in the rand.         provisions will be made in future financial periods.
Additionally, we made a further four investments, all of
which meet our criteria for on-balance-sheet investing,         The combined loss from these discontinuing operations
being outside the scope of our funds under management,          for the year amounted to R109,4 million, inclusive of
and offering exceptional risk/return features.                  realisation adjustments of R45,6 million. Earnings from
                                                                the Margin business declined primarily as a result of bad
During this year we made further investments in our             debt provisions raised at the interim stage against the
private equity funds in accordance with existing                asset-based finance book, and a planned reduction in
commitments. Our investment in the specialised funds            advances during the year. Losses from Trading activities in
activities grew to R36 million, and recorded returns in line    the second half of the year were substantial, following the
with expectations.                                              sharp increase in bond market yields in December 2001
                                                                which resulted in the elimination of profits reported at the
GROUP CAPITAL                                                   interim. The equity trading team incurred losses for the
The allocation of active capital to business units and          second year in a row in a volatile and generally non-
investment of funds held in group treasury are managed          trending market.




                                                               17
                                                   Brait Annual Report 2002
GROUP CHIEF EXECUTIVE’S REPORT CONTINUED




                                                                     liquid instruments will no longer be a constraint. The
 150
                                                                     board will address itself to this issue once the capital has
                                                                     been released.
  75

  60
                                                                     Brait is planning for a year of concentrating its efforts on
                                                                     its existing operations, and on successfully managing
  45
                                                                     down its discontinuing operations. Accordingly, new
  30                                                                 initiatives outside the scope of current operations are not
  15                                                                 anticipated.

   0
         Funds
       Management
                    Advisory
                    Services
                               Investing   Group
                                           Capital                   Conclusion
                    2002           2001
                                                                     It has been a watershed year for Brait and its
          Functional return on equity –                              stakeholders. We move forward in the confidence that the
         before restructuring adjustment
                                                                     decision to deregister the bank is the right one.


Future strategy                                                      I would like to thank all my colleagues for their support
                                                                     and contribution. I am confident that commitment to the
The surrendering of the banking licence has very limited             fundamentals of top-class investing and client advisory
impact on the group strategy. For its clients Brait will             principles will be recognised by continued support from all
continue to offer debt solutions as it has in the past, and          our stakeholder groups in the years ahead.
for its shareowners, returns from participation in equity
and interest rate markets through its specialised funds
activities. Accordingly, the Brait strategy will continue
similar to the model successfully employed by numerous
successful investment banking operations globally that
operate free of the costs and constraints of a licence to
take deposits.
                                                                     Antony Ball
There will, however, be an impact on the group’s financial           Group chief executive
flexibility, as significant capital will be released and the
requirements for such capital to be held in low risk and             26 June 2002




                                                               18
                                                     Brait Annual Report 2002
FUNCTIONAL REVIEW –
FUNDS MANAGEMENT


                                        2002         2001              150                                                   100

Performance for the year                  Rm           Rm
                                                                                                                             80
Net operating income before tax          61,3         41,4
                                                                       100
Average capital employed                 44,6         86,0                                                                   60




                                                                                                                                   Rm
Return on equity before tax (%)        137,4          48,1



                                                                %
                                                                                                                             40
Funds Management comprises the management of third-                     50

party capital by Brait. The earnings stream is high quality,                                                                 20
comprising fees predominantly of an annuity nature
and generating attractive returns on equity. Funds                       0                                                   0
                                                                              98         99    00         01        02
Management also includes our equity accounted interests
                                                                                   ROE                Net operating profit
in African Alliance and ipac South Africa.                                                            before tax


Brait’s management of third-party capital in a fund                                  Funds Management:
                                                                                    Returns and profitability
format is focused on private equity funds. Brait has
an established team and track record that is recognised
as a leader in the private equity asset class in the                2,0% to 2,5% on committed capital of its private equity
African region. The fund format allows Brait to                     funds, reflecting the specialisation of the team and the
leverage its own skills alongside the capital of a premier          intensity with which it supports the investment
set of investors. The economic model followed is true to            processes;
the principles tried and tested originally in the US and        • the funds draw down cash for investment as and when
Europe:                                                             required by the manager and, on realisation, pass
• the fund investment holding vehicles are not traded               proceeds directly back to investors; and
  publicly;                                                     • carried interest and preferred return participations are
• funds are committed for the long term but are closed-             payable once cash has been returned to investors
  end in nature, normally giving the manager five years in          covering cash drawn down for investments and fees,
  which to draw the committed capital to make                       together with a preferred return (generally of 8% in
  investments, and a total of 10 to 12 years from the               US dollar terms). These participations represent
  fund’s inception to return the capital to investors.              20% to 25% of the gains. The private equity team
  Committed private equity funds under management                   participates in these equally with Brait, again aligning
  currently total R5,4 billion;                                     the motivations of all parties.
• management fees are payable on committed capital
  independent of the amount drawn or the valuation of           Given the long-term nature of the commitment and
  the portfolio, representing a secure long-term revenue        illiquidity of the fund investment, investors make careful
  stream. As a result the interests of investor and             and extensive reviews of the manager. Brait enjoys
  manager are aligned by allowing a patient and                 relationships with a premier group of investors that have
  considered pace of investment rather than rewarding a         formed a long-term view of the Brait team, its investment
  rapid deployment of funds. Brait receives annual fees of      strategy, and ability to deliver.




                                                               19
                                                   Brait Annual Report 2002
FUNCTIONAL REVIEW – FUNDS MANAGEMENT CONTINUED




Brait is the leading private equity fund manager investing     The continued low ratings achieved in the small
in the southern African region in terms of funds under         capitalisation sector of the public markets and the sharp
management. Three of Brait’s funds invest in later stage       slowdown in IPO and merger and acquisition activity have
private equity transactions, whilst the fourth is focused on   slowed down value recognition for Fund I and Fund II, and
early stage technology investing. Earlier stage investing at   we seek to optimise value by increasingly targeting trade
present represents approximately 6% of private equity          partners. Our track record entering our eleventh year of
funds under management.                                        operations nevertheless shows internal rates of return in
                                                               Funds l and ll continuing to run at attractive levels, with
The readiness to embrace change and adopt a multi-             gross annual IRR in rand terms since fund inception at
disciplined approach has positioned Brait as a leader of       30% and 65% respectively based on realistic carrying
the private equity asset class in the region. Brait has        values for unrealised positions. The realisation and
ensured that the investment team has a broad base of           liquidity process on these funds are expected to be
skills. An important component of this is the ability and      complete within one and three years respectively.
readiness to provide ongoing strategic, operational and
financial support to the portfolio companies, which drives     In the year Brait Technology and Innovation Fund I
our investment record and provides further differentiation.    (“Braitec”) made one further investment completing
An optimal balance of financial and intellectual capital is    its early stage portfolio size at 19 investments. The new
key to success.                                                investment was made in GraphicData, a UK company
                                                               focused on document management. The portfolio mix is
Considerable resources have been applied in the year to        quite broad and dominated by companies with
enhance strategic and operational plans of existing            proprietary technology, much of which is not information
portfolio companies and in instances where strategic           technology related.
plans have been fully implemented these portfolio
companies have been positioned for realisation.                       200



Brait has drawn down approximately 50% of the South
                                                                      150
African Private Equity Fund III’s capital. The portfolio
represents a healthy blend of transaction-types and
                                                                $bn




                                                                      100
industry diversification. While valuations of unlisted
positions in this fund are generally still held at cost, we
                                                                       50
have seen healthy development of the business plans of
these existing portfolio companies. All companies in our
three later stage funds are trading ahead of budget or last              0
                                                                             95   96   97    98   99    00   01
year. This is a remarkable testimony to the management
groups with which we have invested and to the efforts of
the Brait team in building these businesses and their value
in this past year.                                                       Commitments to US private equity funds




                                                          20
                                              Brait Annual Report 2002
Highlights of the year in Braitec include a number of               The current portfolio of fund investments spans a broad
rounds of funding closed for existing investments in the            range of economic sectors and is summarised in the
portfolio including Rubico, Tissuelink, Intervate, Unique           tables below:
World, Intenda, Maven, Correlate and Connect One. On
balance the Braitec portfolio has held its value through a           Name of
difficult year for technology investors, contains many               investment       Description of business
promising companies, and is positioned for an upturn in
                                                                     Fund I
technology markets.
                                                                     Eyeperoptics     Wholesaler and retailer of optometric
FINANCIAL RESULTS                                                                     products and services with its own

Earnings for the year attributable to private equity fund                             network of nationwide practices

management were ahead of last year. While management                 Franki Africa    Provider of foundation and geo-

fee income was marginally ahead of expectations in rand                               technical services including soil
                                                                                      investigation, foundation design, piled
terms, carried interest participations were weaker as the
                                                                                      foundations and ground retaining
depreciating rand and continued depressed rating of small
                                                                                      systems
capitalisation stocks on the JSE kept pressure on
                                                                     Somerset         Assembly and distribution of
investment valuations and realisation levels. Brait is
                                                                     Educational      educational products, including
satisfied with the strategic positioning, growth prospects,
                                                                                      revolutionary micro-science kits, to
financial performance and value creation within this well
                                                                                      schools, universities and technikons
diversified and balanced portfolio.
                                                                     Wasteman         Industrial, commercial and municipal
                                                                                      waste removal, disposal, street sweep-
                                                                                      ing, sewer and specialised cleaning

       6 000                                                         Fund II

       5 000                                                         Astrapak         Manufacturer of plastic packaging
                                                                                      products and provider of packaging
       4 000
                                                                                      services (small stake also held in Fund I)
  Rm




       3 000                                                         Freeplay Energy Developer of technology involving the
                                                                                      generation and storage of human-
       2 000
                                                                                      generated energy
       1 000                                                         Fuel             Logistics and parcel distribution of
                                                                                      high value goods and FMCG products
          0
                   98       99   00      01      02                                   including warehousing, airfreight,

                     Invested         Total committed
                                                                                      courier and supply chain solution
                                                                                      services
                                                                     Kagiso Media     Media group with interests in radio,
               Private equity funds under management                                  publishing and trade exhibitions




                                                                  21
                                                        Brait Annual Report 2002
FUNCTIONAL REVIEW – FUNDS MANAGEMENT CONTINUED




Nortech          Global supplier of manufactured               Smartcall        Exclusive and leading Vodacom
                 components for detection solutions                             mobile phone airtime reseller
                 including parking, traffic and                                 focusing on prepaid connection and
                 headcounting systems                                           airtime packages
Prime Cure       Provider of high quality, low                 Southern         Resource exploration company
Clinics          cost primary healthcare services              Mining           currently focused on the evaluation
                 through a national network of                 Corporation      and development of Corridor Sands,
                 medical centres                                                the world’s largest titaniferous
Shoe City        National retailer of discounted formal,                        mineral sands deposit
                 casual and sports footwear                    The              Environmental services group focused
Uni-Span         Manufacturer and distributor of               Reclamation      on the secondary metal market,
Formwork &       scaffolding and formwork products to          Group            with developing operations in waste
Scaffolding      the construction and building sector                           paper, glass, rubber and plastic
                                                                                recycling
Fund III
                                                               Wilderness       Leading tourism wholesaler and
Cointel          Value-added service provider                  Safaris          operator of safari camps and related
                 developing systems to provide                                  guest logistics
                 information to portable hand-held
                                                               Braitec
                 devices in GSM cellular networks
Fine Chemicals   High value-add formulator and                 Breathetex       Owner of technology to apply
Corporation      manufacturer of active ingredients                             waterproof, breathable membranes
                 for pharmaceutical products with                               to fabric
                 an FDA rating                                 Connect One      Engaged in the development of
Hydrogen         Leisure business designing,                   Inc              internet connectivity firmware
Entertainment    developing and operating                                       solutions in semi-conductor chips
World            amusement facilities                          Correlate        Developer of patented desktop
Logical Options Leading recruitment, staffing and              Technologies     application software products for the
                 IT services business with interests in                         collection and organisation of data
                 South Africa and North America                Eastmin          Provider of hardware and software
MGX              Provider of IT products and services,         Information      solutions for the office automation
                 storage technologies, document                Technology       and productivity environments
                 management, disaster recovery and             Ecom Institute   Systems integrator providing internet
                 continuity planning, and software                              solutions including procurement,
                 development services                                           supply chain and security applications
OTK              Agricultural services including handling,     ETC              White-label aggregator for providing
                 storing and marketing of cotton and                            full cycle insurance solutions over the
                 grain and the supply of production                             internet
                 requisites, insurance and finance




                                                          22
                                            Brait Annual Report 2002
 Floppy Sprinkler Irrigation technology business                   Rubico             Developer and implementer of
                    which has developed a worldwide                                   component-based object oriented
                    patented, low cost sprinkler system                               software providing a software
 Grapevine          Provider of collaborative messaging                               assembly environment with configu-
 Interactive        solutions to the corporate market                                 ration and consulting support
 GraphicData        Provider of document management                Unique World       Developer and integrator of web-
                    solutions in the UK through the use                               based technology with a focus on
                    of a network of scanning and                                      retail solutions in Australia
                    microfilming bureaus                           Tissue Link        Developer of medical technology
 IBA                Provider of healthcare information                                combining radio frequency energy
 Technologies       systems in Australia, Singapore, New                              with conductive fluid for use in surgical
                    Zealand and UK markets                                            applications principally in the USA
 Intenda            Developer of procurement and tender            Web-angel          UK-based mobile and e-commerce
                    management software solutions                                     business accelerator providing
 Intervate          Intranet knowledge management                                     strategy formulation and fundraising
                    platform, designed to provide a                                   assistance
                    flexible framework of services and
                    functionality                                 ipac
 Laundresse         Developer of a patented wall                  Brait is involved in retail and institutional funds
 International      mounted appliance aimed at the                management through a joint venture with Australian-based
                    hospitality and consumer markets              ipac. During the past year ipac South Africa grew its
 Maven              Provider of software and outsourcing          funds under advice from R1 462 million to R2 830 million,
 Technologies       solutions to insurance brokers, short-        representing a position of critical mass. The ipac SA service
                    term insurers and life insurers               takes the management of the assets of high net worth
                                                                  individuals and institutional funds to a strategic level,

      3 500
                                                                  offering leading-edge processes that match investment and
                                                                  lifestyle objectives with the appropriate asset management
      3 000
                                                                  teams and investment strategies. ipac South Africa
      2 500                                                       expanded its partnerships with the leading independent
      2 000                                                       financial planners in South Africa, resulting in significant
Rm




                                                                  flow of business. An implemented consulting division
      1 500
                                                                  servicing the retirement fund industry has also been
      1 000
                                                                  established – a process which ensures unique and effective
       500                                                        investment strategies for retirement funds and their
         0                                                        members. ipac South Africa has positioned itself to become
               98    99      00      01      02
                                                                  the leading supplier of financial planning to individuals and
                                                                  investment consulting to financial intermediaries and
     Unit trust and specialised funds under management            retirement funds.




                                                                23
                                                      Brait Annual Report 2002
FUNCTIONAL REVIEW – FUNDS MANAGEMENT CONTINUED




AFRICAN ALLIANCE                                                    MEZZANINE FINANCE
African Alliance services sub-Saharan financial markets             Brait has decided to make its mezzanine arrangements
outside South Africa. It increased its earnings significantly       through a “club” arrangement with other investors, and to
over the previous year with all business areas performing           focus on structuring and arranging mezzanine finance for
satisfactorily. The introduction of debt origination and            private equity transactions.
trading as a new division is expected to add value to
African Alliance’s expansion plans, together with                   SPECIALISED FUNDS
established areas. Attention to culture and human                   Specialised funds is Brait’s alternative asset class initiative
resources has increased, bringing expected greater value            within the listed markets and has during the year
in years to come. All the teams have been enhanced                  established a solid platform from which to expand and
further and substantial technology investments have been            develop its activities. The investment objective is to
undertaken to support future development.                           provide absolute returns in all market conditions. The
                                                                    Brait Absolute Fund, the pioneer fund-of-funds, was
African Alliance remains committed to long-term                     successfully launched this year. A further range of
development based on an operating philosophy of                     specialist equity funds has also been launched and is in
integrity, together with sound financial and intellectual           the process of building portfolios and a performance track
foundations. Greater emphasis will be placed on building            record.
in-house research capacity and ever-expanding focus on
client value delivery.




            30%                                                                    29%

                                              70%                                                                      71%




                         2002                                                                   2001


                                                Independent funds        Brait




                                       Total independent funds under management




                                                           24
                                               Brait Annual Report 2002
FUNCTIONAL REVIEW –
ADVISORY SERVICES


                                          2002          2001            100                                               100
Performance for the year                   Rm            Rm
                                                                         80                                               80
Net operating income before tax            23,3          30,2
Average capital employed                   65,0          47,8
                                                                         60                                               60
Return on equity before tax (%)            35,8          63,2




                                                                                                                                Rm
                                                                   %
Brait Advisory Services comprises a team of more than                    40                                               40
40 professionals providing an innovative and unique blend
of skills across all facets of deal making and has the ability           20                                               20
to deliver best advice, technical skills, partnering and
access to capital for its clients.                                        0                                               0
                                                                               98         99     00       01         02

Brait’s Advisory offering is a multi-disciplinary business,                         ROE           Net operating profit
                                                                                                  before tax
effectively addressing client needs by providing corporate
finance, commercial, legal, tax, research, negotiation,
technical, corporate finance and execution advice, and                                  Advisory Services:
                                                                                     Returns and profitability
support across the full spectrum of business transactions
both locally and internationally. It also offers specialised
finance services through origination, packaging and
distribution of debt solutions and includes property and
corporate financial structuring as well as a non-recourse          increased on the back of the debt advisory operations while
preference share trust.                                            M&A and corporate finance fee income accounted for
                                                                   approximately 50% of the team’s total revenue for the period.
The advisory group strives to design around each client
relationship a team, service offering and basis for value          This year Brait continued the consolidation of its market
participation. The team offers solutions that are both relevant    position as one of the leading advisory houses to
and differentiated. This puts Brait in the position of a key       entrepreneurs and small to mid-sized public companies in
strategic partner in enhancing the value of clients’ business.     the markets in which it operates. It also continued to build
                                                                   upon its capacity of completing sizeable and newsworthy
Each team draws from the skills and experience across              crossborder mandates. Brait was ranked fifth in terms of
five principal areas of activity:                                  number of completed transactions announced in South
• mergers and acquisitions;                                        Africa by the annual Ernst & Young survey for 2001 and is
• corporate finance;                                               well positioned in its other markets.
• advice and execution;
• specialised finance; and                                         The year saw a continued decline in inward investment
• property and commercial financial structuring.                   into South Africa with a corresponding increase in
                                                                   outward investment. The net result was a real decline in
Earnings for the year were R23,3 million, down 23% on the          corporate activity in South Africa, in line with the declining
record profits of R30,2 million in the prior year. This            trend elsewhere in the world. Despite the slow down in
performance is considered very satisfactory in view of the         corporate activity, the team was active and the most
corporate market conditions and the start up nature of the         notable deals advised on were:
debt advisory services team, which is expected to contribute       • a capital raising of US$30 million for Bravo Brewery, a
positively to earnings in the new financial year. Revenue             clear beer brewery in Russia;




                                                                  25
                                                      Brait Annual Report 2002
FUNCTIONAL REVIEW – ADVISORY SERVICES CONTINUED




• acquisition of Gearhouse (South Africa) Pty Limited                                           although this was a small part of its total revenue in the
  from the mandators Gearhouse PLC;                                                             year under review.
• the disposal of Illovo Sugar Limited’s holding in Mon
  Tresor and Mon Desert Limited in Mauritius;                                                   The specialised finance team was actively involved in the
• several disposals for OTK Limited in South Africa;                                            origination, packaging and distribution of debt into the
• representation of Warner Brothers Inc (USA) in regard                                         financial services market. In excess of R1 billion of debt
  to its shareholding in e-TV;                                                                  was raised and syndicated during the year under review.
• a disposal by Metropolitan Factors to Close Invoice                                           Significant transactions included the raising and placing
  Factors, a subsidiary of Close Brothers PLC, United                                           of a R300 million preference share financing facility for
  Kingdom;                                                                                      an empowerment company and the origination and
• various disposals by CapeStar Growth Investments                                              structuring of a R240 million funding package for a listed
  Limited and its subsequent delisting and winding-                                             company. Since the beginning of the year, the team
  up; and                                                                                       has positioned itself to operate without the support
• the management buyout of NCS Resins in South Africa.                                          of a banking licence and to generate a significant fees
                                                                                                revenue base.
The advisory team continues to harvest referrals from its
international associations with Close Brothers, particularly                                    The advisory team enters financial year 2003 with a
out of the UK and Europe, and Allco Structured Finance                                          strong pipeline, in particular some notable crossborder
in Australia.                                                                                   M&A and corporate finance mandates. The specialised
                                                                                                finance team has secured several securitisation and debt
In addition to its external clients the advisory team has                                       origination mandates and is closing out a number of large
continued to support the operations of the Brait group                                          transactions.




                  60                                              25                                   350


                  50                                                                                   300
                                                                  20
                                                                       Total deal worth (Rbn)




                                                                                                       250
Number of deals




                  40
                                                                  15
                                                                                                       200
                                                                                                 Rbn




                  30
                                                                                                       150
                                                                  10
                  20
                                                                                                       100
                                                                  5
                  10                                                                                     50

                   0                                              0                                       0
                       97        98       99      00        01                                                  94      95     96      97     98   99   00   01

                            Number of deals    Total deal worth
                                                                                                 Source: Mergers & Acquisitions Survey 2001
                                                                                                         Ernst & Young

                              Advisory Services deals
                                (by calendar year)                                               Trends in South African merger and acquisition activity




                                                                          26
                                                             Brait Annual Report 2002
FUNCTIONAL REVIEW –
INVESTING


                                            2002     2001            100                                             100
Performance for the year                     Rm       Rm              80                                             80

Net operating income before tax             69,9*      1,4            60                                             60

Average capital employed                   339,8     307,7            40                                             40
Return on equity before tax                 20,6       0,5            20                                             20




                                                                                                                           Rm
                                                                %
* Pre-realisation adjustments of R20,0 million                         0                                             0

                                                                     -20                                             -20
Investing resides at the core of Brait’s competence. Brait           -40                                             -40
leverages its skills, insights and relationships as an
                                                                     -60                                             -60
investor by making proprietary medium-term investments
                                                                     -80                                             -80
in its private equity funds, as co-investor in transactions                98         99    00       01         02
completed by its advisory and private equity divisions, and
in special opportunities involving both private and public                      ROE          Net operating profit
                                                                                             before tax
companies. Since inception, Brait has yielded an average
return of 18% on this portfolio against an average of                                   Investing:
0,7% on the JSE Industrial Index, (9)% on the JSE Small                          Returns and profitability
Cap Index, (35,9)% on the JSE IT Index, (0,03)% on
Nasdaq and 4,1% on the Dow Jones Industrial Index.              adopted by Brait, requires all financial assets to be
                                                                brought to account on a mark to market and fair value
Brait’s proprietary investing activities have strategically     basis. The effect of this leads to volatility in earnings
placed greater emphasis this year on established business       reported in the Investing function as is evident in the
opportunities in the industrial and commercial sectors          graph above.
rather than new economy investments.
                                                                The majority of the Investing portfolio comprises direct
These decisions have proved successful this year as the         investment by Brait into private equity funds under its
smaller capitalisation stocks, and in particular the            management and co-investment into certain of such
information technology and earlier stage companies,             portfolio companies. In addition, Brait has made on-
continued to underperform. The results from Investing           balance-sheet direct investment in transactions of a
reflected some general improvement in market indices on         private equity nature, the principal commitments of which
the industrial and commercial sectors but more                  at year-end are summarised below:
particularly the specific performance of Brait’s portfolio.
The effect of the sharp depreciation of the rand on the          Bayport         International micro-finance group with
group’s non-South African investments also contributed                           operations commencing in Zambia in
overall to a much improved performance from proprietary                          conjunction with employer groups
investing activities for the year off a low base. Earnings       Douglas Green Producer, distributor and marketer of
before tax and realisation adjustment was R69,9 million          Bellingham      wine and spirits brands in South Africa
against R1,4 million in the prior period and the average                         and internationally
return on capital invested for the year on this basis was        Dywidag         Industrial services businesses operating
20,6%, compared with 0,5% last year. This performance            and RMS         in the roofbolt, steel reinforcing and
should also be seen in the context of equivalent returns of                      mesh markets
6,4% on the Dow, 10,5% on the JSE Small Cap Index and            Equine Holdings Software developer and distributor of
10,9% on the JSE Industrial Index for the same period.           and Raceclubs   virtual online horseracing software
                                                                 Metra Holdings Management consulting and services
The basis for accounting for all investments in terms of                         group acting as licensee of Gemini
International Accounting Standards, which has been fully                         Consulting in South Africa




                                                              27
                                                    Brait Annual Report 2002
FUNCTIONAL REVIEW – INVESTING CONTINUED




 NCS Resins         South Africa’s leading manufacturer          commitments to funds. As Fund I has reached the end of its
                    and distributor of unsaturated               investment period, special opportunities in the R5 million to
                    polyester resins and gelcoats arising        R20 million range sourced by the group are now available
                    from a management buyout from                for selective investment on Brait’s own balance sheet.
                    Dow Chemicals and simultaneous
                    merger with the Vereguard group              A number of new investments were concluded during the
 Promark Sport      Representative of rugby and football         year under review including Equine Holdings, virtual horse-
 International      professionals in contracts with clubs        racing software website, and NCS Resins, southern Africa’s
                    and unions                                   largest software manufacturer of unsaturated polyester resins
 Web-angel          UK-based mobile and e-commerce               and gel coats. Also, the group entered into agreements for
                    business accelerator listed on               an investment in Bayport, an African focused micro-finance
                    London’s AIM market                          group, which has commenced operations in Zambia. The
                                                                 NCS Resins transaction typified Brait’s strategy of investing
The most notable was the group’s investment in the               on the back of its advisory and debt structuring capability.
Russian brewing group, Bravo, in which Brait co-invested
alongside one of its fund investors. Brait also provided         The Investing activity is by definition long in equity risk
advisory services to the group using its specific                and by its nature difficult to hedge. While the group
relationships and skills in this industry. The fees from the     expects that correlation with public markets is limited by
advisory activities are included in that segment’s results.      the special opportunity and privately negotiated nature of
                                                                 much of this proprietary investing, inevitably in years of
The performance of the group’s investment in the wine            volatility in equity markets earnings will not be smooth
and liquor distribution and manufacturing business, DGB,         and may be adversely affected by abnormal currency or
in South Africa, which falls outside the mandate of the          market sentiment issues.
private equity funds, was also an area of success. This
management buyout, in which Brait both advised and               Brait’s ability to back its clients, proprietary insights and
financially structured the transaction, delivered another        deal flow with its own capital remains strategically
year of strong results in terms of cash flow and                 valuable and a differentiator in its target markets.
profitability.

The group still holds some of its new economy investments                      10 000                                                                                     5 000
in the Australian-listed healthcare software group IBA and                                                                                                                4 500
                                                                                9 000
UK-based mobile and e-commerce business accelerator
                                                                                                                                                                          4 000
Web-angel, and some small positions in JSE listed stocks.
                                                                                8 000
                                                                                                                                                                                  Nasdaq Index




In general these business have performed poorly and the                                                                                                                   3 500
                                                                 JSE Indices




loss of value has been recognised through the group’s                           7 000                                                                                     3 000
mark to market accounting policies.
                                                                                                                                                                          2 500
                                                                                6 000
The group is satisfied with its investment programme into                                                                                                                 2 000
its private equity funds. These investments account for                         5 000
                                                                                                                                                                          1 500
approximately R160 million at fair value at the year-end.
Here the biggest direct exposure is its commitment to                           4 000                                                                                     1 000
                                                                                                                                            May ‘01


                                                                                                                                                      Oct ‘01
                                                                                         Apr ‘99


                                                                                                   Sep ‘99


                                                                                                             Feb ‘00


                                                                                                                       Jul ‘00


                                                                                                                                 Dec ‘00




                                                                                                                                                                Mar ‘02




SAPEF III, which as reported in the funds management
section, is well positioned to deliver value in future years.
                                                                                                      JSE Small                            JSE INDI 25
                                                                                                      Nasdaq
In the current unpredictable market, Brait continues to be
careful in adding exposure to its Investing book outside its                            Relative performance of stock markets




                                                            28
                                               Brait Annual Report 2002
FUNCTIONAL REVIEW –
GROUP CAPITAL

                                                                          40                                              140

Performance for the year                    2002         2001             35                                              120

                                                                          30
Net operating income before tax              86,1*       81,7                                                             100

Average capital employed                   744,1        712,1             25
                                                                                                                          80




                                                                                                                                Rm
Return on equity before tax                  11,6        11,5




                                                                    %
                                                                          20
                                                                                                                          60
                                                                          15
* Pre-realisation adjustments of R34,4 million
                                                                                                                          40
                                                                          10
The Group Capital function oversees the performance and                    5                                              20
allocation of Brait’s capital. It also manages all capital
within the group structure, which is not directly allocated                0                                              0
                                                                                98         99    00       01         02
to or employed by a business unit. Traditionally this has
included capital allocated to the group’s banking structure                          ROE          Net operating profit
                                                                                                  before tax
as this is held predominantly in liquid instruments as
security against the deposit base of the bank.                                            Group Capital:
                                                                                      Returns and profitability

The primary functions of this activity are:                         capital allocated to these operations on both a specific
• to allocate the group’s capital resources to the                  and segmental basis.
  operating units in the group;
• to set capital return targets for business units;                 Following the group’s recent decision to cease its Margin
• to measure risk adjusted returns of the capital                   and Trading activities and the consequent realisation of its
  employed by units;                                                corporate lending book and certain assets in its
• to improve capital utilisation efficiency within the              proprietary investment portfolio, capital allocated to these
  operating units; and                                              assets classes will be returned to the Group Capital
• to manage optimally the investment of unallocated or              function for management. This capital will only become
  residual capital.                                                 available for redeployment once depositor funds have
                                                                    been settled in full and our banking assets realised. The
Return on capital is the fundamental driver of the                  strategy for the allocation of this capital will be developed
group’s financial performance objectives. Brait’s capital           and refined in the course of the next financial year.
allocation process is committed to achieve maximum risk-
adjusted return on invested equity capital. The group’s             Group Capital has in the past been the single largest
equity capital is deployed to provide financial                     contributor to group earnings. Because the bulk of this
stability, capture business opportunities and leverage              capital has been held as cover against the wide range of
the group’s relationships and skills. Essentially, Brait aims to    risks managed within the banking structure and the group
put capital behind its own ideas and relationships and              at large, it is invested predominantly in cash and short-
as an outcome of this it expects to earn superior investment        term assets. Earnings for the period on a pre-adjusted
returns.                                                            basis were R86,1 million against R81,7 million in 2001
                                                                    and the average annualised return on Group Capital for
Brait has implemented an internal capital allocation                the year was 11,6% against a comparable return of
programme, which is responsible for controlling and                 11,5%. The return is disclosed net of unallocated group
balancing the allocation of capital between business                operating costs and provisions which are not allocatable
units. Importantly it offers a measurement for the cost of          to other business segments. Foreign currency translation
allocated capital, identifies the related risks involved and        adjustments on conversion of non-South African assets
considers alternative sources or mix of capital. The asset          into the rand financial statements are included in the
allocation programme also provides a risk weighted                  income and assets of Group Capital. Translation
analysis of capital employed by units in the group and              adjustments in non-integrated operations are reflected in
measures risk adjusted returns on the different classes of          average capital but not in income.




                                                                   29
                                                       Brait Annual Report 2002
FUNCTIONAL REVIEW –
DISCONTINUING OPERATIONS


Discontinuing operations comprise the activities of the             stage. The recovery of this portion of the book was well-
Margin and Trading businesses carried out in the group’s            progressed at year-end.
banking structure.
                                                                    The business of A2 banking continued to became
Margin business                                                     increasingly difficult as the year progressed with the
                                                                    failure of further small banks, culminating in the
Performance for the year                    2002         2001       curatorship of Saambou Bank and the authorities
                                                                    stepping in to guarantee the deposits of BoE Bank. This
Net operating income before tax                  1,2*     40,9
                                                                    led to the announcement by Brait, soon after year-end, of
* Pre-realisation adjustments of R45,6 million                      its intention to apply to the South African Reserve Bank
                                                                    for the deregistration of its banking licence and the
Margin business suffered a torrid 2002 financial year. The          consequent decision to cease its deposit-taking activities
results for the year are disclosed as discontinuing                 by September 2002. At the same time Brait announced
operations as a result of a decision taken by the board             that it intended to recover the capital invested in its
of Brait Merchant Bank Limited to apply for the                     lending book on an accelerated basis and has accordingly
deregistration of its banking licence.                              provided R45,6 million against the recovery of this book
                                                                    in the current financial year. The results of the entire
As described in last year’s annual report, developments in          Margin lending operation have been treated as a
the financial services industry and internal performance            discontinued operation.
and strategic targets within Brait led the group to embark
                                                                               35
on a new strategy relating to deposit-taking and lending
activities towards the end of the 2001 financial year. The                     30

need to maintain high levels of liquidity, in a financial
                                                                               25
environment characterised by deteriorating perceptions of
                                                                               20
A2 banks, resulted in the aggregate returns on advances
                                                                       %




portfolios already at that stage being insufficient for                        15
the banking structure to earn its target return on equity
                                                                               10
from lending activities. These activities were therefore
progressively reduced, and the focus in the year has been                       5

building advisory skills in debt structuring, origination,                      0
                                                                                    98        99        00     01      02
syndication, securitisation and distribution skills rather
than on margin lending.                                                              Brait’s banking capital    Regulatory
                                                                                     adequacy ratio             requirement

A further review of the group’s banking model during the
year highlighted the inadequate risk/reward relationship                        Banking operation capital adequacy ratio
in the bank’s asset-based financing area and, as was
reported in the group’s interim report, the decision was            At 31 March 2002, the net advances book was
taken to exit this type of business completely. This process        R780 million, a decline of 45% on a year previously and
has highlighted the difficulty of recovering a portion of the       the deposit book was R1,1 billion, a decline of 29%
book, and additional provisions for doubtful debts                  compared to 2001. Prospectively, all deposits will be
amounting to R24 million had to be made at the interim              returned and the banking licence cancelled on or about




                                                              30
                                                    Brait Annual Report 2002
30 September 2002. Thereafter certain lending and related          The development of our interest rate research capability
activity may be undertaken by Brait in pursuit of investment       continued, with the objective of developing a client
banking transactions but these will fall outside the ambit of      focused value added interest rate business. It proved
banking regulations and will largely be undertaken to              much more difficult to establish our reputation in this area
facilitate principal investment or client advisory activities.     than had originally been anticipated, and it was only in
                                                                   recent months that some benefits in the form of increased
Trading                                                            deal flow were seen.


Performance for the year                   2002         2001       EQUITY TRADING
                                                                   Although most South African equity indices showed net
Net operating (loss) before tax            (65,0)         (9,2)
                                                                   gains for the year, this conceals what was a volatile and
                                                                   generally non-trending market. For the second successive
Brait’s trading operations have taken place in a turbulent         year Brait equity trading incurred losses and the decision
environment and are also subject to being wound down               was taken to reduce operations, particularly in more
following the decision to terminate the banking licence on         speculative equity and derivative trading. Certain value
which such operations rely for counterparty lines.                 and arbitrage holdings are being reduced more gradually
                                                                   and all positions will be closed or assumed under the
Brait’s primary trading activities fall into two areas:            Investing function by September 2002.


INTEREST RATE                                                      Furthermore, the group’s stockbroking operation, Brait
During the first eight months of the year the team was             Securities, which relied on the group’s proprietary funding
able to exploit a steady bull market and seemed well               for a significant portion of its income and activity, will
placed to enjoy a particularly successful year in the              also be discontinued following the decision to cease
interest rate trading area. The R150 opened the year at            trading activities.
11,73% and the R153 at 12,345%. Our trading
operations successfully read the bull market as lows of
                                                                        15,0
9,37% and 10,0% respectively were reached in late
                                                                        14,5
November. The improved results from trading at the
                                                                        14,0
interim stage were largely derived from the performance
                                                                        13,5
in the interest rate market.
                                                                        13,0
                                                                   %




                                                                        12,5
This was followed in December by the well-publicised
                                                                        12,0
collapse in the rand exchange rate, with a corresponding
                                                                        11,5
vicious increase in bond market yields. In a three-week
                                                                        11,0
period the yield on the R150 increased 383 points, the
                                                                        10,5
most notable increase being 177 points within a two hour                10,0
period on 14 December.                                                                   April 2000 – March 2002



This spike in rates effectively reversed the accumulated
gains to date and the overall results for the year were very
disappointing.                                                                       Bond market trend: R153




                                                                  31
                                                       Brait Annual Report 2002
FINANCIAL REPORT

The Brait S.A. group financials and the company                  • Investing – revenues are market and specific investment
financials are included in this annual report.                     dependent. They are derived from equity and/or
                                                                   structured performance driven participations in funds
A detailed segmental analysis of the results has been              and proprietary ‘private equity’ styled transactions.
prepared for the business and geographical segments of             Costs are variable and capital needs are intensive; and
Brait’s activities. The primary business segment reflects        • Group Capital – income accrues from low risk, liquid
the internal organisation and risk segments of the group           investment of unallocated group capital. Costs are
rather than its legal structures, which are predominantly          minimal although abnormal group charges and
‘tools’ to facilitate the operations of the group. The             revenues are absorbed by Group Capital from time
geographical segment of the business has been separated            to time.
between Europe, South Africa and Africa Other. This
distinguishes between the specific operating, risk and           Discontinuing operations:
currency environments in which the group has significant
                                                                 • Margin business – interest income from credit risk,
activities. Information has been prepared on the basis of
                                                                   semi-fixed costs with highly regulated and large back
similar regional environments rather than on a particular
                                                                   office overhead structure. Capital intensive in the
country basis.
                                                                   A2 banking environment; and
                                                                 • Trading – market performance income, semi-fixed costs
The results and resources of discontinuing operations
                                                                   with highly regulated, large back office, expensive
have been separated from the core continuing activities of
                                                                   systems and overhead structure. Counter-party trading
the group in order to provide a meaningful analysis and
                                                                   lines require a large indirect capital structure.
benchmark for current and future performance.

                                                                 ACCOUNTING POLICIES
The segmental operations are deliberately organised
                                                                 The financial statements of the group have been
around specific risk, skills and product features. These
                                                                 prepared in compliance with International Accounting
characteristics are as follows:
                                                                 Standards. The group was incorporated with effect from
                                                                 1 April 1998 through a merger which has been accounted
Continuing operations:
                                                                 for as a ‘Uniting of Interests’ in accordance with IAS
• Funds Management – annuity income flows from fixed
  long-term      management       fees   and   performance       22 ‘Business Combinations’. The company financial

  participations. The cost structure is predominantly fixed      statements     are   prepared      in   accordance        with

  and the segment requires minimal capital outside its co-       Luxembourg law.

  investment commitments. The co-investments are
  disclosed in Investing;                                        The accounting policies applied in the preparation of the
• Advisory Services – recurring advisory and M&A fee             group financial statements are consistent with those of
  income from relationship business and specialised              the previous year except for the adoption of the statement
  financial services. Lumpy participation fees are also          on   Recognition     and    Measurement       of      Financial
  derived from the M&A and specialised finance activities.       Instruments (IAS 39). The group has committed
  The cost structure is semi-fixed cost and the segment          considerable time and resource in order to meet the full
  has a minimal capital utilisation;                             compliance obligations of this new statement of




                                                           32
                                                 Brait Annual Report 2002
accounting practice. IAS 39 significantly increases the use         investments in subsidiaries) are taken directly to income.
of fair values in accounting for financial instruments and          Prior year translation gains and losses pertaining to
complements IAS 32 which provides for the Disclosure                dividends declared from subsidiaries to the holding
and Presentation of Financial Instruments. In due course,           company are released from the translation reserve to
South Africa will implement its equivalent statement                retained income in the period of declaration.
AC 133 to harmonise with IAS practice in this regard.
                                                                    Gains and losses on the translation of foreign currencies
It is important for South African users of the financial            and exchange transactions in all the group’s operations
statements to recognise that IAS does not apply the                 are recognised through the income statement. During the
concept of headline earnings. As a consequence, the                 year the group recorded translation losses on capital
earnings of the group are disclosed inclusive of profits and        invested into South Africa as a result of the sharp
losses on disposal of discontinued operations, fixed assets         depreciation of the rand. These losses have been included
and trade investments, as well as goodwill amortisations            in income and set off against gains in the holding
and impairments, exceptional items of associates,                   company arising from the translation of assets into rand.
impairment of investments and other items which are of
a non-recurring nature. The financial effects of these              The net effect of translation gains disclosed in income
transactions are disclosed in the financial statements.             for the year was R68,2 million (2001: R29,8 million).
                                                                    These gains or losses theoretically represent the interest
REPORTING CURRENCY AND FOREIGN                                      differential between rands and the specific currencies in
CURRENCY TRANSACTIONS                                               which the assets and liabilities of the group are held.
While the holding company reports in US dollars, the
group financial statements are presented in South African           The movement on the foreign currency translation reserve
rand, as more transactions are recorded in rand than any            for the year primarily reflects the net effect of currency
other single currency in Brait’s operations. In addition, the       translation gains on the assets of non-South African
majority of Brait’s shareowners are South African and are           subsidiaries and the reversal of pro rata prior year
better served for the time being with rand financial                currency translation gains of dividends declared by
statements. For the convenience of non-South African                subsidiaries to the holding company.
users, unaudited US dollar income statements and
balance sheets have been included in the notes and the              OPERATIONAL PERFORMANCE
financial statements.                                               Conditions for the year have been difficult. The capital
                                                                    market sectors in which the group is focused through its
For currency reporting purposes, Brait’s principal                  investing and private equity participations have been
subsidiaries are treated as foreign entities (‘non-                 volatile. The global economic retreat has contributed to a
integrated’ operations) and gains and losses on                     general decline in the demand for financial and advisory
translation of the assets and liabilities of these entities into    services. These have been compounded by the specific
rand are taken directly to the foreign currency translation         problems in the South African A2 banking sector and the
reserve. Gains and losses of the assets and liabilities of          group’s decision to apply for the deregistration of its
the holding company on translation into rand (excluding             banking licence. Arising out of this, the group will realise




                                                                   33
                                                       Brait Annual Report 2002
FINANCIAL REPORT CONTINUED




its advances book and accelerate the disposal of the assets         500                                               60

in its banking structure and other assets of a discontinuing        450                                               50
                                                                    400
nature. Brait has also taken the decision to cease                                                                    40
                                                                    350
operations in its remaining trading and stockbroking units                                                            20
                                                                    300
within the banking structure. These operations have also




                                                               Rm




                                                                                                                            %
                                                                    250                                               10
been treated as discontinuing in the financial statements.          200                                               0
This strategy has given rise to a realisation adjustment            150
                                                                                                                      -10
of R100 million and has been brought to account in the              100
                                                                                                                      -20
results at 31 March 2002. A further provision of                     50

R65 million is expected as a result of closure costs in the           0                                               -30
                                                                          99             00      01           02
banking structure, which will be carried against future
                                                                            Revenue           Revenue – continuing
earnings of the group.                                                                        operations
                                                                            Movement
                                                                            in revenue
The results of continuing operations of R189,8 million                             Growth in revenue
(210 cents per share) were 26% ahead of the comparable
                                                               OPERATING EXPENSES AND PROVISIONS
R150,8 million in the prior year. Earnings per share for the
                                                               Operating expenses of continuing operations, before
group as a whole before the realisation adjustments were
                                                               realisation adjustments, declined marginally by 1% from
unchanged at 200 cents per share while earnings after
                                                               R140,0 million to R138,9 million for the year. Funds
the adjustments were 89 cents per share, down 56%
                                                               Management costs remained largely unchanged,
compared with last year.
                                                               Advisory Services costs increased by additional operating
                                                               costs of the new specialised finance team, while Investing
REVENUE                                                        and Group Capital expenses declined to more acceptable
Revenue of continuing operations for the year at
                                                               levels following some abnormal costs in the prior year.
R379,7 million was 36% ahead of last year. This
accounted for 98% of total revenue which was 4% ahead
                                                                    400
of the 2001 comparative. An improved performance
from Investing activities made the largest contribution to
                                                                    300
the revenue increase. Funds Management revenue
recorded an improvement due to the underlying
                                                               Rm




performance of the private equity funds and a weaker                200

rand. The increase in Advisory Services revenue was
primarily generated by its newly configured specialised             100
finance operations. In discontinuing operations, revenue
of the margin business declined as the asset-based
                                                                      0
finance area was closed and the book deliberately                          99            00       01           02

reduced during the year. Trading revenue was negative                       Operating         Operating expenses –
                                                                            expenses          continuing operations
following the operating losses in both the equities and
interest-rate trading activities.                                          Movement in operating expenses




                                                          34
                                              Brait Annual Report 2002
ASSOCIATES AND JOINT VENTURES                                  TAXATION
Associated income of R8 million for the year includes          The net group tax position for the year was a contribution
R7 million (2001: R5 million) of earnings from the             to earnings of R3,5 million against a charge of
group’s 50% interest in African Alliance Holdings and          R3,9 million in the prior year. The current year contribution
various less significant associated interests. The group’s     represents the effect of deferred tax liability reversals arising
joint venture interests comprise its 50% stake in Capital      from the significant current year losses in the banking
Alliance Finance and its 50% holding of ipac South Africa.     structure, net of normal, deferred and other taxes on the
Income from Capital Alliance Finance’s micro-lending           group’s operations outside the bank structure. Brait has
business was R8 million for the year against R12 million       reconciled its consolidated tax charge to the South African
for the prior year, following additional general provisions    tax rate as the group’s South African operations represent
taken during the year against the loan book. ipac South        the largest geographical and single currency operation of
Africa reduced its losses to R2 million for the year from      the group at present. This analysis is disclosed on page 96
R4 million in the prior year.                                  in the notes to the annual financial statements.


FINANCE COSTS                                                  In the non-banking operations of the group, normal tax
Finance costs represent non-banking and inter-group            charges in most activities have increased in line with the
finance charges. The significant increase for the year         growth in earnings. The net group position though has
has arisen from the funding costs of the Brait South           been distorted by the banking structure losses. The credit
Africa group campus erected in Johannesburg in                 tax charge is abnormal and not sustainable. Future
March 2001.                                                    expected profitability from continuing operations will
                                                               cause the group’s long-term tax charge to edge closer
AMORTISATION OF INTANGIBLES                                    towards the South African corporate rate of 30%.
Goodwill arising from acquisitions by the group is             However, because many of the group’s operations are
amortised over the period of the economic benefit arising      conducted in regions with lower tax rates than South
from the acquisition. During the year the group wrote off      Africa, the overall tax rate is expected to settle below 30%.
its goodwill on Brait Securities. The remaining goodwill       The rate will also be affected by permanent differences
relates to the group’s interest on the acquisition of Rabin    arising from foreign currency translation gains and losses
van den Berg and Pelkowitz, and ipac. This is being            and the geographic allocation and employment of future
written off over 10 years.                                     capital released from the banking structure.




                                                              35
                                                  Brait Annual Report 2002
FINANCIAL REPORT CONTINUED




NET ASSET VALUE                                                         350

The net asset value of the group declined from                          300
R1 204 million (1 329 cents per share) to R1 182 million
                                                                        250
(1 312 cents per share) at the year-end. Before dividends
                                                                        200
paid of R75 million during this period, the net asset value




                                                                 Rm
increased by R53 million or 4,4%.                                       150

                                                                        100
GROUP CASH POSITION
                                                                         50
Brait’s net cash position has increased significantly
following the group’s strategic decision at the beginning                 0
                                                                              99       00         01        02
of the year to reduce its lending book. Cash and cash
equivalents were R314 million at 31 March 2002. The net
cash inflow was R207 million for the year after taking to
account an inflow of R550 million from a reduction in                     Cash and cash equivalents at end of year
advances and net deposit and dividend repayments of
R447 million and R75 million respectively.




                                                         36
                                             Brait Annual Report 2002
SOCIAL RESPONSIBILITY

Brait’s Corporate Social Responsibility programme is             The Foundation has recently adopted a school in Soweto
centred on the Brait Foundation, a charitable trust that is      to introduce the Entrepreneurs on the Move Project. The
resourced by contributions from Brait’s staff of their time      aim of this project is to introduce and encourage
together with contributions from its business units. The         entrepreneurship amongst students and school leavers.
primary object of the Brait Foundation is to promote,            The Foundation has continued its support of promising
nurture and develop intellectual capital in commercial           professionals, in the sponsorship of a disabled law student
activities as well as support and foster excellence in the       in her final year at the University of the Witwatersrand.
fields of sport and art. We believe that this is necessary as    Through the CA’s Eden Trust, the Foundation also
a long-term solution to South Africa’s development               supports a third-year BCompt student. In the areas of arts
challenges.                                                      and culture we have supported a talented dance student,
                                                                 and as patron of the Orchestra Company, we have given
As an organisation that recognises and promotes                  an opportunity to disadvantaged children with a desire
excellence, drive and entrepreneurial spirit, Brait seeks to     and the talent to pursue a musical career, by providing
foster individuals whose ability, commitment to learning         access to musical instruments, professional tuition and
and determination to overcome barriers can be an                 performance experience.
example to their peers and ourselves. While we look to
include people with these attributes in our own                  Our aim is to make a difference and to do more in the
organisation, we support others from a disadvantaged             years ahead in ways that are creative and personal,
background who exhibit similar ambition in the academic,         and provide more than money to the development of
business, sports or arts and culture arenas.                     our society.




Entrepreneurialship project at a school in Soweto




                                                                37
                                                    Brait Annual Report 2002
EMPLOYMENT REPORT

Whilst the past year has seen further focus and                 Brait will continue to maintain high standards of staff
development of teams of continued operations within the         development and selective recruitment. Individual
group, the application for the deregistration of the Brait      contributions based on commitment, skill, knowledge,
banking licence saw the closure of certain units within the     attitude and professionalism are regularly monitored and
banking structure. A process of extensive consultation          measured – these criteria form the foundation of the
with staff in discontinuing operations commenced in May         company’s expectations regarding performance and
2002, and a strategy has been agreed in terms of                facilitate the process of creative and lateral thinking
effectively winding down the banking operations over the        promoted by the Brait culture.
coming months.
                                                                Group training and development continues to support the
Whilst the culture of Brait has been tested by the loss of      development of staff potential and all staff are encouraged
these team members, the dignified and responsible               to take ownership of their personal and skills-based
manner in which affected staff considered and                   development. Accordingly training is facilitated according
approached their future alternatives positively, reflects the   to the individual needs of staff and include study loan
Brait culture and value system. This augurs well for the        schemes which are well supported by Brait staff.
ongoing climate within the group.
                                                                EMPLOYMENT EQUITY
CONTINUING OPERATIONS                                           The loss of a substantial number of staff members as a
The year ahead for continuing operations will see ongoing       result of closure of certain banking operations has
development of Brait’s philosophy. Business units will          impacted       Brait’s   employment     equity     strategy.
continue to comprise tightly knit teams differentiated by a     Notwithstanding this, Brait’s commitment to employment
partnering approach both with clients and in multi-             equity unequivocally remains and transformation over the
disciplinary teams co-operating across business units.          past year has been driven on several fronts including
                                                                social investment and equity initiatives. Policy on equity
Individualised remuneration and incentive packages form         and harassment was formalised and the employment
the cornerstone of employee retention strategies.               equity committee was fully constituted and commenced
Continual monitoring and alignment of employee                  functioning.
performance levels and individual contributions promote
ongoing teamwork and personal development whilst                Going forward, the equity strategy will continue to
forthright and open communication provides the                  build towards targeted representation of previously
cornerstone of business relationships.                          disadvantaged groups by the 2005 financial year in our
                                                                South African operations, with particular emphasis on
Whilst the Brait S.A. Share Incentive Scheme serves the         professional and executive levels.
committed participation of all Brait staff in the overall
performance of the group, the value of the scheme has           Brait will continue to give preference, wherever possible,
been undermined by the poor performance of the group’s          to black candidates in its recruitment and selection
share price. Fresh approaches to the alignment of               process. The hiring and development of young black
management and shareowners will be considered, and              candidates with potential continued, particularly with the
the motivation and mood of staff members will be closely        successful recruitment of three investment professionals
monitored.                                                      within our private equity operation.




                                                           38
                                               Brait Annual Report 2002
The sponsorship of young executives on secondment                      differentiation and leadership in continuing operations will
programmes continued and these individuals are                         serve our people, teams and clients well.
entrusted with imparting their newly acquired knowledge
of international markets and business standards as part of             A number of affected staff members have already sourced
ongoing staff development.                                             alterative employment and Brait remains actively
                                                                       committed to facilitating such opportunities for the
The closure of certain operations within the banking                   balance of affected staff. Guidance, training and support
structure has challenged the group on many levels                      necessary to equip staff with the skills and attitude
although strategic goals have been held consistent. Brait              necessary to re-enter the labour market will continue to
remains firm in its belief that the sense of focus,                    be provided.



      1 200
                                                                                                     7%     2%
                                                                                                                        25%
      1 000                                                                            20%


       800
 Rm




       600


       400
                                                                                                            46%

       200


         0                                                                                     20 – 30                50 – 60
               98      99          00   01      02                                             30 – 40                60+
                                                                                               40 – 50



                    Earnings per employee                                                    Age distribution of Brait’s staff


              37%                                                                       44%

                                               63%                                                                            56%




                            2002                                                                         2001


                                                 Professional staff         Support staff




                                             Braits’ professional and support staff




                                                                      39
                                                      Brait Annual Report 2002
SHARE ANALYSIS
Distribution of shareowners at 31 March 2002



                                                                    Shareowners                        Shares held
                                                        Number                    %        Number                     %

  Range of shareowning
  1 to 10 000                                               2 852            91,8      2   978   135             3,2
  10 001 to 50 000                                            136             4,4      3   241   234             3,5
  50 001 to 100 000                                            32             1,0      2   340   549             2,5
  more than 100 000                                            88             2,8     84   923   301            90,8

                                                            3 108           100,0     93 483 219               100,0

  The analysis of shareownings above includes the underlying beneficial shareowners in nominee companies:

  Shareowner spread
  To the best knowledge of the directors and after reasonable enquiry, as at 31 March 2002, the spread of
  shareowners was as follows:


                                                                    Shareowners                        Shares held
                                                        Number                    %        Number                     %

  Public                                                    3 101            99,8     79 243 759                84,8
  Directors                                                     4             0,1     10 409 635                11,1
  Other – treasury shares                                       3             0,1      3 829 825                 4,1

                                                            3 108           100,0     93 483 219               100,0

  Major shareowners
  The following major shareowners are directly or indirectly beneficially interested in 5% or more of Brait’s share
  capital:
                                                                                                  Shares held
                                                                                          Number                %

  Liberty Group                                                                       14 590 524                15,6
  Liberty Life                                                                         5 616 400                     6,0
  Liberty Unit Trusts                                                                  1 047 500                     1,1
  Liberty Asset Management on behalf of its clients                                    7 926 624                     8,5

  Investec Asset Management on behalf of its clients                                   9   618   600            10,3
  BoE Asset Management on behalf of its clients                                        5   093   593             5,5
  Ball Family Trust                                                                    4   993   623             5,3
  The Thierry Dalais Family Trust                                                      4   993   623             5,3

  Total                                                                               39 289 963                42,0




                                                       40
                                          Brait Annual Report 2002
SHARE ANALYSIS
Stock exchange performance for the years ended 31 March




                                                                                                                                                                                                            2002                                                              2001                                             2000                                                         1999

        Price performance
        Traded prices (cents per share)
        – year-end closing price                                                                                                                                                                              860                                                         1         145                                  2      200                                                        3   695
        – high                                                                                                                                                                                              1 590                                                         2         200                                  3      975                                                        5   900
        – low                                                                                                                                                                                                 845                                                         1         145                                  1      790                                                        1   640
        – weighted average price per share traded                                                                                                                                                           1 331                                                         1         605                                  2      628                                                        3   252
        Price-earnings ratio (on closing price)*                                                                                                                                                               4,3                                                                   5,7                                         8,7                                                           17,9

        Volume performance
        Number of shares in issue (000)                                                                                                                                                           93 483                                                                 93 483                                      93 483                                                         93 483
        Volume of shares traded (000)                                                                                                                                                             26 758                                                                 25 034                                      37 298                                                         39 057
        Number of transactions                                                                                                                                                                     3 333                                                                  5 268                                      10 068                                                         10 531
        Volume traded as % of average shares in issue                                                                                                                                                 29                                                                     27                                          40                                                             42
        Number of shareholders (at 31 March)                                                                                                                                                       3 108                                                                  2 184                                       2 696                                                          3 668

        Value performance
        Value of shares traded (Rm)                                                                                                                                                                              367                                                        394                                            980                                                             1 270
        Market capitalisation at 31 March (Rm)                                                                                                                                                                   804                                                      1 070                                          2 057                                                             3 454

        Yield
        Earnings yield (%)*                                                                                                                                                                                   23,3                                                                  17,6                                       11,5                                                                  5,6
        Dividend yield (%)                                                                                                                                                                                     7,0                                                                   5,2                                        3,4                                                                  1,6

        Liquidity rating of securities
        Brait’s shares have a class one maximum liquidity rating on the JSE Securities Exchange South Africa.

*2002 earnings before realisation adjustment

        2 500                                                                                                                                      6,0                                                                                                                                     100
                                                                                                                                                                                                                                                                                            90
                                                                                                                                                   5,0
        2 000                                                                                                                                                                                                                                                                               80
                                                                                                                                                                                                                                                                                            70
                                                                                                                                                   4,0
        1 500                                                                                                                                                                                                                                                                               60
                                                                                                                                        Millions
Cents




                                                                                                                                                                                                                                                                                     Rm




                                                                                                                                                   3,0                                                                                                                                      50
        1 000                                                                                                                                                                                                                                                                               40
                                                                                                                                                   2,0
                                                                                                                                                                                                                                                                                            30
         500                                                                                                                                                                                                                                                                                20
                                                                                                                                                   1,0
                                                                                                                                                                                                                                                                                            10
           0                                                                                                                                        0                                                                                                                                        0
                Apr ‘01




                                                                                                                                                         Apr ‘01




                                                                                                                                                                                                                                                                                                 Apr ‘01
                          May ‘01
                                    Jun ‘01
                                              Jul ‘01
                                                        Aug ‘01
                                                                  Sep ‘01
                                                                            Oct ‘01
                                                                                      Nov ‘01
                                                                                                Dec ‘01




                                                                                                                                                                    May ‘01
                                                                                                                                                                              Jun ‘01
                                                                                                                                                                                        Jul ‘01
                                                                                                                                                                                                  Aug ‘01
                                                                                                                                                                                                             Sep ‘01
                                                                                                                                                                                                                       Oct ‘01
                                                                                                                                                                                                                                 Nov ‘01
                                                                                                                                                                                                                                           Dec ‘01




                                                                                                                                                                                                                                                                                                           May ‘01
                                                                                                                                                                                                                                                                                                                     Jun ‘01
                                                                                                                                                                                                                                                                                                                               Jul ‘01
                                                                                                                                                                                                                                                                                                                                         Aug ‘01
                                                                                                                                                                                                                                                                                                                                                   Sep ‘01
                                                                                                                                                                                                                                                                                                                                                             Oct ‘01
                                                                                                                                                                                                                                                                                                                                                                       Nov ‘01
                                                                                                                                                                                                                                                                                                                                                                                 Dec ‘01
                                                                                                          Jan ‘02
                                                                                                                    Feb ‘02
                                                                                                                              Mar ‘02




                                                                                                                                                                                                                                                     Jan ‘02
                                                                                                                                                                                                                                                               Feb ‘02
                                                                                                                                                                                                                                                                          Mar ‘02




                                                                                                                                                                                                                                                                                                                                                                                           Jan ‘02
                                                                                                                                                                                                                                                                                                                                                                                                     Feb ‘02
                                                                                                                                                                                                                                                                                                                                                                                                               Mar ‘02




                                                Average price                                                                                                                  Volume traded                                                                                                                                   Value traded


The information disclosed above includes all trades on the Luxembourg, London and Johannesburg stock exchanges.




                                                                                                                                                                                                            41
                                                                                                                                                                   Brait Annual Report 2002
GROUP VALUE ADDED STATEMENT


                                                                                                   2002            2001
                                                                                                     Rm                 Rm

VALUE ADDED
Fees, investment returns, interest and other revenues                                             561,6           632,2
Cost of services and interest paid to depositors                                                  (346,8)         (314,5)

Wealth created                                                                                    214,8           317,7

DISTRIBUTION OF WEALTH
Employees                                                                                         118,0           117,0
Salaries, wages and other benefits
Governments – national and regional                                                                  9,3               14,7
Taxation and duties
Shareowners                                                                                        75,2                54,1
Dividends proposed/paid
Retentions for reinvestment                                                                        12,3           131,9
Retained earnings and depreciation

                                                                                                  214,8           317,7




                  6%
                                                                           41%
   35%
                                         55%                                                                     37%




                                                                                                            5%
            4%                                                                              17%

                      2002                                                                2001


                       Employees      Governments       Shareowners        Retentions for reinvestment




                                          Distribution of wealth created




                                                     42
                                          Brait Annual Report 2002
   TIME LINE



• Establishment of       • Discontinuation        • Reconfiguration       • Announcement
  specialised funds        of the asset-based
                           finance business
                                                    of a specialised
                                                    finance activity
                                                                            of intention to
                                                                            deregister banking
                                                                                                      2002
                                                                            licence




                                                           2000 – 2001
• Acquisition of the     • Consolidation of       • Development of a
  corporate advisory       South African            mezzanine finance
  business of Rabin        businesses into one      capability
  van den Berg &           integrated
  Pelkowitz                operation




                                             1999
• Disposal of non-       • Establishment                 • Establishment of      • Amalgamation        • Establishment
  core interests in        of Australian                   South African           of Brait Unit         of Brait
  Decillion and Brait      operation                       Private Equity Fund     Trusts with ipac      Technology and
  Asset Managers                                           III – $409 million      South Africa          Innovation Fund I
                                                           of commitments                                – R305 million of
                                                                                                         commitments



              1998
                        Establishment of Brait on the Luxembourg, London
                        and Johannesburg stock exchanges

                        • Establishment          • Disposal of non-core investments
                          of full advisory         in Brait Properties and Fincorp
                          and investing            businesses
                          operations in
                          Mauritius



                                                                 43
                                                      Brait Annual Report 2002
BOARD OF DIRECTORS

Back row left to right

Rick Haller, Allan Rosenzweig, Chris Tayelor, Richard Koch, Serge Weber and
Jean Bodoni
Front row left to right

Peter Wilmot, Mervyn King, Antony Ball and Thierry Dalais




                                         44
                               Brait Annual Report 2002
BOARD PROFILE


Mervyn Eldred King (64)*                                         Jean Ernest Bodoni (54)+
BA, LLB (cum laude) H Dip Tax (Wits)                             Commercial engineer
Non-executive chairman – Appointed to the board 1998             Non-executive director – Appointed to the board 1998
Mervyn King is a senior counsel and former Judge of the          Jean Bodoni has in excess of 30 years experience in
Supreme Court of South Africa. He is the Chairman of the         the Luxembourg banking sector and currently holds
King Committee on Corporate Governance, president                the position of senior vice-president with Dexia Banque
of the Commonwealth Association for Corporate                    Internationale à Luxembourg. Jean is a director of a
Governance, president of the Advertising Standards               number of Luxembourg resident companies.
Authority of South Africa and the South African
representative of the ICC International Commercial               Frederic Zachary Haller (56)#
Arbitration Court. He is presently chairman of the               BA (Econ)
Automobile Association of South Africa, Dunlop Africa            Non-executive director – Appointed to the board 2000
Limited and Strate Limited. He is a director of the              Rick Haller started his career with Chase Manhattan in
JD Group Limited and Fedsure Limited.                            New York. He transferred to Libra Bank in London in
                                                                 1973 where he was a director until he moved his team
Raymond Thierry Dalais (43)*                                     to Morgan Grenfell in 1990. He served on the group
BCom, BAcc, CA(SA)                                               executive committee at Deutsche Bank after its
Executive deputy chairman – Appointed to the board 1998          acquisition of Morgan Grenfell. Rick is currently advisor to
Thierry Dalais was a co-founder of Brait’s private equity        the board of Hamilton Bank in Miami, Florida, a trade
business. He has led the formulation of the group’s              finance bank and also serves as a director of TVK, a
private equity investment policy, with overall responsibility    Hungarian chemical company listed on the London
for transaction structuring and financial engineering.           Stock Exchange.


Antony Charles Ball (43)*                                        Richard John Koch (51)*
BCom (Hons), MPhil (Oxon), CA(SA)                                MA (Oxon), MBA (Wharton)
Group chief executive – Appointed to the board 1998              Non-executive director – Appointed to the board 1998
Antony Ball was a co-founder of Brait’s private equity           Richard Koch was a founder of the LEK Partnership, a
business. He has led the raising and governance of the           partner of Bain & Co and a consultant with the Boston
group’s principal private equity. He is responsible for          Consulting Group, during which period he advised the
numerous of the group’s private equity investments. He           chief executive officers and chairmen of many blue-chip
was appointed group chief executive of Brait in March            American and European corporations. Richard is an
2000 and has been responsible for leading the                    author, consultant, investor and promoter in private equity
reorganisation of the Brait group in the past year.              investment.




                                                                45
                                                    Brait Annual Report 2002
BOARD PROFILE CONTINUED




Allan Mark Rosenzweig (47)*                                    Peter Linford Wilmot (62)*
BA, LLB, H Dip Tax                                             CA(SA)
Non-executive director – Appointed to the board 1998           Non-executive director – Appointed to the board 1999
Allan Rosenzweig was an international tax advisor and          Peter Wilmot was the chairman of Deloitte & Touche from
corporate    financier    with   PricewaterhouseCoopers        1996 until his retirement in August 1999 after a career
including its New York office and Intertax, a South African    spanning 41 years in the auditing profession. Peter has
international tax consultancy. Allan is a director of both     chaired the Accounting Practices Committee and
listed and unlisted companies. In 1996, he joined the          was president of the Transvaal Society of Chartered
MIH group as executive director of Corporate Finance of        Accountants and the South African Institute of Chartered
Nethold B.V. Allan is currently based in the Netherlands,      Accountants (SAICA). Currently he is deputy chairman of
where he acts as the MIH group director of corporate           the Standards Advisory Council of the International
finance.                                                       Accounting Standards board and chairman of the
                                                               Accounting Practices Board.
Christopher John Tayelor (45)*
BAcc, CA(SA), AMP (Harvard)                                    Nationality
Finance director – Appointed to the board 1998                 *   South African
Chris Tayelor was part of the southern African national        +
                                                                   Luxembourgish
technical team at PricewaterhouseCoopers before he             ** British
joined Johannesburg Consolidated Investment Company            #
                                                                   USA
Limited (“Johnnies”) in Corporate Finance, which he
headed from 1990 to 1994. Following the unbundling of
Johnnies, Chris was appointed Financial Director of
JCI Limited and to the boards of its listed operations. He
left this position prior to joining Brait in May 1998.


Serge Joseph Pierre Weber (38)+
Business Diploma (ESSEC Business School, Paris)
Executive director – Appointed to the board 2001
Serge Weber is a director of Considar Europe SA, part of
the Luxembourg-based ARBED Steel group. He is the
corporate treasurer and has worked in this capacity
for many years with Renault V.I. in France and
SA Des Minerais, a leading metals and ferro-alloy trading
and marketing group based in Luxembourg. He was
finance director of SA Des Minerais until 1999.




                                                         46
                                               Brait Annual Report 2002
GROUP STATISTICS –
FINANCIAL DEFINITIONS


ATTRIBUTABLE EARNINGS                                          from the issue of shares from dilutive instruments. The
Earnings attributable to shareowners’ funds.                   resultant earnings are divided by the weighted average
                                                               number of shares in issue including all dilutive
AVERAGE SHAREOWNERS’ FUNDS                                     instruments assuming they had been in issue from the
Average of the shareowners’ funds at the beginning and         beginning of the year, excluding the number of treasury
end of the financial year.                                     shares, expressed in cents.

CAPITAL ADEQUACY RATIO                                         EARNINGS YIELD
Total capital of Brait Merchant Bank expressed as a            Basic earnings per share expressed as a percentage of the
percentage of its risk-weighted assets.                        closing price per share.

CLOSING PRICE                                                  NET ASSET VALUE PER SHARE
The closing market price of a Brait share on the               Shareowners' funds divided by the number of shares in
JSE Securities Exchange South Africa at the group’s            issue excluding the number of treasury shares, expressed
financial year-end.                                            in cents.

DIVIDEND COVER                                                 PRICE-EARNINGS RATIO
Earnings per share divided by the proposed dividend per        The closing price per share divided by the earnings per
share.                                                         share.

DIVIDEND PER SHARE                                             RETURN ON SHAREOWNERS’ FUNDS
The dividend proposed by the directors of Brait S.A., to be    Attributable earnings expressed as a percentage of
approved by shareholders at the annual general meeting         average shareowners’ funds.
on 31 July 2002, divided by the number of shares in issue
at the group’s financial year-end, excluding the number of     RETURN ON TOTAL ASSETS
treasury shares, expressed in cents.                           Attributable earnings expressed as a percentage of
                                                               average total assets.
DIVIDEND YIELD
Dividend per share expressed as a percentage of the            SHAREOWNERS’ FUNDS
closing share price per share.                                 Share capital, share premium and all reserves. Share
                                                               capital and premium has been reduced by shares held
EARNINGS PER EMPLOYEE                                          in treasury.
Attributable earnings divided by the average number of
employees in service during the year.                          TREASURY SHARES
                                                               Brait S.A. shares held by the company and/or its
EARNINGS PER SHARE                                             subsidiaries.
Basic
Attributable earnings divided by the weighted average          WEIGHTED AVERAGE SHARES IN ISSUE
number of shares in issue, excluding the number of             The pro forma number of shares in issue at the beginning
treasury shares, expressed in cents.                           of the year, plus shares issued during the year, less
                                                               treasury shares acquired during the year, weighted on a
Diluted                                                        time basis for the period during which they have
Attributable earnings adjusted by the after tax effect of      participated in the income of the group.
any changes in income and expenses that would result




                                                              47
                                                  Brait Annual Report 2002
GROUP STATISTICS –
FIVE-YEAR REVIEW



                                                           Dis-
                                          Continuing continuing
                                          operations operations      Total
                                               2002       2002      2002       2001      2000      1999      1998

 Income statement
 Net operating income
 before taxation (Rm)                         186,2     (109,4)     76,8      186,4     244,4     216,9     135,9
 Attributable earnings (Rm)                   189,8     (109,4)     80,4      182,5     232,0     192,7     107,3
 Earnings per share (cents)
 – basic                                      210,5                 89,2      201,4     252,7     206,8     124,5
 – diluted                                    210,4                 89,1      200,0     250,0     206,8     124,5
 – pre-realisation adjustment (diluted)                            200,0      200,0     250,0     206,8     124,5
 Earnings yield (%)                            24,5                 10,4       17,6      11,5        5,6
 Price earnings ratio                           4,1                   9,6        5,7       8,7     17,9
 Dividends per share (cents)
 (declared/proposed)                           60,0                 60,0       60,0      75,0        60
 Dividend cover (times)                         3,5                   1,5        3,4       3,4       3,4
 Dividend yield (%)                             7,0                   7,0        5,2       3,4       1,6
 Six-year compound growth*
 – attributable earnings (%)                   39,5                            48,0      73,3      95,7
 – earnings per share (%)                      38,5                            46,5      70,6      90,7

 Balance sheet
 Shareowners’ funds (Rm)                    1 182,2               1 182,2    1 204,5   1 102,5    912,9     538,6
 Average shareowners’ funds (Rm)            1 193,4               1 193,4    1 153,5   1 007,7    853,3     485,0
 Return on shareowners’ funds (%)              15,9                   6,7      15,8      23,0      22,6      22,1
 Total assets (Rm)                          2 719,7               2 719,7    3 322,9   2 889,5   3 083,4   2 059,7
 Return on total assets (%)                     6,3                   2,7        5,9       7,8       7,5
 Net asset value per share (cents)
 – including intangible assets              1 312,1               1 312,1    1 335,4   1 201,0    994,4     624,8
 – excluding intangible assets              1 276,0               1 276,0    1 285,4   1 184,2    987,0     603,9
 Assets under management (Rm)                                      8 696      7 131     6 520     5 540

 – Private equity commitments                                      5 400      4 900     4 600     4 200
                      †
 – African Alliance                                                1 881      1 500     1 300     1 000
 – ipac†                                                           1 415        731       620       340




                                                         48
                                             Brait Annual Report 2002
                                                              Dis-
                                             Continuing continuing
                                             operations operations       Total
                                                  2002       2002        2002        2001        2000        1999      1998

     Share information
     Shares in issue (m)                          93,5       93,5        93,5        93,5        93,5        93,5
     Shares in issue – excluding treasury
     shares (m)                                   90,1       90,1        90,1        90,2        91,8        91,8
     Weighted average shares in issue (m)         90,2       90,2        90,2        90,6        91,8        93,2       86,2

     Personnel
     Number of employees at year-end                                      229         234         231         201       286
     Earnings per employee (R’000)‡                                       788         785       1 074         959       375

     Brait Merchant Bank Limited
     CAPITAL ADEQUACY
     Risk-weighted assets (Rm)                                         2 327,5    2 640,1     1 617,9     1 493,7      888,6
     Total capital (Rm)                                                 513,7       676,3       608,3       480,9      170,7

     – bank (Rm)                                                        452,9       576,3       508,3       380,9      170,7
     – trading (Rm)                                                      60,8       100,0       100,0       100,0

     Capital adequacy ratio (%)                                          22,0        23,6        31,4        25,5       19,2

* Based on actual and pro forma results (2001, 2000 and 1999 five, four and three-year compound growth respectively)
† Brait’s share of assets under management
‡
    Pre-realisation adjustment for 2002




                                                                  49
                                                      Brait Annual Report 2002
GROUP BAL ANCE SHEETS
FIVE-YEAR REVIEW



                                   2002           2001        2000      1999      1998
                                     Rm             Rm          Rm        Rm        Rm

 ASSETS
 Non-current assets              1 193,5        1 321,9     1 182,5   1 586,0    758,9
 Intangibles                       32,5           39,9         15,4       6,8     18,0
 Property and equipment            69,9           74,1         44,1      22,4     12,8
 Investments                      818,9          958,7      1 014,5   1 325,2    728,1
 Loans and advances               264,3          241,9        105,4     230,1
 Deferred tax asset                 7,9            7,3          3,1       1,5
 Current assets                  1 526,2        2 001,0     1 707,0   1 497,4   1 300,8
 Cash and cash equivalents        314,8           110,7        91,2    176,8      75,8
 Trading securities               451,7           479,2       350,0    427,4     329,5
 Loans and advances               518,3         1 167,4     1 133,6    805,9     739,6
 Accounts receivable              241,4           243,7       132,2     87,3     155,9

 TOTAL ASSETS                    2 719,7        3 322,9     2 889,5   3 083,4   2 059,7
 EQUITY AND LIABILITIES
 Equity
 Share capital and premium        802,1          803,0       832,7     832,7     379,3
 Non-distributable reserves        13,7            3,9        37,0      35,8      37,1
 Foreign currency translation
 reserves                          24,0           42,0        23,9      11,2       2,3
 Distributable reserves           342,4          355,6       208,9      33,2     120,0
                                 1 182,2        1 204,5     1 102,5    912,9     538,7
 Outside shareowners’ interest                                           0,8      (0,1)
 Total equity                    1 182,2        1 204,5     1 102,5    913,7     538,6
 LIABILITIES
 Non-current liabilities          167,6          200,2        53,4      92,7      78,2
 Deferred tax liabilities          11,5           22,5        14,5      38,9      37,7
 Long-term deposits                29,8           14,5        25,2      53,4      25,8
 Other liabilities                126,3          163,2        13,7       0,4      14,7
 Current liabilities             1 369,9        1 918,2     1 733,6   2 077,0   1 442,9
 Current deposits                1 068,9        1 531,7     1 407,4   1 956,6   1 264,6
 Accounts payable                  158,6          168,2        48,2      57,9     138,6
 Accruals                           45,0           48,3        71,0      35,8      28,6
 Other liabilities                  95,0          162,0       146,8       0,2       0,2
 Bank overdraft                      0,6            3,6         4,1       3,5      10,4
 Taxation                            1,8            4,4        56,1      23,0       0,5

 Total liabilities               1 537,5        2 118,4     1 787,0   2 169,7   1 521,1
 TOTAL EQUITY AND LIABILITIES    2 719,7        3 322,9     2 889,5   3 083,4   2 059,7




                                           50
                                 Brait Annual Report 2002
GROUP INCOME STATEMENTS
FIVE-YEAR REVIEW



                                          Dis-
                         Continuing continuing
                         operations operations     Total
                              2002       2002     2002       2001     2000     1999     1998
                                Rm        Rm        Rm         Rm       Rm       Rm       Rm

 Revenue                     379,7        6,5     386,2      372,8    473,0    312,6    272,0

 Net operating income
 before taxation             186,2     (109,4)     76,8      186,4    244,4    216,9    135,9

 Funds management             61,3                 61,3       41,4     36,6     40,8     55,1
 Advisory                     23,3                 23,3       30,2     23,4     33,7      1,7
 Investing                    49,9                 49,9        1,4     55,2     40,1    (10,4)
 Group capital                51,7                 51,7       81,7     79,2    130,3     89,5
 Margin                                 (44,4)    (44,4)      40,9      3,0     12,2      n/a
 Trading                                (65,0)    (65,0)      (9,2)    47,0    (40,2)     n/a


 Taxation                       3,5                 3,5       (3,9)   (12,4)   (23,9)   (28,6)

 Net operating income
 after taxation              189,7     (109,4)     80,3      182,5    232,0    193,0    107,3
 Minority interest              0,1                 0,1                         (0,3)

 Attributable earnings       189,8     (109,4)     80,4      182,5    232,0    192,7    107,3




                                             51
                                  Brait Annual Report 2002
FINANCIAL STATEMENTS




CONTENTS
Corporate governance 53                         Group statement of changes in equity 83
Risk management review 58                       Group segmental reports 84
Directors’ responsibility 72                    Supplementary US dollar financials 88
Report of the independent auditors 73           Accounting policies 90
Directors’ report 74                            Notes to the group financial statements 94
Introduction to the financial statements 79     Notes to the company financial statements 115
Group income statements 80                      Principal subsidiaries, associated companies and joint ventures 117
Group balance sheets 81                         Notice of annual general meeting 118
Group cash flow statements 82                   Proxy form Attached




                                                        52
                                              Brait Annual Report 2002
CORPORATE GOVERNANCE

GOVERNANCE PRINCIPLES
General
Brait is committed to an open governance process, which provides its shareowners and other stakeholders with
the assurance that, in adding value to and protecting the group’s financial and human investment, the group is being
managed ethically in accordance with predetermined risk parameters and in compliance with best international practices.
The directors of Brait subscribe fully to the principles embodied in appropriate international corporate governance codes,
and they believe that these principles have been adhered to and complied with in the discharge of their duties.

Policies, objectives and performance measurement
The philosophy, policies, values and objectives of the group, as set out in the annual review report, are determined by
the board of directors of Brait who in turn receive input and guidance from the group management committee. The
board sets the strategic objectives of the group and determines investment and performance criteria. Management is
charged with the detailed planning and implementation of that policy in accordance with appropriate risk parameters.
The achievement of objectives and compliance with policies by management is monitored by the board through
mandated reports to the board by management which is accountable for its actions.

Risk management
Risk management is central to Brait’s business. The group has developed comprehensive systems and risk management
processes to control and monitor all activities in the group. A critical element of Brait’s strategy has been the development
of skilled professionals who have an established culture of risk management. While direct responsibility for managing risk
in the group is held by the directors of its subsidiary operations and is closely monitored at the centre, ultimate
accountability lies with the board.

Ethics
Brait is committed to good ethics, which embrace the principles of transparency, honesty and frankness in all dealings.
Employees of the group are bound by the group’s code of conduct governing trade in the company’s shares.

Employee empowerment
The group places great emphasis on the development and training of its people and endeavours to ensure that it offers
staff equal opportunity and appropriate participation in decision-making processes. Through its share incentive scheme,
employees have ownership in the company and are incentivised in their performance.

The environment, health and safety
While the group’s direct activities do not pose any threat to the environments in which they operate, Brait seeks to ensure
that it invests in businesses which conform to environmental standards. Similarly, it makes investments where the health
and safety of employees and the well-being of the communities in which these companies operate is recognised as an
important component of corporate governance.

Reporting
Brait is committed to transparent reporting and disclosure. Information provided to all stakeholders, including financial
results and the annual report, are presented in a meaningful and relevant manner so as to enable users to gain a proper
and objective perspective of the group. Brait’s website is maintained as a relevant means of communicating Brait’s




                                                               53
                                                   Brait Annual Report 2002
CORPORATE GOVERNANCE CONTINUED



message to all its stakeholders. Brait in 2001 received the Investment Analysts Society award for the second consecutive
year in the financial services category for its investor communications.

GOVERNANCE STRUCTURES
Directorate
The board of directors of the company is chaired by a non-executive director of the company who is supported by five
non-executive directors and four executive directors. The board meets regularly and is responsible for the proper
management, control, compliance and ethical behaviour of the business under its direction. Having due regard for the
recommendations by its management and executive committees, the board determines and monitors matters relating to
the implementation and/or modification of policies and strategic plans, group investments and dispositions, major capital
expenditure and operating and financial budgets.

Serving members of the Brait S.A. board are: M E King (Chairman)†, A C Ball‡, J E Bodoni†, R T Dalais‡, F Z Haller†,
R J Koch†, A M Rosenzweig†, C J Tayelor‡, S J P Weber‡, P L Wilmot†.

Internal control
Responsibility for the group’s systems of internal financial and operational control is recognised and acknowledged
by the board as being its responsibility. The foundations for the group’s internal control process are its governance
principles which incorporate ethical behaviour and compliance with legislation and sound accounting practice.

The control systems include clearly defined lines of accountability and delegation of authority, and provide for full
reporting and analysis against approved budgets. The executive directors are responsible for determining the adequacy,
extent and operation of these systems. In this regard, the executive directors are of the opinion that the systems in
operation provide reasonable assurance that the assets are protected against material loss or unauthorised use and that
transactions are properly authorised and documented.

Comprehensive reviews and testing by the internal auditors ensure the effectiveness of the internal control systems in
operation. The results of these and external audit reviews are submitted to the group audit committee for consideration
and, if applicable, confirmation of the adequacy of the systems of internal control in operation. It is the responsibility of
this committee to inform the directors of any material losses which may have arisen as a result of a breakdown of the
systems in operation and to report on remedial action taken.

Audit committee
The Brait group audit committee has a minimum of three members. At least two members are non-executive directors
and the committee is chaired by a non-executive director.

The committee’s primary objective is to provide the board with additional assurance regarding the quality and reliability
of the financial information used by the directors and to assist them in the discharge of their duties. The committee must
provide satisfaction to the board that adequate and appropriate financial and operating controls are in place; that
significant business; financial and other risks have been identified and are being managed; and that appropriate
standards of governance, reporting and compliance are in operation.




                                                          54
                                              Brait Annual Report 2002
Issues relating to accounting, auditing, internal control and financial reporting matters are discussed with the group’s
external auditors at meetings convened on a periodic basis. Both the internal and the external auditors are afforded
unrestricted access to the group audit committee.

The group’s internal audit functions are performed by external practitioners who in turn function under and report to the
audit committee. Major responsibilities allocated to the internal auditors include the examination and evaluation of the
effectiveness of operational activities together with the attendant business risks and the systems of operational and
financial control. Material deficiencies, development needs and instances of non-compliance are reported to the audit
committee, the external auditors and operational management for resolution.

Serving members of the group audit committee are: P L Wilmot (Chairman)†, R T Dalais‡, M E King†.

Remuneration committee
The Brait group remuneration committee has three members of which two are non-executive. It meets at least once a
year and is charged with the assessment of a remuneration strategy for the group. This strategy includes the
determination of incentive pay structures for directors and senior executives in both the short and long term and the
positioning of these levels in accordance with trends in local and international markets.

The committee’s main objective is to provide the board with an assurance that the employees, directors and senior
executives of the group are fairly rewarded for their individual contributions to the group’s performance. The group views
the inclusion of share incentives in the remuneration package as an essential element as it promotes a congruence of
interests with shareowners and incentivises a long-term commitment. Existing or proposed share incentives are reviewed
by the committee which, in addition, is tasked with reviewing fringe benefits.

Serving members of the group remuneration committee are: M E King (Chairman)†, A C Ball‡, R J Koch†.

Group management committee
The Brait group management committee is chaired by the group chief executive and includes the key decision-makers
in the group. The committee meets regularly and on an ad hoc basis for urgent matters of business.

The Brait group management committee is responsible for developing the group’s strategy, its business plan and corporate
policies for board approval, and to monitor the implementation of these in accordance with the board’s directive. In
addition, the board has delegated to this committee the authority to review and approve certain new business investment
decisions and operating expenditure within the limits prescribed by the board and to deal with specific tasks delegated
to it.

Serving members of the group management committee are: A C Ball (Chairman), F Z Haller, R J Koch, R T Dalais,
S J P Weber.

South African executive committee
A South African executive committee has been incorporated as a sub-committee of the group management committee
to carry out specific tasks delegated to it in respect of the South African operations of the group.
†
Non-executive, ‡Executive




                                                              55
                                                  Brait Annual Report 2002
CORPORATE GOVERNANCE CONTINUED



Serving members of the South African executive committee are: A C Ball (Chairman), P C Botha, P M Carr, R T Dalais,
N O Davies, J A Gnodde, N A Griffith, G Mariouklas, D H Rabin, C J Tayelor.

Risk management and compliance
Risk and compliance is managed at an executive level throughout the group. In the banking structure special purpose
committees have been incorporated to manage and review the following critical areas:

Credit committee
The credit committee, which meets weekly or as required, has the primary responsibility for setting credit policy in the
banking operations. This includes:
• Restrictions on the concentration of advances to particular industry sectors, interbank loan, or by nature of transactions;
• Limits on management’s sanctioning authority;
• Adequacy of security;
• Documentation and procedures; and
• Credit monitoring and maintenance.

This committee, which comprises senior management from within the banking operations and management from the
group, assesses all material loans. Particularly significant advances are referred to the board for approval.

Serving members of the credit committee are: N A Griffith (Chairman), A C Ball , D M Swart, C J Tayelor.

Assets and liabilities committee
The primary function of the assets and liabilities committee is to manage the term structure of the banking operation’s
balance sheet. This takes into account the funding requirement of lending and trading activities, the depositors’ profile
and spread, the bank’s view on future trends in interest rates and expected changes in money market conditions.

This committee is also responsible for approving all investments and commitments which are not specifically reserved for
the board or credit committee of the banking structure.

Serving members of the assets and liabilities committee are: N A Griffith (Chairman), A Louw, C E Newland, T C Polkinghorne.

Risk management committee
The role and function of this committee is to identify risks, formulate controls and solutions to mitigate risks, approve risk
related policies and procedures and to manage the implementation of the risk policies and practices.

Serving members of the risk management committee are: N A Griffith (Chairman), S Arnold, A C Ball, A Louw, D M Swart.

Compliance committee
The purpose of the compliance committee is to manage the regulatory risks of the banking structure. These risks include
compliance with regulators, legislation, best banking practices and the group’s code of conduct. This committee includes
senior management of the banking structure, credit and legal risk experts and a human resources representative

Serving members of the compliance committee are: N A Griffith (Chairman), K Harris, I Danielz, A Louw, D M Swart.




                                                          56
                                              Brait Annual Report 2002
DIRECTORS’ EMOLUMENTS FOR BRAIT S.A. AND ITS SUBSIDIARIES


                                      Fees and                                                    Other
                                      expenses                 Cash     Performance             benefits       Other            2002
  for the year ended                as directors              salary         bonuses            (note 1)     (note 2)           Total
  31 March 2002                             Rm                  Rm               Rm                 Rm           Rm              Rm

  A C Ball                                  0,1                 1,9                1,5              0,1                           3,6
  J Bodoni
  F Z Haller                                0,1                                                                   0,2             0,3
  R T Dalais                                0,1                 1,7                1,0                                            2,8
  R J Koch                                  0,1                                                                   0,8             0,9
  M E King                                  0,4                                                                   0,5             0,9
  A M Rosenzweig                            0,1                                                                   0,2             0,3
  S J P Weber                                                                                                     0,2             0,2
  C J Tayelor                                                   1,0                1,3              0,2                           2,5
  P L Wilmot                                0,3                                                                                   0,3

                                            1,2                 4,6                3,8              0,3           1,9            11,8

                                      Fees and                                                    Other
                                      expenses                 Cash     Performance             benefits       Other            2001
  for the year ended                as directors              salary         bonuses            (note 1)     (note 2)           Total
  31 March 2001                             Rm                  Rm               Rm                 Rm           Rm              Rm

  A C Ball                                  0,1                 1,2                1,9              0,1                           3,3
  J Bodoni
  F Z Haller                                                                                                      0,2             0,2
  R T Dalais                                0,1                 1,2                1,6                                            2,9
  R J Koch                                  0,1                                                                   0,7             0,8
  M E King                                  0,3                                                                   0,5             0,8
  A M Rosenzweig                                                                                                  0,2             0,2
  C J Tayelor                                                   0,9                0,8              0,2                           1,9
  P L Wilmot                                0,3                                                                                   0,3

                                            0,9                 3,3                4,3              0,3           1,6            10,4

Note 1   Other benefits represent provident fund contributions, travel allowances, medical aid and group life cover.
Note 2   Other services includes time spent by directors in the management and/or day-to-day activities of the company and/or its
         subsidiaries, and/or consulting and advisory services.

                                                                                         2002                           2001
                                                           Expiry              Shares                         Shares
  Share options/entitlements                                date              granted       Issue price      granted       Issue price

  A C Ball                                         November 2008             523 914             13,30      523 914            13,30
  J Bodoni
  F Z Haller                                       November   2008            38   000           13,30       38   000          13,30
  R T Dalais                                       November   2008           523   914           13,30      523   914          13,30
  R J Koch                                         November   2008            34   000           13,30       34   000          13,30
  M E King                                         November   2008            60   000           13,30       60   000          13,30
  A M Rosenzweig                                   November   2008            34   000           13,30       34   000          13,30
  S J P Weber                                          June   2009            25   000           14,55
  C J Tayelor                                      November   2008           325   000           13,30      325 000            13,30
  P L Wilmot                                       November   2008            34   000           13,30       34 000            13,30

                                                                            1 597 828                      1 572 828




                                                                       57
                                                       Brait Annual Report 2002
RISK MANAGEMENT REVIEW

Throughout this difficult period for Margin and Trading business in Brait, the group continued to place importance and
priority on its approach to risk management and retained its strong culture of risk management. It recognises that risk
impacts on profitability and is an integral component of most transactions. A comprehensive and independent process
of risk management is in place to effectively identify, evaluate and assess all types of risks and to optimise the risk-reward
trade-off. As part of this process, clearly defined policies have been set and international best practice standards have
been implemented. While the primary risk management functions of the group affect businesses utilising the banking
structure of the group, such processes shall remain in place for so long as such assets and liabilities are held,
notwithstanding the decision to apply for the deregistration of the group’s banking licence.


RISK MANAGEMENT RESPONSIBILITY AND STRUCTURES
Although the ultimate responsibility for the formulation of risk management policies and the systems of control and review
lie with the board of directors at both subsidiary and group level, individual committees and an independent risk
management function focus on specific risk categories. Effective risk management is also achieved through the
decentralisation of responsibilities to managers of risk-taking units, with reporting lines to the risk manager and risk
committees. The risk control structures and reporting lines are summarised in the following diagram:




                               Board of directors


                                      Managing                                                  Risk management
                                      director                                                  committee


                                                                                                        ALCO


    Risk                             Risk-taking                                                    Investment
    management                       units                                                          committee

                                                                                                     Credit
                                                                                                     committee

                                                                                                    Compliance
                                                                                                    committee
                                   Direct reporting lines
                                   Indirect reporting lines                                        Management
                                                                                                   committee




                                                          58
                                              Brait Annual Report 2002
Different types of risk are clearly defined and such definitions provide the basis for measuring risk and implementing risk
management processes.


The major risks to which the group are exposed are market risk; credit risk; interest rate and liquidity risk; solvency risk;
operational risk; legal and compliance risk and strategic risk. These risk factors are considered below.


Market risk
Market risk is the potential change in the value of a financial instrument resulting from changes in market conditions.
On a portfolio basis, this is the risk of a decrease in the value of the portfolio as a result of an adverse move in market
parameters such as equity prices, interest rates, volatilities, convexity, time decay and correlations amongst these
variables.


Primary control of risk is established through a comprehensive limit structure that promotes the alignment of the group’s
risk appetite with trading and investment risk-taking activities. Trading limits are approved by the bank’s board and
reviewed during the financial year depending on market conditions. Dealers are expected to remain within all limits.


The VAR methodology is used to measure the maximum potential loss at different portfolio levels over one day and at
a conservative 99% confidence interval. This implies that there is only a 1% chance (or approximately two trading
days annually) of the actual loss exceeding the VAR estimate. The graph below represents Brait’s VAR for the 2002
financial year.


       0

      -1

      -2

      -3
Rm




      -4

      -5

      -6

      -7

      -8
                                                         April 2001 to March 2002




                                                 Brait daily trading VAR




                                                                59
                                                   Brait Annual Report 2002
RISK MANAGEMENT REVIEW CONTINUED



The table below represents Brait’s average and period-end VARs for its total trading portfolio for each of the major
components as well as the maximum and minimum VAR for the period.


                                                                                    Year ended 31 March 2002
                                                                      Average        Minimum     Maximum         Year-end
                                                                          VAR            VAR           VAR            VAR
                                                                           Rm             Rm           Rm              Rm

Interest rate                                                              3,9            1,3           7,1            1,8
Equities                                                                   2,8            1,7           4,3            2,1
Total VAR                                                                  6,7            3,0         11,4             3,9


Whereas VAR captures exposure under normal market conditions, stress testing discloses the risk under abnormal market
conditions. Stress testing is integral to the risk management process and is equal and complementary to VAR as a risk
management tool. Non-linear risk profiles are applied to capture revenue-generating opportunities during times of normal
market conditions but also limit downside exposure during periods of market turmoil. Potential losses under stress testing
should be at acceptable levels and an assessment is made of the bank’s ability to alter strategies or liquidate positions.


Stress VAR using both the covariance approach and Monte Carlo simulation is measured daily and monitored against
approved limits. The graph below represents Brait’s stress test VAR as a percentage of the approved limit for the 2002
financial year.




                                      80

                                      70
Percentage of stress test limit (%)




                                      60

                                      50

                                      40

                                      30

                                      20

                                      10

                                       0
                                                         April 2001 to March 2002




                                            Brait stress test VAR as % of limit




                                                          60
                                              Brait Annual Report 2002
The quality of VAR models is continually evaluated through backtesting of the VAR results. This is done on both a
hypothetical basis and a trading outcome basis. Hypothetical backtesting is done by freezing a portfolio and then
applying a history of price changes on the portfolio and comparing the losses to the calculated VAR. In the trading
outcome method the actual trading profit and loss is compared against the calculated VAR for the previous day. The
graph below represents Brait’s trading VAR backtesting for the financial year and illustrates the dramatic impact on the
daily profits and losses of the sudden 9 standard deviation increase in bond rates that occurred on 14 December 2001.
This spike in bond rates accompanied the well publicised collapse in the rand exchange rate at the end of 2001 that
subsequently gave rise to the Myburgh Commission of Enquiry.


       8

       4

       0

       -4
Rm




       -8

      -12

      -16

      -20

      -24
                                                    Exceptions 5 (2%) – April 2001 to March 2002

                                                        Daily VAR          Daily profit and loss




                                                    Backtesting of daily VAR


Because no single risk statistic can reflect all aspects of market risk, Brait also uses non-statistical risk measures such as
net open positions, basis point values, option ‘Greeks’ and position concentration. These measures provide additional
information on exposures’ size and direction.


Brait measures the current profit and loss on trading positions by marking them to market on a daily basis. Controls are in
place to ensure that transactions are booked at prevailing market rates and that positions are revalued at current market
prices. Mark to market profit and loss reports and risk reports are compiled and distributed on a daily basis. Risk reporting
is also distributed to the bank’s board and reports include the current risk profile and historical utilisation of market risk limits.


All risk management models and pricing are validated periodically to ensure that they make relevant assumptions and
correct calculations. Model validations are done both internally as well as through comparison with other market
participants.




                                                                    61
                                                       Brait Annual Report 2002
RISK MANAGEMENT REVIEW CONTINUED



Risk management within the bank and the group as a whole operates with clear independence and authority from the
operations and reports to senior management and the board. In general, the market risk management function is
responsible for sound systems, models and procedures.


Since the group announcement to close its banking structure, the group has ceased its equity and interest-rate trading
activities. Current positions are being managed to realisation. Controls and risk management practices will continue to
ensure an orderly and well managed realisation process.


Credit and counterparty risk
Credit and counterparty risk refers to the effects on future cash flows and earnings of borrowers; trading counterparties
or issuers of instruments held either in portfolio or as collateral, defaulting on their obligations. Such risk arises primarily
from lending, trading and investment activities as well as from the settlement of proprietary financial market transactions
and those undertaken on behalf of clients. Brait manages these risks by setting prudent credit exposure limits, constantly
measuring current credit exposures, estimating maximum potential credit exposures that may arise over the duration of
a transaction, and responding quickly when corrective action needs to be taken.


The board has established a credit committee in the bank, represented by senior management and executive directors, which
is tasked with the management of credit risk within comprehensive credit risk guidelines that are reviewed annually and
approved by the board. Delegated authority is limited to the chief executive officer of the bank, who signs jointly with one other
member of the credit committee up to an aggregate risk exposure of R5 million. All exposures above R5 million require the
prior written authority of a fully constituted credit committee comprising a quorum of four members. Significant exposures, in
excess of 10% of the bank’s qualifying capital and reserves, are recommended to the board for final approval. Compliance
with pre-approved limits is measured daily, aided by exception reports generated from the loan transacting system and
monitored both internally and independently by the credit risk function. The credit risk management function facilitates the
monitoring and reporting of credit risk information and ensures regular reporting of appropriate information to the credit
committee and the board, including details of portfolio concentration; individual large exposures and compliance with
prudential limits.


In the evaluation of proposed credit exposures, the credit committee takes into account:
• appetite for risk in relation to the bank’s own capital and liquidity;
• the exposure in relation to the client’s financial situation;
• target market, industry and geographic considerations;
• the qualitative aspects of the client;
• the aggregation of exposures across the group and across products; and
• relationships that may exist between current and potential clients.




                                                            62
                                                Brait Annual Report 2002
Once established, all limits are subject to regular review at least annually. The underlying illustrations provide a summary
profile of the loan portfolio at year-end.


Classification (Grade 1 – 5)

                                                                          31 March 2002                31 March 2001
   Classification categories                           Grade               Rm              %           Rm               %

   Current                                                  1           782,9           83,7      1 158,4            86,3
   Special mention                                          2                                         34,2             2,6
   Substandard                                              3            21,3            2,3          90,3             6,7
   Doubtful                                                 4            49,0            5,2          40,0             3,0
   Loss                                                     5            82,5            8,8          19,1             1,4

   Total loans and advances                                             935,7         100,0       1 342,0           100,0


Classification per advances type

                                                                     Classification category
                                                                        31 March 2002

                                                      Special            Sub-
                                     Standard       mention          standard       Doubtful          Loss           Total
   Advances type                             Rm           Rm               Rm            Rm            Rm             Rm

   Mortgages                                 2,7                                                                       2,7
   Instalment sales                          7,3                                        14,5           7,5           29,2
   Credit cards
   Other loans and advances              656,5                           21,3           34,5          75,0          787,4
   Investments and other                 116,4                                                                      116,4

   Total gross balance                   782,9                           21,3           49,0          82,5          935,7




                                                                63
                                                   Brait Annual Report 2002
RISK MANAGEMENT REVIEW CONTINUED



Portfolio distribution by loan type

                                                               4,0%   3,0%
                                                 12,5%                            14,3%

                                       9,2%                                                  4,2%

                                      0,4%




                                                                  52,4%




                                             Containers                Mortgages
                                             Equity loans              Revolving credit facilities
                                             Guarantees                Term loans
                                             Overdraft loans           Instalment sale facilities




                                                Portfolio distribution by loan type



Single exposures distribution

   Value bands                                                                                       31 March   31 March
  (% of bank qualifying                                                                                 2002          2001
  capital and reserves)                                                                                    %            %

   <1%                                                                                                    16           17
   1% – 5%                                                                                                58           39
   5% – 10%                                                                                               16           22
   10% – 25%                                                                                              10            22


General as well as specific provisions for bad debts are raised throughout the year and at financial year-end these
provisions amounted to R92,8 million (general – R2,9 million, specific, including interest suspended – R89,9 million). In
determining the appropriate level of provisioning, the bank has adopted a credit risk classification methodology that is
aligned to revised regulations relating to banks. The credit committee regularly evaluates the appropriateness of
classifications assigned to problem loans and considers the adequacy of specific provisions based on its assessment of the
reasonable prospects of recovery; the extent of realisable collateral held and the nature and extent of the impairment. The
total provisions as at the year-end constitute 9,92% of total advances which is conservative by industry standards.




                                                                64
                                                 Brait Annual Report 2002
Apart from the regulatory risk classifications, a further distinction is made in respect of items considered to be categorised
as non-performing loans, defined as those items classified as “doubtful” and “loss”.


                                                         Gross                            Net                            Net
   Analysis of                                            non-                           non-        Value of      exposure
   non-performing                                  performing            Specific   performing       security         at risk/
   loans                                                 loans         provisions        loans           held        (surplus)
                                                           Rm                Rm           Rm              Rm             Rm

   Overdraft and loans                                    70,2             (51,9)        18,3           (17,2)            1,1
   Revolving credit                                       21,1             (11,9)          9,2           (1,3)            7,9
   Term loans                                             18,2             (16,6)          1,6           (3,3)           (1,7)
   Instalment sale                                        21,9              (3,1)        18,8           (18,0)            0,8

   Gross non-performing loans                           131,4              (83,5)        47,9           (39,8)            8,1
   Less: Interest suspended                               (6,3)                           (6,3)                          (6,3)

   Total                                                125,1              (83,5)        41,6           (39,8)           1,8

   Coverage as percentage
   of non-performing loans                                   %                 %            %              %               %

   Gross NPL                                                                66,8                        31,9
   Net NPL                                                                               33,2           96,1

   Non-performing loans as percentage
   of total loans and advances

   Gross NPL                                              13,4
   Net NPL                                                                                 4,4


The advances book has been reorganised during the year toward improvement of its overall profitability and return on capital.
Certain loans were identified as non-strategic as they did not meet hurdle rate criteria and further were not optimally matched
to the bank’s funding maturity profile. Through the process certain specific loans have been identified that could potentially
be problematic and resulted in our more conservative view on provisioning to safeguard against any potential re-finance risk
relating to specific loans. The increase in provision is not due to a general decline across the advances book but relates to a
few specific items concentrated.


During the year, the credit risk management function was further strengthened through system enhancements, including
process and control improvements designed to facilitate credit administration and control and achieving reporting
efficiencies in line with more stringent regulatory reporting requirements. The credit philosophy embodies the principle
of a continuous process of improvement toward alignment of organisational practice with international best practice as
advocated by the Basle Committee on banking supervision.




                                                                  65
                                                    Brait Annual Report 2002
RISK MANAGEMENT REVIEW CONTINUED



Since the group announcement to deregister its banking structure, the group has ceased making new advances. The
current book will be realised as and when amounts fall due for repayment or as third party refinancing is arranged.
Controls and risk management practices will continue to ensure an orderly and well managed realisation process.


Interest rate and liquidity risks
Interest rate risk refers to the impact on future cash flows and earnings of assets and liabilities repricing either at different
points in time or on different basis (eg prime overdraft rate as opposed to BA rate). The banking book is defined as all assets
and liabilities intended to be held to maturity in order that they generate margin income over time and thus comprises assets
and earnings streams reported earlier under Margin business. The effect of changes in interest rates on instruments held for
trading purposes is considered to be market risk and is managed as described above.


Liquidity risk arises in the general funding of the bank’s activities when there are mismatches between the sizes and maturities
of assets and liabilities and also in its Trading operation (see graph below for the cumulative liquidity gaps at the end of March
2002). It refers to the ability of the bank to meet its financial obligations as they fall due. It also refers to the ability to liquidate
trading or short-term investment positions in a timely manner at reasonable prices.


The graph below represents the percentage of the short-term liquidity target that was met at month-ends. The target is
set conservatively and is equal to the sum of the top 10 call deposits.




      80

      60

      40

      20
Rm




       0

     -20

     -40

     -60
                  1 Month                           3 Months                           6 Months                          12 Months




                                                    Cumulative liquidity gap




                                                                66
                                                   Brait Annual Report 2002
     140

     120

     100

      80
%




      60

      40

      20

       0
                                                                 Aug ‘01
                                    June ‘01




                                                  July ‘01
                          May ‘01




                                                                            Sept ‘01




                                                                                        Oct ‘01




                                                                                                  Nov ‘01




                                                                                                            Dec ‘01




                                                                                                                      Jan ‘02




                                                                                                                                Feb ‘02




                                                                                                                                          Mar ‘02
                Apr ‘01




                                               Percentage of short-term liquidity target met
                                                             (Target = Top 10 call deposits)



Interest rate and liquidity risks are related in that funding reprices at the time contracted for renewal, replacement or
withdrawal (ie the assets and liability books are structured with both maturity and repricing objectives). Trading positions should
be liquid so as to facilitate the repayment of funding when called upon to do so. The bank has historically traded in only the
more liquid financial instruments and the setting of issuer limits by the credit committee takes into account the marketability
of instruments.


The primary function of the assets and liabilities committee (ALCO) is to manage the term structure of the bank’s balance
sheet. This takes into account the funding requirement of lending and trading activities, the depositors’ profile and spread,
the bank’s view on future trends in interest rates and expected changes in money market conditions, while also allowing for
the unexpected. Liquidity gaps, interest rate gaps and the sensitivity of the balance sheet to interest rate changes are
monitored on a daily basis. The ALCO model measures balance sheet risk on a VAR basis and has stress testing and what-if
capabilities.


The graph below shows the interest rate risk for Margin business and excludes Trading portfolios (calculated on a VAR
basis with 10-day holding period and 99% confidence level) for the previous financial year-end.




                                                                                   67
                                                                 Brait Annual Report 2002
RISK MANAGEMENT REVIEW CONTINUED



      60


      50


      40
%




      30


      20


      10


       0
           Apr ‘01




                     May ‘01




                                  Jun ‘01




                                                                  Aug ‘01




                                                                                 Sep ‘01
                                                    Jul ‘01




                                                                                                   Oct ‘01




                                                                                                             Nov ‘01




                                                                                                                       Dec ‘01




                                                                                                                                                     Mar ‘02
                                                                                                                                           Feb ‘02
                                                                                                                                 Jan ‘02
                                                                                           Month-end



                                            Interest rate (balance sheet) risk as a % of limit utilised


The bank takes a conservative view on mismatches in its balance sheet structure and holds sufficient liquid and readily
realisable AAA assets to meet possible eventualities.


Solvency risk – capital adequacy
Adequately capitalising the group is important to absorb potential losses in its activities, to maintain the confidence of all
those with whom it does business and to fund the future growth of its operations. It is also important to ensure that losses
in one operation do not contaminate the others. The group has therefore been structured so that distinct operations are
housed in separately capitalised legal entities with transactions between companies in the group being conducted on a
strictly at arm’s length basis.


Capital adequacy is measured by expressing capital as a percentage to risk-weighted assets, including both on and off-
balance-sheet transactions. The South African Reserve Bank has, in accordance with international standards issued by
the Bank of International Settlements (BIS), established minimum standards for the capitalisation of banks taking into
account the particular risks to which each bank may be exposed.


However, in the bank, including wholesale and trading activities in inter-bank and institutional markets requiring limits for
the settlement of significantly large financial market transactions, it has been important to maintain capital considerably
in excess of the requirements of the authorities. The bank’s capital adequacy ratio at the end of March 2002 was 22,0%
compared to the regulatory requirement of 10%.




                                                                            68
                                                              Brait Annual Report 2002
CAPITAL ADEQUACY OF BRAIT MERCHANT BANK LIMITED

                                                                                                    2002          2001
                                                                                                      Rm            Rm

  Primary capital
  Ordinary share capital                                                                              3,3           3,3
  Share premium                                                                                    381,3         381,3
  Reserves                                                                                         126,2         289,7

  Total primary capital                                                                            510,8         674,3

  Secondary capital
  General debt provision                                                                              2,9           2,0

  Total secondary capital                                                                             2,9           2,0

  Banking                                                                                          452,9         576,3
  Trading                                                                                           60,8         100,0

  Total capital                                                                                    513,7         676,3

  Risk-weighted assets
  Banking                                                                                         1 780,5      2 045,1
  Trading                                                                                          547,0         595,0

  Total risk-weighted assets                                                                      2 327,5      2 640,1

  Banking capital adequacy ratio (%)                                                                25,4          25,6
  Trading capital adequacy ratio (%)                                                                11,1          16,8
  Total capital adequacy ratio (%)                                                                  22,0          23,6


Operational and technology risks
Operational risk is the potential for loss caused by a breakdown in information, communication, transaction processing,
and settlement systems and procedures. The high value and complexity of transactions in financial markets makes the
potential costs of such breakdowns very high. It is therefore critical that the group maintains comprehensive systems of
internal controls, and sound policies and practices in the areas of information technology, human resources, physical
security and insurance. The enforcement and monitoring of compliance with such policies and standards of practice is a
vital component of operational risk management.


The group audit committee, which has responsibility, inter alia, for overseeing of the management of operational risk,
comprises non-executive directors to whom both external and internal auditors have direct access. The functioning of this
committee is dealt with more fully under the corporate governance section of the annual report.




                                                             69
                                                  Brait Annual Report 2002
RISK MANAGEMENT REVIEW CONTINUED



The specialised nature of the bank’s Trading operations and the need to ensure continual compliance with international
best practice in this area, led to the board’s decision to outsource the internal audit of the bank to reputable professionals
in this field and industry. This is supplemented by management’s commitment to a number of internal control procedures
that are fully documented. With the primary responsibility for operational risk management at business unit level, the
group has also at corporate level ensured that operational risk is minimised through the implementation of sound
accounting methods, administrative controls and a code of conduct.


Utilisation of information technology is guided by the group’s IT steering committee whose purpose is not only to set IT
policy but also to act as the final decision-making authority. The group employs both onsite and offsite disaster recovery
facilities which are tested regularly. Business continuity plans are in place in the case of catastrophic events.


All business processes are supported by software systems, which are kept current with the latest technology trends.
Outsourced internal auditors, who are reputable professionals in this field and report directly to the board, audit all major
IT procedures and processes.


Legal risk
Legal risk is the risk that transactions or agreements with third parties may not be legally enforceable or do not reflect
the deal as approved by the credit committee. Brait recognises the legal risks inherent in banking transactions and has
committed legal resources to each transaction to mitigate such risks. The objective is that each transaction entered into
by the bank accurately reflects the deal approval by the committee and any changes thereto are captured by the
documentation pertaining to the deal.


The legal function also takes cognisance of the ever-changing legal environment in order to ensure the validity and
enforceability of such legal documentation to protect Brait’s interests.


Compliance risk
Compliance or regulatory risk is the risk of non-compliance with regulatory requirements. Brait has established an
independent compliance function as part of its risk management framework. The management of compliance risk is
achieved through independent monitoring, reporting, training and other services. The compliance function reporting to
the group audit committee provides the required level of independence to discharge Brait’s compliance responsibilities.




                                                          70
                                              Brait Annual Report 2002
Risk management for fund investment
The group acts as manager for a number of funds financed primarily by third party capital. Each of these funds is typically
subject to a number of governance controls with risk management effects, including:
• fund mandates setting out investment parameters including targeted markets, transaction types and investment limits;
• controlled investment processes including appropriate approval by investment committees;
• investor review by way of periodic reporting and performance evaluation;
• advisory committee review for resolution of certain potential conflicts of interest; and
• statutory and regulatory controls.


Brait’s internal control processes ensure that fund mandates are adhered to, and these controls are subject to internal
audit and thus audit committee review. The effect on Brait’s financial position is assessed by applying sensitivity analysis
to material positions held in its funds under management.


CONCLUSION
It should be recognised that, as a result of its chosen position, Brait is exposed to South African domestic risk and, directly and
indirectly, to its equity and interest rate markets in particular. A strong culture of risk awareness is in place and, due to the
dynamic nature of risk management, this capability is continuously expanded to ensure future plans are implemented in a
prudent and controlled manner.




                                                                  71
                                                      Brait Annual Report 2002
DIRECTORS’ RESPONSIBILITY
for financial reporting


The directors are responsible for the preparation, integrity and objectivity of financial statements that fairly present the
state of the affairs of the company and of the group at the end of their financial years and the income and cash flow for
these years, as well as for other information contained in the annual report.


In preparing the financial statements:
• Luxembourg law has been adhered to in respect of the company financial statements;
• International Accounting Standards have been adopted in respect of the group financial statements; and
• reasonable and prudent judgements and estimates have been made.


To enable the directors to meet the financial reporting responsibilities:
• the board and management set standards and the management implements internal control, accounting and
   information systems aimed at providing assurance as to the integrity and reliability of the financial statements and to
   safeguard, verify and maintain the group’s assets; and
• the group audit committee, together with input from the external auditors, plays an integral role in matters relating to
   financial and internal control, accounting policies, reporting and disclosure.


To the best of their knowledge and belief, based on the above, the directors are satisfied that no material breakdown in
the operation of the systems of internal control and procedures has occurred during the year under review. The auditors
concur with this statement.


The directors are of the opinion that Brait S.A. will continue as a going concern in the year ahead and have adopted the
going concern basis in preparing the financial statements. The auditors concur with this opinion.


The group’s external auditors, Deloitte & Touche, have audited the financial statements and their unqualified report
appears on page 73.


The financial statements which appear on pages 74 to 117 were approved by the board of directors on 26 June 2002
and are signed on its behalf by




M E King                                                         A C Ball
Chairman                                                         Group chief executive




                                                          72
                                              Brait Annual Report 2002
REPORT OF THE INDEPENDENT AUDITORS
to the shareowners of Brait S.A.


We have audited the annual financial statements of Brait S.A. as set out on pages 74 to 87 and pages 90 to 117, and
the annual financial statements of the company as set out on pages 115 to 116 for the year ended 31 March 2002 and
have read the directors’ report as set out on pages 74 to 78. These financial statements and directors’ report are the
responsibility of the company’s directors. Our responsibility is to express an opinion on these financial statements based
on our audit and to verify the consistency of the directors’ report with the annual financial statements.


Scope
We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes:
• examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;
• assessing the accounting principles used and significant estimates made by management; and
• evaluating the overall financial statement presentation.


We believe that our audit provides a reasonable basis for our opinion.


Audit opinion
In our opinion, the group financial statements present fairly, in all material respects, the financial position of the group
at 31 March 2002, and the results of its operations, cash flows and changes in equity for the year then ended in
accordance with International Accounting Standards.


In our opinion, the company financial statements present fairly, in all material respects, the financial position of the
company at 31 March 2002, and the results of its operations for the year then ended in conformity with the legal and
regulatory requirements in Luxembourg.


The directors’ report is consistent with the annual financial statements.


Supplementary schedules
The supplementary information on pages 88 to 89 do not form part of the annual financial statements. We have not
audited them and consequently do not express an opinion on them.




Deloitte & Touche SA


26 June 2002




                                                               73
                                                   Brait Annual Report 2002
DIRECTORS’ REPORT
for the year ended 31 March


The directors have pleasure in presenting their report for the year ended 31 March 2002.


NATURE OF BUSINESS
Brait is an investment banking group with its primary listing on the Luxembourg Stock Exchange. It also has secondary
listings on the Johannesburg and London stock exchanges. The group has shareowners’ funds of R1,2 billion
(approximately US$104 million) and diverse earnings from the following activities:
• Funds Management;
• Advisory Services;
• Investing; and
• Group Capital.


It has announced its intentions since the financial year end to apply for the deregistration of its banking licence and
discontinue the following activities:
• Margin; and
• Trading.


SHARE CAPITAL
Authorised
The authorised share capital of the company comprises 150 000 000 ordinary shares of no par value.


Issued
The issued share capital of the company comprises 93 483 219 ordinary shares of no par value. Of this number,
3 829 825 ordinary shares are held in treasury and are under the control of the directors with the authority to hold these
shares for so long as considered necessary and to dispose of them on terms and conditions which they deem appropriate.
This includes 1 928 763 shares held in the Brait S.A. Share Incentive Trust, which are also under the control of the
directors for the delivery of shares granted to employees in terms of the Brait S.A. Share Incentive Scheme.


Unissued shares
At the forthcoming annual general meeting members will be asked to place the unissued shares in the capital of the
company under the control of the directors in terms of the provisions of the company’s articles of incorporation.


It should be noted that in terms of the articles the directors may not issue shares in any one year, whether for cash or
otherwise, if the issue exceeds 10% of the company’s issued ordinary share capital and such issues shall not in aggregate
in any three-year period exceed 15% of the company’s issued ordinary share capital.




                                                        74
                                             Brait Annual Report 2002
RENEWAL OF AUTHORITY FOR THE REPURCHASE OF SHARES
The conditions relating to the repurchase by the company of its own shares are governed by the company’s articles of
incorporation which provide, inter alia, that this authority shall not extend beyond the date of the forthcoming annual
general meeting unless such authority is renewed by shareowners in general meeting. At the forthcoming annual general
meeting shareowners will accordingly be requested to renew this authority until the conclusion of the next annual general
meeting to be held in July 2003.


DIVIDEND
The proposed dividend of 60 South African cents per share in respect of the year ended 31 March 2001 was ratified by
shareowners at the annual general meeting held on 17 July 2001 and the dividend, which absorbed R53 982 283, was
paid on 3 August 2001.


The board declared an interim dividend of 25 South African cents per share on 5 November 2001. The dividend, which
absorbed R22 565 006, was paid on 7 December 2001 to members registered as such on the record date, namely
23 November 2001. Shareowners will be asked to ratify and confirm the declaration by the board and the payment of
the interim dividend at the annual general meeting of shareowners of the company which will be held in Luxembourg on
Wednesday, 31 July 2002.


The board has proposed a final dividend of 35 South African cents per share for the year ended 31 March 2002. In terms
of the articles of incorporation of the company, shareowners are required to approve the declaration of the dividend which
will be tabled at the forthcoming annual general meeting of shareowners of the company. Having obtained the necessary
consent of shareowners, payment of the dividend in respect of the year ended 31 March 2002 will be effected on or about
26 August 2002 to shareowners registered as such on the record date, 23 August 2002.


THE BRAIT S.A. SHARE INCENTIVE SCHEME
The establishment of the Brait S.A. Share Incentive Scheme (“the Scheme”) was approved by members at
an extraordinary general meeting of shareowners held on 29 July 1998. In terms of the scheme, the aggregate number
of ordinary shares in the capital of the company which may be made available for purposes of the scheme shall not,
without prior authority of members in general meeting, exceed 15% of the company’s issued share capital. The Brait S.A.
Share Incentive Trust (“the Trust”) was established for the purposes of the scheme and is composed of a minimum of two
trustees. Messrs A N Leontsinis and A Mitchell were appointed as additional trustees on 15 May 2001 and
Messrs M E King and M J Shaw subsequently resigned as trustees on 31 August 2001. The Trust accordingly comprises
two trustees.




                                                              75
                                                  Brait Annual Report 2002
DIRECTORS’ REPORT CONTINUED



A summary of shares granted to employees of the group during the period is given below:


GROUP SHARE INCENTIVE SCHEME RECONCILIATION

                                                                                                    2002            2001

  Options/share entitlements outstanding at beginning of the year                            10 480 449       9 914 436
   Granted                                                                                       784 205     11 420 288
   Delivered                                                                                    (630 143)      (169 143)
   Lapsed                                                                                     (1 176 801) (10 685 132)

  Options/share entitlements outstanding at end of year                                        9 457 710     10 480 449


OPTIONS/SHARE ENTITLEMENTS OUTSTANDING AT 31 MARCH 2002

   Expiry date                                                                                   Number       Strike price
                                                                                                 of shares             (R)

   30 November 2008                                                                            8 175 685           13,30
   31 March 2009                                                                                 683 175           11,97
   30 June 2009                                                                                  209 296           14,55
   30 September 2009                                                                             287 976           13,28
   31 December 2009                                                                              101 578           12,74

   Options/share entitlements outstanding at end of year                                       9 457 710


DIRECTORATE
Mr S J P Weber was appointed as a director of the company on 28 May 2001 and Messrs J P Montanana and D H Rabin
resigned as directors on 29 October 2001 and 20 February 2002, respectively. No other changes in the composition of
the board of directors have occurred between 31 March 2002 and the date of this report.


In terms of the company’s articles of incorporation, the directors’ terms of office end immediately after the conclusion of
the annual general meeting of shareowners and they may be reappointed at that meeting.

Accordingly, Messrs A C Ball, J E Bodoni, R T Dalais, F Z Haller, M E King, R J Koch, A M Rosenzweig, C J Tayelor,
S J P Weber and P L Wilmot retire from the board at the annual general meeting and, being eligible, offer themselves
for re-election.




                                                         76
                                             Brait Annual Report 2002
DIRECTORS’ INTERESTS
On 31 March 2002 the directors beneficially held 10 409 635 shares in the company (2001: 10 484 635). The directors’
entitlements under employee ownership initiatives are 1 597 828 (2001: 1 572 828) shares. These are disclosed more
fully in the section on corporate governance.

Details of the directors’ direct and indirect shareholdings in the company’s issued share capital are:

                                                                                                       2002         2001

   M E King                                                                                         176 689      176 689
   A C Ball                                                                                        4 993 623    4 993 623
   J E Bodoni
   R T Dalais                                                                                      4 993 623    4 993 623
   F Z Haller
   R J Koch                                                                                         245 700      320 700
   A M Rosenzweig
   C J Tayelor
   S J P Weber
   P L Wilmot

   Total                                                                                          10 409 635   10 484 635

All the above interests are beneficially held and there have been no changes to the above holdings since 31 March 2002
to the date of this report.


A register of the interests of directors in the capital of the company is available on request.


MAJOR SHAREOWNERS
According to information available to the company after reasonable enquiry, the following shareowners held 5% or more
of the issued capital of the company at 31 March 2002:

   Shareowner                                                                                                          %

   Liberty Group                                                                                                     15,6

   Liberty Life                                                                                                       6,0
   Liberty Unit Trusts                                                                                                1,1
   Liberty Asset Management on behalf of its clients                                                                  8,5

   Investec Asset Management on behalf of its clients                                                                10,3
   BoE Asset Management on behalf of its clients                                                                      5,5
   Ball Family Trust                                                                                                  5,3
   The Thierry Dalais Family Trust                                                                                    5,3




                                                               77
                                                   Brait Annual Report 2002
DIRECTORS’ REPORT CONTINUED
for the year ended 31 March


Share Transactions Totally Electronic (“STRATE”)
Share Transactions Totally Electronic (“STRATE”) affects those shareowners who hold their shares on the South African
branch register of the company. It is a project undertaken by the JSE Securities Exchange South Africa (“JSE”) to establish
a new electronic clearing, settlement and custody system for securities listed on the JSE. It is aimed at achieving a secure
electronic settlement environment for transactions on the JSE and for all market trades and allows share transactions to
be settled electronically instead of using share certificates and transfer deeds. In addition its introduction necessitates the
dematerialisation of share certificates and the representation of ownership via an electronic record.

In accordance with this objective the company’s shares were converted to the STRATE system on 10 December 2001
and trading for electronic settlement commenced on 7 January 2002.

SPECIAL RESOLUTIONS
Details of special resolutions passed by the company and its subsidiaries are available on request.

EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
On 6 May 2002, the group announced its intention to apply for deregistration of its banking structure licence. Recent
events in the South African A2 banking industry and required levels of gearing, have persuaded the board that the
group’s banking licence is not sustainable at the levels of capitalisation which the group has the means to support. In its
view, deposit-taking prospects have been permanently impaired and, as a result, those structures of the group requiring
a banking licence to operate offer no prospect of meeting the return goals set by the boards. In addition, the board has
concluded that sustaining the banking licence places significant financial risk on the group as a whole.

It is anticipated that this deregistration will occur on or about 30 September 2002.

As a consequence of this decision, the board has resolved to realise a significant component of the banking and
associated assets. This action has been taken to enhance the return on capital of the group through the reduction of
capital deployed following the decision to apply for deregistration of the bank. It is proposed that the realisation should
be done on an accelerated basis. This process is preferable to a protracted disposal, which would have a lesser impact
on earnings, but reflects greater interruption and economic loss to the continuing operations of the group.

The resulting adjustments amounting to R100 million have been made against the carrying value of assets held at
31 March 2002.

Additionally, costs associated with the closure of operations, after consultations have been held with staff, are likely to be
incurred. These costs are in the order of R65 million and the majority is expected to be expensed in the year ending
31 March 2003, against discontinuing operations.

COMPOSITION OF GROUP COMMITTEES
The composition of the board and the group audit, remuneration, management and other sub-committees of the board
are reflected in the section dealing with corporate governance.

CORPORATE GOVERNANCE
Full details regarding the company’s commitment to and its compliance with appropriate international corporate
governance practices are set out on pages 53 to 57.




                                                           78
                                               Brait Annual Report 2002
INTRODUCTION TO THE FINANCIAL STATEMENTS

ACCOUNTING POLICIES
The group financial statements are prepared in accordance with International Accounting Standards and the company’s
financial statements are prepared in accordance with Luxembourg law for the year ended 31 March 2002.

In terms of International Accounting Standards as well as international trends, unrealised gains as well as unrealised losses
are recognised in the period during which these arose. Luxembourg law, following the European Union law, does not
permit the recognition of such unrealised gains. The directors are of the view that the group financial statements prepared
in accordance with International Accounting Standards represent more appropriately the financial position of the group
and the results of its operations and cash flows and have accordingly adopted International Accounting Standards for the
group.

REPORTING CURRENCY
Company
The financial statements of the company are reported in US dollars as the accounting records as well as the majority of
its assets and liabilities are maintained in US dollars.

Group
The group financial statements are presented in South African rand, as the rand represents the largest single currency in which
the transactions of the group are concluded, and the majority of shareowners reside in South Africa. This decision will be
regularly reviewed in light of the group’s activities and its shareowners listed on the Johannesburg, Luxembourg and London
stock exchanges.

For the convenience of non-South African users, unaudited US dollar income statements and balance sheets have been
presented and prepared using the International Accounting Standards interpretation SIC 30. Translation from reporting
currency to measurement currency. They are not intended to be a presentation in accordance with International Accounting
Standards and are presented solely for the convenience of the users.

Rates
Currency conversion guide
The approximate rand cost of a unit of the following currencies at 31 March was:

                                                                                                        2002           2001

   US dollar
   – closing rate                                                                                     11,340           8,013
   – average rate                                                                                      9,503           7,325

   Sterling                                                                                           16,161         11,351

   Euro                                                                                                9,881           7,072

   Luxembourg/
   Belgian franc                                                                                          n/a          0,174




                                                                79
                                                    Brait Annual Report 2002
GROUP INCOME STATEMENTS
for the year ended 31 March



                                                      Continuing            Discontinuing
                                                      operations             operations                Total
                                                   2002       2001        2002       2001      2002            2001
                                        Note         Rm         Rm          Rm         Rm        Rm              Rm

  Revenue                                    1     379,7      279,0         6,5      93,8     386,2            372,8
  Operating expenses                         2    (193,3)    (140,0)     (113,1)     (59,6)   (306,4)      (199,6)

  Normal operations                               (138,9)    (140,0)      (67,5)     (59,6)   (206,4)      (199,6)
  Realisation adjustments                    5     (54,4)                 (45,6)              (100,0)


  Profit from operations                           186,4      139,0      (106,6)     34,2      79,8            173,2
  Finance costs                                    (10,4)      (1,7)                           (10,4)           (1,7)
  Income from associates                             8,3       12,2                              8,3            12,2
  Income from joint ventures                         6,7           8,0                           6,7             8,0
  Disposal of investments                                          5,5                                           5,5
  Amortisation of intangibles               14      (4,8)      (8,3)       (2,8)      (2,5)     (7,6)          (10,8)

  Profit before taxation                           186,2      154,7      (109,4)     31,7      76,8            186,4
  Taxation                                   3       3,5       (3,9)                             3,5            (3,9)

  Profit after taxation                            189,7      150,8      (109,4)     31,7      80,3            182,5
  Minority interest                                  0,1                                         0,1

  Attributable earnings                            189,8      150,8      (109,4)     31,7      80,4            182,5

  Earning per share (cents)                  4
  – continuing operations – diluted                                                           210,4            165,4
  – before realisation adjustment – basic   5                                                 200,2            201,4
  – before realisation adjustment – diluted 5                                                 200,0            200,0
  – basic                                                                                      89,2            201,4
  – diluted                                                                                    89,1            200,0
  Dividend per share (cents)                 6                                                 60,0             60,0

  – interim (declared)                                                                         25,0
  – final (proposed)                                                                           35,0             60,0




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                                            Brait Annual Report 2002
GROUP BAL ANCE SHEETS
at 31 March 2002



                                                                                   2002      2001
                                                                          Note       Rm        Rm

  ASSETS
  Non-current assets                                                             1 193,5   1 321,9
  Intangibles                                                              14      32,5      39,9
  Fixed assets                                                             15      69,9      74,1
  Investments                                                              16     818,9     958,7
  Loans and advances                                                       17     264,3     241,9
  Deferred tax assets                                                       9       7,9       7,3
  Current assets                                                                 1 526,2   2 001,0
  Cash and cash equivalents                                                18     314,8      110,7
  Trading securities                                                       19     451,7      479,2
  Loans and advances                                                       17     518,3    1 167,4
  Accounts receivable                                                      20     241,4      243,7

  TOTAL ASSETS                                                                   2 719,7   3 322,9

  EQUITY AND LIABILITIES
  Equity
  Share capital and premium                                                 7     802,1     803,0
  Non-distributable reserves                                                8      13,7       3,9
  Foreign currency translation reserves                                            24,0      42,0
  Distributable reserves                                                          342,4     355,6
  Total equity                                                                   1 182,2   1 204,5

  LIABILITIES
  Non-current liabilities                                                         167,6     200,2
  Deferred tax liabilities                                                  9      11,5      22,5
  Deposits                                                                 10      29,8      14,5
  Other liabilities                                                        11     126,3     163,2
  Current liabilities                                                            1 369,9   1 918,2
  Current deposits                                                         10    1 068,9   1 531,7
  Accounts payable                                                         12      158,6     168,2
  Accruals                                                                 13       45,0      48,3
  Other liabilities                                                                 95,0     162,0
  Bank overdraft                                                                     0,6       3,6
  Taxation                                                                           1,8       4,4

  Total liabilities                                                              1 537,5   2 118,4
  TOTAL EQUITY AND LIABILITIES                                                   2 719,7   3 322,9
  Net asset value per ordinary share (cents)
  – book value                                                                   1 312,1   1 329,5
  – market and directors’ valuation                                              1 337,5   1 366,8




                                                         81
                                               Brait Annual Report 2002
GROUP CASH FLOW STATEMENTS
for the year ended 31 March 2002



                                                                                 2002      2001
                                                                        Notes      Rm        Rm

  Cash flows from operating activities                                           35,4     146,0

  Cash (utilised)/generated by operations                                26.1    (64,1)    48,7
  Dividends received                                                             86,5      76,5
  Interest received                                                             198,6     247,3
  Interest paid                                                                 (170,6)   (171,5)
  Taxation paid                                                          26.2    (15,0)    (55,0)

  Change in working funds                                                       296,4     (133,4)

  (Decrease)/increase in other liabilities                                       (67,0)    15,2
  Decrease in investments                                                       301,9      71,0
  (Increase) in inventories and trading securities                               (41,4)   (152,4)
  Decrease/(increase) in loans and advances                                     550,4     (180,8)
  (Decrease)/increase in deposits                                               (447,5)   113,6


  Cash generated by operating activities                                        331,8      12,6

  Cash flows from funding activities                                            (121,6)    50,9

  Treasury shares                                                                 (9,5)    (29,7)
  Dividend paid                                                          26.4    (75,2)    (68,9)
  (Decrease)/increase in liabilities                                             (36,9)   149,5

  Cash flows from investment activities                                           (3,1)    (43,5)

  Increase in intangibles                                                         (0,2)    (35,3)
  Proceeds on sale of investments                                                          12,0
  Acquisition of property and equipment                                           (4,2)    (36,4)
  Proceeds on sale of property and equipment                                       1,3     16,2


  Net increase in cash and cash equivalents                                     207,1      20,0
  Cash and cash equivalents at beginning of year                                107,1      87,1

  Cash and cash equivalents at end of year                                      314,2     107,1

  Cash and cash equivalents at end of year                                      314,2     107,1

  Cash and cash equivalents                                                     314,8     110,7
  Bank overdraft                                                                  (0,6)     (3,6)




                                                       82
                                             Brait Annual Report 2002
GROUP STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 March 2002



                                                                                  Foreign
                                  Share capital                  Other non-      currency           Group          Total
                                      and share         Legal distributable    translation         retained shareowners’
                                      premium         reserves     reserves      reserves      earnings          interest
                                           Rm             Rm            Rm            Rm               Rm            Rm

  Balance at 31 March 2000               832,7            3,0         34,0           23,9           208,9       1 102,5
  Net exchange rate adjustments                                                      18,1                          18,1
  Attributable earnings                                                                             182,5         182,5
  Dividends                                                                                          (68,9)        (68,9)
  Treasury shares                         (29,7)                                                                   (29,7)
  Transfer to/(from) reserves                             0,9         (34,0)                          33,1

  Balance at 31 March 2001               803,0            3,9                        42,0           355,6       1 204,5
  Net exchange rate adjustments                                                     (18,0)                         (18,0)
  Attributable earnings                                                                               80,4         80,4
  Dividends                                                                                          (75,2)        (75,2)
  Treasury shares                          (0,9)                                                      (8,6)         (9,5)
  Transfer to/(from) legal reserves                       9,8                                         (9,8)

  Balance at 31 March 2002               802,1           13,7                        24,0           342,4       1 182,2


  Treasury shares constitute 1 901 062 shares of Brait S.A. held by subsidiaries and 1 928 763 shares held by the
  Brait S.A. Share Incentive Trust. The Trust is consolidated in the group financial statements.

  The movement on the foreign currency translation reserve arises primarily from the translation of the reporting
  currencies of non-South African foreign entities into South African rand upon consolidation, net of the pro rata
  portion of foreign currency translation reserves relating to dividends declared by these subsidiaries to the holding
  company.




                                                             83
                                                   Brait Annual Report 2002
GROUP SEGMENTAL REPORTS
for the year ended 31 March 2002


The group’s segmental reports are organised into business and geographical segments. The primary segment is the
business analysis which distinguishes between related services that bear similar risks and returns. The geographical
segment distinguishes between services and capital that are managed in economic environments, which have similar
specific risks and regulations.


                                                                    Before       Realisation
                                                              adjustment        adjustments*
                                                                     2002               2002               2002               2001
   Business analysis                                                   Rm                 Rm                 Rm                  Rm

   1.1   REVENUE
         Continuing operations
         Funds Management                                           102,1                                 102,1                84,3
         Advisory Services                                           94,4                                  94,4                72,2
         Investing                                                   74,5                                  74,5                 8,6
         Group Capital                                              108,7                                 108,7               113,9

                                                                    379,7                                 379,7               279,0

         Discontinuing operations
         Margin                                                       35,6                                  35,6               77,1
         Trading                                                     (29,1)                                (29,1)              16,7

                                                                       6,5                                   6,5               93,8

         Total revenue                                              386,2                                 386,2               372,8

   1.2   OPERATING EXPENSES
         Continuing operations
         Funds Management                                            47,0                                   47,0               46,3
         Advisory Services                                           67,6                                   67,6               38,5
         Investing                                                   12,1                20,0               32,1               24,7
         Group Capital                                               12,2                34,4               46,6               30,5

                                                                    138,9                54,4             193,3               140,0

         Discontinuing operations
         Margin                                                      34,4                45,6               80,0               36,2
         Trading                                                     33,1                                   33,1               23,4

                                                                     67,5                45,6             113,1                59,6

         Total operating expenses                                   206,4              100,0              306,4               199,6

   Note: * Following the announcement of the group’s intention to deregister its banking licence, the board has approved an
           accelerated disposal of a large proportion of the assets in its banking structure and other associated assets. This action
           has necessitated an abnormal non-recurring adjustment to the carrying value of these assets at 31 March 2002.




                                                               84
                                                  Brait Annual Report 2002
                                          Before     Realisation
                                     adjustment     adjustments*
                                           2002              2002          2002        2001
Business analysis (continued)                Rm                Rm           Rm           Rm

1.3   PROFIT BEFORE TAXATION
      Continuing operations
      Funds Management                      61,3                           61,3         41,4
      Advisory Services                     23,3                           23,3         30,2
      Investing                             69,9             (20,0)        49,9          1,4
      Group Capital                         86,1             (34,4)        51,7         81,7

                                          240,6              (54,4)       186,2        154,7

      Discontinuing operations
      Margin                                 1,2             (45,6)       (44,4)        40,9
      Trading                              (65,0)                         (65,0)         (9,2)

                                           (63,8)            (45,6)      (109,4)        31,7

      Profit before taxation              176,8             (100,0)        76,8        186,4


                                          Assets       Liabilities    Net assets   Net assets
                                           2002              2002          2002        2001
                                             Rm                Rm           Rm           Rm

1.4   ASSETS AND LIABILITIES
      Continuing operations
      Funds Management                      40,3             (17,7)        22,6         66,5
      Advisory Services                     76,8             (11,7)        65,1         64,8
      Investing                           396,9              (32,4)       364,5        315,0
      Group Capital                       946,2             (216,2)       730,0        735,3

                                        1 460,2             (278,0)     1 182,2      1 181,6

      Discontinuing operations
      Margin                            1 042,4        (1 042,4)                        41,0
      Trading                             217,1             (217,1)                      1,5

                                        1 259,5        (1 259,5)                        42,5

      Total                             2 719,7        (1 537,5)        1 182,2      1 224,1




                                           85
                                 Brait Annual Report 2002
GROUP SEGMENTAL REPORTS CONTINUED
for the year ended 31 March 2002




                                                               2002     2001
  Geographical analysis                                          Rm       Rm

  2.1   REVENUE
        Continuing operations
        Europe                                                 53,0      53,8
        South Africa                                          175,3     145,8
        Africa Other                                          151,4      79,4

                                                              379,7     279,0

        Discontinuing operations
        Europe
        South Africa                                             6,5     93,8
        Africa Other

                                                                 6,5     93,8

        Total revenue                                         386,2     372,8

  2.2   PROFIT BEFORE TAXATION
        Continuing operations
        Europe                                                 37,4      13,5
        South Africa                                             5,6     70,3
        Africa Other                                          143,2      70,9

                                                              186,2     154,7

        Discontinuing operations
        Europe
        South Africa                                          (109,4)    31,7
        Africa Other

                                                              (109,4)    31,7

        Profit before taxation                                 76,8     186,4




                                             86
                                   Brait Annual Report 2002
                                          Assets       Liabilities    Net assets   Net assets
                                           2002              2002          2002        2001
Geographical analysis                        Rm                Rm           Rm           Rm

2.3   ASSETS AND LIABILITIES
      Continuing operations
      Europe                              307,3               (7,6)       299,7         83,6
      South Africa                        795,3             (240,6)       554,7        756,1
      Africa Other                        357,7              (29,9)       327,8        341,9

                                        1 460,3             (278,1)     1 182,2      1 181,6

      Discontinuing operations
      Europe
      South Africa                      1 259,4        (1 259,4)                        42,5
      Africa Other

                                        1 259,4        (1 259,4)                        42,5

      Total                             2 719,7        (1 537,5)        1 182,2      1 224,1




                                           87
                                 Brait Annual Report 2002
SUPPLEMENTARY US DOLL AR FINANCIALS


Introduction
The group income statements and balance sheets are presented below in US dollars for the convenience of users of the annual financial statements.
Users should note the following:
1 The rand financial statements (measurement currency) reflect the economic substance of the underlying events and circumstances of the Brait
  S.A. group. The US dollar financials disclosed below are for convenience purposes only.
2 The balance sheet has been translated at the closing rate of R11,340 to $1 (2001: R8,013 to $1).
3 The income statement has been translated at the average rate for the period of R9,503 to $1 (2001: R7,325 to $1).
4 Equity items have been translated at the closing rate.
5 All exchange differences other than net profit for the period, arising from the translation, have been recognised directly in equity.
6 Dividends have been translated at the rate prevailing at date of payment, except for the 2002 final proposed dividend which has been translated
  at the closing rate.

Income statement                                                      Continuing                    Discontinuing
for the year ended 31 March                                           operations                      operations                          Total
                                                                  2002           2001            2002            2001           2002              2001
                                                                US$m            US$m            US$m           US$m            US$m           US$m

Revenue                                                            40,0           38,1              0,7           12,8           40,7             50,9
Operating expenses                                                (20,3)         (19,1)          (11,9)           (8,1)         (32,2)            (27,2)

Normal operations                                                 (14,6)         (19,1)            (7,1)          (8,1)         (21,7)            (27,2)
Realisation adjustment                                             (5,7)                           (4,8)                        (10,5)

Profit from operations                                             19,7           19,0           (11,2)            4,7             8,5            23,7
Finance costs                                                      (1,1)           (0,2)                                          (1,1)            (0,2)
Income from associates                                              0,9             1,7                                            0,9              1,7
Income from joint ventures                                          0,7             1,1                                            0,7              1,1
Disposal of investments                                                             0,8                                                             0,8
Amortisation of intangibles                                        (0,5)           (1,1)           (0,3)          (0,3)           (0,8)            (1,4)

Profit before taxation                                             19,7           21,3           (11,5)            4,4             8,2            25,7
Taxation                                                            0,4            (0,5)                                           0,4             (0,5)

Attributable earnings                                              20,1           20,8           (11,5)            4,4             8,6            25,2

Earnings per share (cents)
– continuing operations – diluted                                                                                                22,1             22,6
– before realisation adjustment – basic                                                                                          21,1             27,5
– before realisation adjustment – diluted                                                                                        21,0             27,3
– basic                                                                                                                            9,4            27,5
– diluted                                                                                                                          9,4            27,3

Dividend per share (cents)                                                                                                         5,4              7,3

– interim (declared)                                                                                                               2,3
– final (proposed)                                                                                                                 3,1              7,3




                                                                      88
                                                       Brait Annual Report 2002
                                                 copy to come




Balance sheet
as at 31 March 2002                                                     2002    2001
                                                                        US$m    US$m

ASSETS
Non-current assets                                                      105,2   165,0
Intangibles                                                               2,9     5,0
Fixed assets                                                              6,1     9,2
Investments                                                              72,2   119,6
Loans and advances                                                       23,3    30,2
Deferred tax assets                                                       0,7       1
Current assets                                                          134,6   249,7
Cash and cash equivalents                                                27,8    13,8
Trading securities                                                       39,8    59,8
Loans and advances                                                       45,7   145,7
Accounts receivable                                                      21,3    30,4

TOTAL ASSETS                                                            239,8   414,7

EQUITY AND LIABILITIES
Equity
Share capital and premium                                                70,7   100,2
Non-distributable reserves                                                1,2     0,5
Foreign currency translation reserves                                     2,1     5,2
Distributable reserves                                                   30,2    44,4
Total equity                                                            104,2   150,3

LIABILITIES
Non-current liabilities                                                  14,7    25,0
Deferred tax liabilities                                                  1,0     2,8
Long-term deposits                                                        2,6     1,8
Other liabilities                                                        11,1    20,4

Current liabilities                                                     120,9   239,4
Current deposits                                                         94,3   191,2
Accounts payable                                                         14,0    22,5
Accruals                                                                  4,0     4,5
Other liabilities                                                         8,3    20,2
Bank overdraft                                                            0,1     0,4
Taxation                                                                  0,2     0,6

Total liabilities                                                       135,6   264,4
TOTAL EQUITY AND LIABILITIES                                            239,8   414,7
Net asset value per ordinary share (cents)
– book value                                                            115,7   165,9
– market and directors’ valuation                                       117,9   170,6




                                                       89
                                             Brait Annual Report 2002
ACCOUNTING POLICIES

BASIS OF PRESENTATION
The financial statements of the group are prepared in accordance with International Accounting Standards and the
financial statements of the company are prepared in accordance with Luxembourg law.

ACCOUNTING POLICIES
The following are the principal accounting policies which are consistent with the previous year, except for changes made
as a result of the implementation of IAS 39, “Recognition and measurement of financial instruments”.

1. PRINCIPLES OF CONSOLIDATION
   •   Business combinations
       Business combinations are accounted for in accordance with the underlying nature of the combination.
       Acquisitions are accounted for using purchase accounting and mergers are accounted for using the uniting of
       interests method. Where an investment in a subsidiary or associated company is acquired or disposed of during
       the financial period, its results are included from, or to, the date control became, or ceased to be, effective.

     •       Goodwill arising on acquisition
             Goodwill arising on acquisition represents the excess of the cost of acquisition over the group’s interest in the
             fair value of the identifiable net assets of the subsidiary at the date of acquisition. Goodwill is recognised as an
             asset and amortised per accounting policy note 14.

     •       Basis of merger
             The Brait group annual financial statements incorporate the annual financial statements of Brait S.A., and its
             subsidiaries. These parties merged their interests with effect from 1 April 1998. The merger has been accounted
             for as a “Uniting of Interests” in accordance with IAS 22 “Business Combinations”. All material inter-company
             transactions and balances have been eliminated.

     •       Associated companies
             Associates are those enterprises in which the group holds a long-term equity interest and over which it has the
             ability to exercise significant influence and which are neither subsidiaries, nor joint ventures.

             Equity accounted income, which is included in the carrying values of the associates, represents the
             group’s proportionate share of the associates’ profit before tax after accounting for dividends payable by
             those associates.

     •       Joint ventures
             A joint venture is a contractual arrangement whereby the group and other parties undertake an economic
             activity which is subject to joint control.

             Equity accounted income, which is included in the carrying values of joint ventures, represents the
             group’s proportionate share of the joint ventures’ profit before tax after accounting for dividends payable by the
             joint ventures.

2.       TRANSLATION OF FINANCIAL STATEMENTS INTO THE MEASUREMENT CURRENCY
         Assets and liabilities of foreign entities are translated into the group’s measurement currency, South African rands,
         at year-end exchange rates. Capital and reserves are translated at historical rates. Income statement items are
         translated at the average exchange rates for the year.

         Subsidiaries have been accounted for as foreign entities as their activities are not an integral part of the holding
         company. Translation differences arising from foreign entities are taken directly to reserves. On disposal of foreign
         entities, such translation differences are recognised in the income statement as part of the gain or loss on disposal.




                                                              90
                                                  Brait Annual Report 2002
3.   FOREIGN CURRENCY ASSETS AND LIABILITIES
     Non-South African currency transactions are accounted for at the exchange rates prevailing at the date of
     the transactions. Gains and losses resulting from the settlement of such transactions are translated at average
     exchange rates during the period. Gains and losses resulting from the translation of monetary assets and liabilities
     denominated in foreign currencies are recognised in the income statement at year-end exchange rates.

4.   TAXATION
     Income tax on the profit and loss for the year comprises current and deferred tax. Current income tax is the
     expected tax payable on the taxable income for the year, using tax rates enacted at the balance sheet date,
     and any adjustments to tax payable in respect of previous years.

     Deferred tax is provided for on the comprehensive basis, using the balance sheet liability method, for all temporary
     differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting
     purposes, using tax rates enacted at the balance sheet date.

     Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against
     which the unused tax losses can be utilised.

5.   GOODWILL
     Goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net assets
     of the subsidiary, associate or joint venture at the date of acquisition.

     Goodwill arising on the acquisition of subsidiaries, associates or joint ventures which were not part of the merger in
     1998, are reported in the balance sheet as an intangible asset and is amortised using the straight-line method over
     its estimated useful life, not exceeding 20 years.

     Goodwill is carried at cost less any accumulated amortisation. The carrying amount of goodwill is reviewed annually
     and written down for impairment where considered necessary.

6.   PROPERTY AND EQUIPMENT
     Property and equipment is stated at historical cost less accumulated depreciation.

     Depreciation is provided on historical cost using the straight-line basis at rates considered appropriate to write the
     assets off over their estimated useful lives. Land and buildings are not depreciated.

7.   FINANCIAL ASSETS AND INSTRUMENTS
     Financial assets and financial liabilities are recognised on the group’s balance sheet when the group has become a
     party to the contractual provisions of the instrument.

     •   Private equity interests
         Direct or carried interests in private debt or equity instruments are held at estimated fair value as determined by
         the board of directors at the balance sheet date. The resultant increase or decrease in value is recognised in the
         income statement. The directors determine the fair value for the group’s interest in private equity funds under
         its management by applying the guidelines of the British Venture Capital Association and the valuation indicators
         appropriate to the underlying listed or unlisted investments.




                                                                91
                                                    Brait Annual Report 2002
ACCOUNTING POLICIES CONTINUED



     •   Securities
         Investments in securities are recognised on a trade date basis and are initially measured at cost.

         At subsequent reporting dates, debt securities that the group has the expressed intention and ability to hold to
         maturity (held-to-maturity debt securities) are measured at amortised cost, less any impairment loss recognised
         to reflect irrecoverable amounts. The annual amortisation of any discount or premium on the acquisition of a
         held-to-maturity security is aggregated with other investment income receivable over the term of the instrument
         so that the revenue recognised in each period represents a constant yield on the investment.

         Investments other than held-to-maturity debt securities are classified as either held for trading or available-for-
         sale, and are measured at subsequent reporting dates at fair value, based on quoted market prices at the
         balance sheet date. Where securities are held for trading purposes or available-for-sale investments, unrealised
         gains and losses are included in net profit or loss for the period.

         Where there is no formal market, insufficient liquidity in the security, or there is a restriction on sale, the fair
         value reflects directors’ valuation.

     •   Repurchase and resale agreements
         Where securities are sold subject to repurchase agreements, the securities continue to be recorded as assets in
         the financial statements and are valued in terms of the accounting policy for securities investments. The
         proceeds from the sale of such securities are treated as deposits. Assets purchased subject to resale agreements
         are recorded as loans granted against security and are recorded under loans and advances.

     •   Endowment policies
         Endowment policies are revalued to reflect the redemption value of the policies.

8.   DERIVATIVE FINANCIAL INSTRUMENTS
     Derivative financial instruments are initially recorded at cost and are remeasured to fair value at subsequent
     reporting dates.

     Changes in the fair value of derivative financial instruments that are designated and effective as cash flow hedges
     are recognised directly in the income statement.

     Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised
     in the income statement as they arise.

9.   TRADE RECEIVABLES
     Trade receivables are stated at their nominal value, as reduced by appropriate allowances for estimated irrecoverable
     amounts.

10. DOUBTFUL LOANS AND ADVANCES
    Loans and advances are stated net of specific and general provisions. Specific provisions are made against
    specifically identified doubtful loans and advances. A general provision is held to cover potential losses which,
    although not specifically identified, are historically proven to be included in the portfolio held. The level of this
    general provision is reviewed periodically by the credit committee and the policy is reassessed if the composition of
    the book changes materially. Accrual of interest on advances is suspended when the recoverability of an advance
    becomes uncertain.




                                                          92
                                              Brait Annual Report 2002
11. PROVISIONS
    Provisions are recognised when the group has a present obligation as a result of a past event which it is probable
    will result in an outflow of economic benefits that can be reasonably estimated.

    Provisions for restructuring costs are recognised when the group has a detailed formal plan for the restructuring
    which has been notified to affected parties.

12. TRADE PAYABLES
    Trade payables are stated at their nominal value.

13. BORROWINGS
    Interest-bearing bank loans and overdrafts are recorded at the proceeds received, net of direct issue costs. Finance
    charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are
    added to the carrying amount of the instrument to the extent that they are not settled in the period in which they
    arise.

14. REVENUE RECOGNITION
    Fee income is recognised when all significant acts relating to services have been executed and the client invoiced.
    Interest income is recognised on a basis that reflects the effective yield on the underlying instruments. Gains and
    losses on investments and derivatives are recognised as set out above. Realised and unrealised gains and losses on
    disposal of trading securities are recognised in revenue. With the exception of preference share investments,
    dividends are brought into account as at the last date of registration in respect of listed shares and when declared
    in respect of unlisted shares. Where dividends on preference shares are calculated with reference to time and the
    ultimate receipt is beyond doubt, dividends are accrued on a daily basis.

15. BORROWING COSTS
    Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
    assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
    cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment
    income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
    deducted from the cost of those assets.

     All other borrowing costs are dealt with in income in the period in which they are incurred.

16. RETIREMENT BENEFIT COSTS
    Payments to defined contribution retirement benefit plans are charged as an expense as they fall due.

17. PROPERTY INVENTORIES
    Property inventories are reflected at the lower of cost and net realisable value, on a specific asset basis.

18. COMPARATIVE FIGURES
    Where necessary, comparative figures have been restated to conform with changes in presentation in the current
    year and changes in accounting policies.




                                                               93
                                                   Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS
for the year ended 31 March



                                                                                  2002      2001
                                                                                    Rm        Rm

  1.   REVENUE
       Includes the following:
       Fees and participations                                                   207,5     183,6

       Banking                                                                    30,2      38,8
       Other                                                                     177,3     144,8

       Net interest income                                                        38,4      77,5

       Advances                                                                   140,4     180,0
       Funding costs                                                             (160,2)   (169,8)
       Trading securities                                                          33,8      34,6
       Investing securities                                                        24,4      32,7

       Dividends                                                                  86,6      76,5

       Trading securities                                                         16,7      17,8
       Investing securities                                                       69,9      58,7

       Gains and losses on securities                                             53,1      35,2

       Trading securities                                                         30,0      21,3
       Investing securities                                                       23,1      13,9

       Miscellaneous                                                                0,6         –

       Total revenue                                                             386,2     372,8

       Revenue includes related party interest and similar income of
       R19,2 million (2001: R31,6 million).
       Revenue is inclusive of net currency exchange gains of R68,2 million
       (2001: R29,8 million) arising primarily from the translation of foreign
       currencies into the group’s measurement currency.




                                                       94
                                           Brait Annual Report 2002
                                                                                         2002            2001
                                                                                           Rm              Rm

2.   OPERATING EXPENSES
     Employee costs                                                                     105,1            104,2
     Retirement funding costs                                                             1,0              0,7
     Administration expenses                                                             29,8             21,9
     Rental expenditure of operating leases                                               0,8              3,5
     Bank expenses relating to fee income                                                 5,1              3,6
     Auditors’ remuneration                                                               3,5              3,9

     Audit fees – external                                                                 1,9             2,3
                – internal                                                                 0,6             0,6
     Prior year underprovision                                                             0,5             0,4
     Other services                                                                        0,5             0,6

     Directors’ emoluments                                                               11,8             10,4

     Executive directors
     As directors of Brait S.A.                                                            0,2             0,2
     As directors of subsidiaries                                                          8,7             7,9

     Non-executive directors
     As directors of Brait S.A.                                                            1,0             0,7
     Otherwise in connection with the group                                                1,9             1,6

     Provisions against loans and advances                                               71,1              9,7

     Fixed assets                                                                          8,8             (8,2)

     Loss/(profit) on sale                                                                 1,7           (11,7)
     Depreciation                                                                          7,1             3,5

     Other expenses (including realisation adjustments not disclosed above)              69,4             49,9

     Total expenses                                                                     306,4            199,6

     Operating expenses include related party interest and also fee and commission expenses of R0,3 million and
     R4,0 million respectively (2001: nil).




                                                        95
                                              Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                                                        2002     2001
                                                                                          Rm      Rm

  3.   TAXATION
       3.1   Taxation expense
             Current tax expense
             – for the year                                                              12,4     9,0
             – prior period adjustments                                                   0,1    (5,7)
             Deferred tax
             – for the year                                                             (15,2)    2,2
             Tax (credit) relating to associate                                          (0,8)   (1,6)

             Total taxation (credits)/expense                                            (3,5)    3,9

       3.2   Tax rate reconciliation                                                       %       %
             Average effective tax rate                                                    (5)      2
             Non-deductible expenses                                                      (26)     (7)
             Non-taxable income                                                           69       19
             Tax losses utilised                                                          (12)      –
             Tax differential                                                               4      16

             Applicable tax rate                                                          30       30

             Income tax has been reconciled to the South African corporate
             tax rate as the measurement currency of the group has been defined
             in South African rand.

       3.3   Other                                                                        Rm      Rm
             Deductible temporary differences and unutilised tax losses for
             which no deferred tax assets are recognised in the balance sheet
             as there will be no future taxable income to recognise the asset against   110,7     1,8
             Unutilised tax losses available for offset against future profits          126,0    12,7




                                                      96
                                            Brait Annual Report 2002
                                                                                             2002              2001
                                                                                               Rm                Rm

4.   EARNINGS PER SHARE (CENTS)
     The calculation of the basic and diluted earnings per share is based on
     the following data:
     – Attributable earnings                                                                  80,4            182,5

     – Number of shares
       Weighted average number of ordinary shares issued (million)                            93,5              93,5
       Weighted average number of treasury shares (million)                                   (3,4)             (2,9)

     – Weighted average number of ordinary shares for the purposes of basic
       earnings per share (million)                                                           90,1              90,6
     – Dilutive potential of share options granted to employees (million)                      0,1               0,6

     – Weighted average number of ordinary shares for the purposes of diluted
       earnings per share (million)                                                           90,2              91,2

5.   DISCONTINUING OPERATIONS AND REALISATION ADJUSTMENTS
     On 6 May 2002, the board announced its intention to apply for deregistration of its banking licence by
     30 September 2002 and the discontinuance of its Margin business and Trading activities carried out within
     this structure. At the same time the board approved an accelerated disposal of the assets of the discontinued
     operations and associated activities. This action has necessitated an abnormal R100 million non-recurring
     adjustment to the carrying value of these assets at 31 March 2002. It is expected that it will take at least two
     years to complete the realisation of these assets.

     The financial effects of the discontinuing operations are disclosed in the group income statement and
     segmental reports. The net cash flows attributable to the discontinuing operations are as follows:

                                                                                             2002              2001
                                                                                              Rm                Rm

       Net cash flows from operating activities                                              (67,1)             23,8
       Net cash flows from investing activities
       Net cash flows from financing activities

     A further R65 million of closure costs in the banking structure is expected to be expensed in future financial
     periods. The majority of this expense should be incurred in the financial year ending 31 March 2003.

6.   DIVIDENDS
     In August 2001 an annual dividend of 60 South African cents per share was paid to shareowners. In respect
     of the current period, the directors declared an interim dividend of 25 South African cents per share in
     November 2001 and have recommended a final dividend of 35 South African cents per share be paid to
     shareowners in August 2002. The final 2002 dividend is subject to approval by shareowners at the annual
     general meeting and has not been included as a liability in these financial statements. The US dollar
     equivalent of the proposed dividend will depend on the rand/US dollar conversion rate at the date of payment.




                                                           97
                                               Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March




  7.   SHARE CAPITAL
       Share capital
       Authorised share capital
       The authorised share capital of the company is US$225 000 000 represented by 150 000 000 shares of no
       par value.
       Issued share capital
       93 483 219 (2001: 93 483 219) ordinary shares of no par value
       The unissued ordinary shares are under the control of the directors, subject to certain constraints, until the
       forthcoming annual general meeting.

       At 31 March 2002, the company has granted options/share entitlements to directors and employees to
       subscribe for 9 457 710 (2001: 10 480 449) ordinary shares in the company as set out on pages 76 and 77.

                                                                                              2002             2001
                                                                                               Rm               Rm

  8.   NON-DISTRIBUTABLE RESERVES
       Luxembourg law requires the appropriation of 5% of the unconsolidated
       net earnings of Brait S.A. to a legal reserve until such reserve equals
       10% of its issued share capital. The legal reserve is not available for
       distribution, except upon dissolution of Brait S.A. The transfer to
       the legal reserve is subject to the approval of shareowners.                            13,7              3,9

  9.   DEFERRED TAXATION
       The components of temporary differences between accounting and
       taxation for income and expenditure are as follows:
       9.1   Liabilities and assets
             Deferred tax liabilities                                                          11,5             22,5
             Deferred tax assets                                                               (7,9)            (7,3)

             Net position                                                                       3,6             15,2

       9.2   Movement in net position
             The movement for the year in the group’s net deferred tax balances
             was as follows:
             Balance at beginning of the year                                                  15,2             11,4
             (Addition)/charge to income for the year                                         (15,2)             2,2
             Other                                                                              3,6              1,6

             Balance at end of the year                                                         3,6             15,2




                                                        98
                                            Brait Annual Report 2002
9.   DEFERRED TAXATION (continued)
     9.3   Analysis of liabilities
           The following are the major deferred tax liabilities and assets recognised by the group and the
           movement thereon during the year:

                                                 Unrealised
                                                  profit and
                                                  losses on
                                                     trading
                                                  securities,
                                               banking and       Prepaid                      2002           2001
                                                investments     expenses      Accruals         Total         Total
                                                         Rm           Rm           Rm           Rm            Rm

           Deferred tax liabilities:
           Balance at beginning of the year            17,3         14,6          (9,4)        22,5          14,5
           (Addition)/charge to income
           for the year                                 (9,3)       (14,6)         9,4        (14,5)          6,4
           Foreign currency translation
           movement                                      3,5                                    3,5           1,6

           Balance at end of the year                  11,5                                    11,5          22,5


                                                                                              2002           2001
                                                                                               Total         Total
                                                                                                Rm            Rm

     9.4   Analysis of assets
           Deferred tax assets:
           Balance at beginning of the year                                                     7,3           3,1
           Addition to income for the year                                                      0,6           4,2

           Balance at end of the year                                                           7,9           7,3




                                                         99
                                              Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                                             2002      2001
                                                                               Rm        Rm

  10.   DEPOSITS
        10.1 Category analysis
             Negotiable certificates of deposit                              55,3        9,4
             Deposits received under repurchase agreements                  236,9     295,6
             Other depositors                                               806,5    1 241,2

             Total deposits                                                1 098,7   1 546,2


             – Current deposits                                            1 068,9   1 531,7
             – Long-term deposits                                            29,8      14,5

             Total deposits                                                1 098,7   1 546,2

                                                                                %         %
        10.2 Maturity and geographical analysis
             Less than one month                                               75        80
             One to six months                                                 21        19
             Six months to one year                                             1         1
             One to five years                                                  3         –

             Total deposits in South Africa                                   100       100

                                                                               Rm        Rm
        10.3 Deposits received from related parties                          26,9      35,3

        10.4 Fair value
             The carrying value of deposits represents fair value as the
             majority are variable rate instruments                        1 098,7   1 546,2




                                                       100
                                              Brait Annual Report 2002
                                                                                         2002             2001
                                                                                           Rm               Rm

11.   OTHER LIABILITIES
      Liabilities subject to finance leases                                               51,6             59,2
      Loans from associates (unsecured)                                                   17,6             44,5
      Secured                                                                             71,7             70,3

      Total liabilities                                                                  140,9           174,0
      Less: Current finance leases included under current liabilities                     14,6             10,8

      Total other liabilities                                                            126,3           163,2

      The secured liability was raised in 2001 by the issue in two subsidiary companies of compulsory convertible
      loans. The conversion rights in respect of these loans was purchased by another group company for
      R7,5 million. The loans bear interest at effective rates, based on the capital outstanding, of 13,8% and
      14% respectively. The loans are secured over the property and certain fixed assets with a book value of
      R58,4 million.

                                                                                         2002             2001
                                                                                           Rm               Rm

      11.1 Repayment schedule of total liabilities
             Repayable in the year ending 31 March:
             2004                                                                         17,2             10,8
             2005                                                                         15,1             10,8
             2006                                                                         13,1             10,8
             Thereafter                                                                   77,9             97,2
             No fixed terms of repayment                                                  17,6             44,4

             Total liabilities                                                           140,9           174,0

      11.2 Analysis of interest rates payable
             0% to 5%                                                                     17,6             44,5
             10% to 15%                                                                   71,7             70,3
             15% to 20%                                                                   51,6             59,2

             Total liabilities                                                           140,9           174,0




                                                           101
                                                Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                                                  2002     2001
                                                                                    Rm       Rm

  11.   OTHER LIABILITIES (continued)
        11.3 Amounts owing to related parties                                      17,5     44,5

        11.4 None of the liabilities are subject to repricing and the
              carrying value approximates to fair value

  12.   ACCOUNTS PAYABLE
        Trade payables                                                            121,7    151,4
        Related parties                                                             1,0      3,9
        Deferred income                                                            11,3      7,7
        Other payables                                                             24,6      5,2

        Total accounts payable                                                    158,6    168,2

  13.   ACCRUALS
        Employee costs and benefits                                                32,4     32,5
        Other accruals                                                             12,6     15,8

        Total accruals                                                             45,0     48,3

        Movement of accruals
        The movement for the year in the group’s total accruals was as follows:
        Balance at beginning of the year                                           48,3     71,0
        Provisions utilised during the year                                       (31,0)   (48,0)
        Charge to income for the year                                              27,7     25,3

        – current year                                                             33,7     31,9
        – amounts released to income statement                                     (6,0)    (6,6)


        Balance at end of the year                                                 45,0     48,3




                                                       102
                                              Brait Annual Report 2002
                                                                                              2002                 2001
                                                                                                Rm                  Rm

14.   INTANGIBLES
      Cost
      Balance at beginning of the year                                                         44,7                24,2
      Arising on acquisition of business                                                        0,2                35,3

      Balance at end of the year                                                               44,9                59,5

      Amortisation
      Balance at beginning of the year                                                          4,8                 8,8
      Charge for the year                                                                       7,6                10,8

      Balance at end of the year                                                               12,4                19,6

      Carrying value                                                                           32,5                39,9

      Intangibles represent goodwill on acquisition. Goodwill is the difference between the cost of acquisition and
      the fair value of the net assets acquired. The average write-off period of goodwill is currently 10 years.




                                                           103
                                                Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                  Land      Furniture
                                                   and            and         Motor      Computer
                                              buildings        fittings     vehicles    equipment                Total
                                                    Rm             Rm            Rm            Rm                 Rm

  15.   FIXED ASSETS
        Cost
        Balance at beginning of the year          45,5           22,8            0,6          13,3               82,2
        Additions                                                  1,9           0,1           2,2                4,2
        Disposals                                                 (1,2)                       (0,4)              (1,6)

                                                  45,5           23,5            0,7          15,1               84,8

        Accumulated depreciation
        Balance at beginning of the year            0,3            2,2           0,3           5,3                8,1
        Charge for the year                                        3,1           0,1           3,8                7,0
        Disposals                                                                             (0,2)              (0,2)

                                                    0,3            5,3           0,4           8,9               14,9

        Carrying value
        – at 31 March 2002                        45,2           18,2            0,3           6,2               69,9
        – at 31 March 2001                        45,2           20,6            0,3           8,0               74,1

        15.1 Depreciation rates
               Furniture                   10% – 33%
               Equipment                   10% – 20%
               Computer equipment          20% – 50%
               Computer software           50% – 100%
               Motor vehicles              20% – 25%
               Partitioning                       17%
               Land and buildings with a book value of R45,2 million (2001: R12,7 million) is not depreciated.




                                                      104
                                            Brait Annual Report 2002
                                                                                        2002         2001
                                                                                          Rm           Rm

15.   FIXED ASSETS (continued)
      15.2 Fixed assets pledged as security
           Fixed assets amounting to R58,4 million have been pledged
           as security (refer note 11)                                                   58,4         59,6

16.   INVESTMENTS
      16.1 Carrying values
           Investments in joint ventures
           Unlisted                                                                      16,1         16,3

           – cost                                                                         4,6          6,4
           – share of retained earnings                                                  11,5          9,9

           Investments in associates
           Unlisted                                                                      50,9         73,0

           – cost                                                                         9,0          0,9
           – share of retained earnings                                                  41,9         72,1

           Securities
           Unlisted                                                                     751,9        869,4

           – Government                                                                  19,2         16,9
           – preference shares                                                          585,3        425,1
           – other                                                                      147,4        427,4


           Total carrying value of investments                                          818,9        958,7

           Other unlisted securities primarily comprise money market investments with major banks.




                                                          105
                                                 Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                                                           2002    2001
                                                                                             Rm      Rm

  16.   INVESTMENTS (continued)
        16.2 Valuation
             Investments in unlisted – joint ventures                                       20,2    42,0
                                       – associates                                         55,7    78,3
             Securities – unlisted                                                         751,9   869,4

             Total market value and directors’ valuation of investments                    827,8   989,7

             Market value approximates fair value and is not necessarily indicative of
             values that could be realised on disposal. Directors’ valuation of unlisted
             investments is based on expected return and other relevant factors.

        16.3 Joint ventures
             The following sets out the group’s proportionate share of
             joint venture assets, liabilities, income and expenses:
             Non-current liabilities                                                        82,1    67,4
             Current liabilities                                                            51,6    16,1
             Non-current assets                                                             26,4    20,4
             Current assets                                                                127,0    83,6
             Income                                                                         71,6    42,6
             Expenses                                                                       69,3    36,5




                                                        106
                                             Brait Annual Report 2002
                                                                         2002       2001
                                                                           Rm         Rm

17.   LOANS AND ADVANCES
      Loans and advances                                                 875,7    1 416,0
      Loans granted under resale agreements                                0,2      20,5
      Less: Provision for doubtful loans and advances                    (93,3)     (27,2)

      Total loans and advances net of provisions                         782,6    1 409,3


      Non-current loans and advances                                     264,3     241,9
      Current loans and advances                                         518,3    1 167,4

      Total loans and advances net of provisions                         782,6    1 409,3

      17.1 Balance of loans and advances on which interest
           has been suspended                                              6,4      19,1

      17.2 Category analysis of loans and advances
           Placements with, loans and advances to other banks            117,0     216,7
           Loans and advances to customers                               604,1     926,6
           Loans to directors (all secured and current)                   35,5      80,6
           Other                                                          26,0     185,4

           Total loans and advances net of provisions                    782,6    1 409,3

      17.3 Provision for doubtful loans and advances
           Opening balance                                                27,2      18,6
           Provision for uncollectible loans and advances raised          71,1        9,4
           Loans and advances written off                                 (5,0)      (0,8)

           Provision for doubtful loans and advances                      93,3      27,2

           General provision                                              23,1      15,7
           Specific provisions                                            70,2      11,5

           Provision for debt loans and advances                          93,3      27,2




                                                          107
                                              Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                                     2002      2001
                                                                        %         %

  17.   LOANS AND ADVANCES (continued)
        17.4 Maturity profile
             Less than one month                                       48        54
             One to six months                                         11        18
             Six months to one year                                    10        11
             One to five years                                         24         8
             More than five years                                       7         9

             Total loans and advances net of provisions               100       100

        17.5 Sectoral                                                  Rm        Rm
             Construction and property                               192,5    210,0
             Finance                                                 257,9    530,9
             Manufacturing                                            80,2    125,9
             Services                                                 26,7     45,0
             Transport                                                29,8     13,7
             Wholesale                                                91,6    126,7
             Telecommunications, media and technology                102,7    201,8
             Other                                                     1,2    155,3

             Total loans and advances net of provisions              782,6   1 409,3

        17.6 Geographical
             Europe                                                    9,8       3,9
             South Africa                                            772,8   1 291,2
             Africa Other                                                     114,2

             Total loans and advances net of provisions              782,6   1 409,3




                                                    108
                                          Brait Annual Report 2002
                                                                                         2002            2001
                                                                                           Rm              Rm

17.   LOANS AND ADVANCES (continued)
      17.7 Advances to related parties
               Advances to related parties include advances to associates,
               joint ventures, Brait Private Equity Funds, investee companies
               and other associated parties.

               Secured advances have been made by a group company to directors
               and entities controlled by individual directors. These advances are
               made on an arm’s length basis in the ordinary course of business.

               Total related party advances                                             124,5            149,8

      17.8 Fair value
               The carrying value of loans and advances approximates fair value,
               as the majority are variable rate instruments which are repriced
               on a daily basis.

18.   CASH AND CASH EQUIVALENTS
      Balances with other banks                                                         301,8             75,8
      Money on call                                                                        8,5            32,8
      Other                                                                                4,5             2,1

      Total cash and cash equivalents                                                   314,8            110,7

19.   TRADING SECURITIES
      Real estate for resale                                                               5,7            13,7
      Trading securities – listed (government)                                            80,0            62,5
                           – other                                                      371,3            393,2

      Listed        – market value                                                      120,7            181,6
      Unlisted      – directors’ valuation                                              250,6            211,6

      Option premium marked to market                                                     (5,3)            9,8

      Total carrying value of inventories and trading securities                        451,7            479,2

      Market value approximates fair value and is not necessarily indicative of values that could be realised on 1
      disposal. Directors’ valuation of unlisted investments approximates fair value.




                                                             109
                                                  Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                                                                 2002              2001
                                                                                                   Rm                Rm

  20.   ACCOUNTS RECEIVABLE
        Customers and other receivables                                                          241,2            237,4
        Amounts owed by related parties                                                            1,9               4,7
        Prepayments and accrued income                                                             1,2               2,0
        Provisions held against receivables                                                        (2,9)            (0,4)

        Total accounts receivable                                                                241,4            243,7

  21.   RETIREMENT BENEFIT COSTS
        Most of the group’s employees are members of its defined contribution
        retirement funds. The group does not have any defined benefit plans. The
        majority of the group’s employees also participate in various disability and
        group life assurance benefits.

  22.   CONTINGENT LIABILITIES AND COMMITMENTS
        22.1 Contingencies
              Guarantees and other contingent liabilities                                        159,6              21,0

        22.2 Commitments
              Commitments to extend credit and invest in funds                                   191,5            487,8
              Capital expenditure authorised and contracted for                                   14,0

  23.   FAIR VALUE OF FINANCIAL INSTRUMENTS
        Total excess of fair value of financial investments over book value                        (5,3)            33,8

        The accounting policies of the group prescribe that all financial assets and liabilities are stated at fair value
        with the exception of investments.

        The book values of all other financial assets and liabilities equate to the fair values of the instruments. Fair
        values have been determined using available market information and appropriate valuation methodologies
        but are not necessarily indicative of the amounts that the group could realise in the normal course of
        business.




                                                        110
                                              Brait Annual Report 2002
                                                         Fair value     Fair value    Fair value        Fair value
                                                           Positive       Negative           Net              Net
                                                              2002           2002          2002             2001
                                                               Rm             Rm             Rm               Rm

24.   DERIVATIVES
      24.1 Product analysis of derivative
           instruments at fair value
           Held for trading purposes
           Interest rate products                             43,6           (48,1)         (4,5)             2,8

           Forward rate agreements                            43,6           (48,1)         (4,5)             2,8

           Held for hedging purposes
           Interest rate products                              0,2            (1,0)         (0,8)

           Swap contracts                                      0,2            (1,0)         (0,8)


           Total fair value of interest rate
           derivative products held for trading
           and hedging purposes                               43,8           (49,1)         (5,3)             2,8

           Derivative instruments held for hedging purposes have been entered into in terms of asset and liability
           management strategies. The fair value of a derivative instrument represents the positive or negative
           cash flow which would have arisen had the instrument been closed out in normal trading conditions
           at the year-end.




                                                        111
                                               Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                                                                               Total
                                         Less                              More                            asset and
                                         than   Three to      One to        than       Total     Trading     liability
                                        three      twelve        five        five   notional    notional   manage-
                                      months     months        years       years     amount     amount         ment
                                          Rm          Rm         Rm          Rm          Rm          Rm          Rm

  24.   DERIVATIVES (continued)
        24.2 Maturity analysis
             of derivative
             instruments

             2002
             Interest rate products

             Over the counter          1 610         500      (1 200)         54        964         910           54

             Forward rate
             agreements                1 610         500      (1 200)                   910         910
             Swap contracts                                                   54         54                       54


             2001
             Interest rate products
             Over the counter          1 140       3 900         200          62      5 302       5 240           62

             Forward rate
             agreements                1 140       3 900         200                  5 240       5 240
             Swap contracts                                                   62         62                       62


             The notional amount is the gross value of derivative contracts outstanding at the year-end and serves
             only as an indicator of the extent of the group’s derivative activities. The notional amount does not
             necessarily reflect the amount payable or receivable under a derivative contract.

  25.   EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
        The directors are not aware of any material event arising since the accounting date, not otherwise dealt with
        in this report, that would affect the operations or results of the group.




                                                      112
                                           Brait Annual Report 2002
                                                                               2002      2001
                                                                                 Rm        Rm

26.   CASH FLOW INFORMATION
      26.1 Cash (utilised)/generated by operations
           Profit before taxation                                              76,8     186,4
           Dividends received                                                  (86,6)    (76,5)
           Interest received                                                  (198,6)   (247,3)
           Interest paid                                                      160,2     169,8
           Finance costs                                                       10,4        1,7
           Depreciation                                                          7,1       3,5
           Profit on sale of investments                                                  (5,5)
           Loss/(profit) on sale of fixed assets                                 1,7     (11,7)
           Unrealised gains and losses on securities and currency              (98,5)    39,7
           Equity accounted earnings and joint ventures                        (15,0)    (20,2)
           Movement in provisions and accruals                                 85,3      (25,2)
           Amortisation of intangibles                                           7,6     10,8
           Decrease/(increase) in accounts receivable                            2,3    (111,5)
           (Decrease)/increase in accounts payable                              (9,6)   132,5
           Other                                                                (7,2)      2,2

           Total cash (utilised)/generated by operations                       (64,1)    48,7

      26.2 Taxation paid
           Taxation balance at beginning of the year                            (4,4)    (56,1)
           Current tax expense – for the year                                  (12,4)     (3,3)
           Taxation balances at end of the year                                  1,8       4,4

           Total taxation paid                                                 (15,0)    (55,0)




                                                            113
                                                   Brait Annual Report 2002
NOTES TO THE GROUP FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                                                            2002             2001
                                                                                              Rm               Rm

  26.   CASH FLOW INFORMATION (continued)
        26.3   Acquisition of subsidiary
               Rabin van den Berg & Pelkowitz
               On 1 March 2000, the group acquired specific assets of
               Rabin van den Berg & Pelkowitz as a going concern, subject
               to certain suspensive conditions which have been fulfilled.
               Accordingly the effective date of the combination for accounting
               purposes is 1 March 2000, a thirteen-month period.
               The consideration paid was funded by way of an interest-free loan
               by a group company, with no fixed terms of repayment.

               26.3.1 Net assets acquired
                       Fixed assets                                                                            0,6
                       Accounts receivable                                                                     1,4
                       Goodwill                                                                               35,2

                       Total consideration paid                                                               37,2

               26.3.2 Consideration paid
                       – Loan from group company                                                              37,2

               26.3.3 Net cash position of transactions
                       Cash paid                                                                             (37,2)

                       Net cash outflow                                                                      (37,2)

               26.3.4 No provisions for restructuring were recognised at the date
                       of acquisition, nor in the period since that date.

               26.3.5 No voting shares were acquired.

        26.4   Dividends paid                                                               (75,2)           (68,9)
               Dividends represent the dividend of 60 cents paid in August 2001, being the annual dividend proposed
               in the prior year, and the interim dividend of 25 cents paid in November 2001. (2001 represents the
               annual dividend of 75 cents paid in July 2000.)

  27.   COMPARATIVE AMOUNTS
        Certain comparative amounts have been reclassified to ensure consistent disclosure in these financial
        statements.




                                                       114
                                             Brait Annual Report 2002
NOTES TO THE COMPANY FINANCIAL STATEMENTS
for the year ended 31 March



                                                                                      2002     2001
                                                                            Notes     US$m     US$m

  28.   FINANCIAL STATEMENTS OF BRAIT S.A.
        Brait S.A. is the holding company of the group.
        It was incorporated on 5 May 1976 in the Grand Duchy of
        Luxembourg in terms of the law of 31 July 1929.

        28.1 Income statements for the period
             Net financial and other income                                            13,1     25,2
             Administrative and other expenses                                         (1,0)    (0,5)

             Profit for the year                                                       12,1     24,7

        28.2 Balance sheets
             Assets
             Investments
             Subsidiaries at cost                                                     607,5    616,0
             Current assets                                                            51,9     36,9

             Interest-free intercompany advance with no fixed repayment date           25,1     35,4
             Accounts receivable and prepayments                                        2,3      0,1
             Cash and cash equivalents                                                 24,5      1,4


             TOTAL ASSETS                                                             659,4    652,9

             Equity
             Share capital and premium                                         28.4   625,7    625,7
             Legal reserve                                                              2,0      0,8
             Retained earnings                                                 28.5    30,6     26,2

             Total equity                                                             658,3    652,7

             Liabilities
             Current liabilities
             Accounts payable                                                           1,1      0,2

             Total liabilities                                                          1,1      0,2

             TOTAL EQUITY AND LIABILITIES                                             659,4    652,9




                                                          115
                                                 Brait Annual Report 2002
NOTES TO THE COMPANY FINANCIAL STATEMENTS CONTINUED
for the year ended 31 March



                                                                                      2002     2001
                                                                                      US$m     US$m

  28.   FINANCIAL STATEMENTS OF BRAIT S.A. (continued)
        28.3 Significant accounting policies
             Significant accounting policies for the company are consistent with
             those disclosed for the group, except for unrealised gains which have
             been excluded from income in accordance with Luxembourg law.

             The carrying value of subsidiaries is reflected at cost and does
             not take account of any possible impairment in the acquisition values.

        28.4 Share capital
             Authorised
             150 000 000 (2001: 150 000 000) ordinary shares of
             no par value
             Issued
             93 483 219 (2001: 93 483 219) ordinary shares of
             no par value                                                             140,2    140,2

        28.5 Retained earnings
             At beginning of the year                                                  26,2      2,4
             Profit for the year                                                       12,1     24,7
             Dividend paid                                                             (6,5)   (10,1)
             Transfer to legal reserve                                                 (1,2)    (0,1)
             Transfer from non-distributable reserves                                            9,3

             At end of the year                                                        30,6     26,2




                                                        116
                                           Brait Annual Report 2002
PRINCIPAL SUBSIDIARIES, ASSOCIATED
COMPANIES AND JOINT VENTURES
Details of subsidiaries, associated companies and joint ventures which are material to the financial position of the group
are stated below:


                                                                                                    Issued
                                                                                                  ordinary
  Name and                                Date of                                             share capital   Holding
  registration number                     incorporation       Nature of business                   Millions         %

  SUBSIDIARY COMPANIES
  Brait Private Equity Limitedø           03/09/91            Funds manager                                       100
  1991/004856/06
  Brait Merchant Bank Limitedø            26/10/60            Merchant banking                      R3,3m         100
  1960/003893/06
  Brait South Africa Limitedø             01/07/98            Holding company                       R1,0m         100
  1998/012594/06
  Capital Partners Group                  13/03/98            Funds manager and                 US$15,9m          100
  Holdings Limited*                                           investing
  271641
  Brait Mauritius Limited‡                01/04/99            Advisory services                                     85
  507172
  Brait International Limited‡            30/06/98            Advisory services,                                  100
  20703/4507                                                  investment holding company
                                                              and funds manager
  Brait Investments Limitedø              29/11/96            Investment and lending                              100
  1996/016949/06


                                                                                     Issued                   Carrying
                                          Date to which                            ordinary                      value
  Name and                                equity income                               share        Holding       2002
  registration number                     accounted for       Nature of business    capital              %         Rm

  ASSOCIATED COMPANIES
  African Alliance Limited†       31/03/02                    Holding company                           50        12,9
  79171C
  Capital Partners Group Limited* 31/03/02                    Funds manager                             49        33,6
  158272
  JOINT VENTURES
  ipac South Africa Limitedø              31/03/02            Financial services    R6,3m               50         1,5
  1999/008036/06
  Capital Alliance Finance
  (Pty) Limitedø                          31/03/02            Financial services                        50        18,8
  1998/006840/07

  * Incorporated in the British Virgin Islands
  † Incorporated in the Isle of Man
  ‡ Incorporated in Mauritius
  ø Incorporated in South Africa




                                                               117
                                                      Brait Annual Report 2002
NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the annual general meeting of shareowners will be held at the registered office of
the company, 69, route d’Esch, Luxembourg, L-2953, Grand Duchy of Luxembourg, at 09:30 on Wednesday, 31 July
2002 for the following business:

1.   To receive and adopt the consolidated financial statements of the company and of the group for the year ended
     31 March 2002, and to receive and adopt the reports of the directors and of the auditors for the year then ended.

2.   To ratify transfers to reserves.

3.   To ratify and confirm the payment of an interim dividend for the six months ended 30 September 2001.

4.   To approve the payment of the final dividend, as recommended by the directors.

5.   To grant discharge to the directors, officers and statutory auditors in respect of the execution of their mandates for
     the year ended 31 March 2002.

6.   To renew and confirm the authority granted to directors, subject to the terms of the articles of incorporation, to issue
     further ordinary shares, whether for cash or otherwise, as and when suitable situations arise.

     The authority of the directors to allot and issue shares in the company, whether for cash or otherwise, shall be
     granted until the fifth anniversary of the adoption of the company’s articles of incorporation, provided that this
     authority, unless confirmed by the annual general meeting of shareowners, shall not extend beyond 15 (fifteen)
     months from the date of adoption of the articles of incorporation or the date of such confirmation and is subject
     to the following limitations:
     • a paid press announcement giving details, including the impact on net asset value and earnings per share, will
        be published at the time of any such allotment and issue of shares representing, on a cumulative basis within
        one year, 5% or more of the number of ordinary shares in issue prior to any such issues;
     • that issues (excluding shares to be issued pursuant to any share incentive scheme established for the benefit of
        the employees of the company and its subsidiaries (“incentive schemes”)) in aggregate in any one year may not
        exceed 10% of the company’s issued ordinary share capital, provided further that such issues (excluding shares
        to be issued pursuant to incentive schemes) shall not in aggregate in any three-year period exceed 15% of the
        company’s issued ordinary share capital;
     • that, in determining the price at which an allotment and issue of shares will be made in terms of this authority,
        the maximum discount permitted will be 10% of the average market price of the ordinary shares as determined
        over the 30 days prior to the date that the price of the issue is determined or agreed by the directors on all stock
        exchanges on which the ordinary shares are listed and have traded during that period; and
     • that any such securities so issued for cash shall be made to the “public” and will also not result in an affected
        transaction.




                                                        118
                                             Brait Annual Report 2002
7.    To renew and confirm by way of a general authority that the company may purchase its own shares subject to the
      following limitations:
      • unless a tender offer is made to all shareowners on the same terms and except in case of an emergency where
          the repurchase is carried out to avoid a material loss which the company would otherwise incur, each purchase
          shall be made through a stock exchange on which the shares in the company are regularly traded and the
          purchase price shall not exceed 5% above the average market value for the shares on all stock exchanges on
          which the ordinary shares are listed and have traded for the 10 business days before the purchase;
      • if purchases are by tender, tenders must be available to all shareowners alike;
      • that this authority shall not extend beyond 18 (eighteen) months from the date of the adoption of these articles
          of incorporation but shall be renewable for further periods by resolution of the annual general meeting of the
          shareowners from time to time; and
      • the maximum number of shares that may be repurchased pursuant to this authority shall not exceed 10% of the
          issued share capital of the company from time to time.

8.    To re-appoint the directors for a further term of office in accordance with the provisions of the articles of
      incorporation.

9.    To re-appoint Deloitte & Touche SA as statutory and independent auditors.

10.   Miscellaneous.

Any shareowner may, in writing, appoint a proxy, who need not be a shareowner, to represent him at any general
meeting. Any company, being a shareowner, may execute a form of proxy under the hand of a duly authorised officer or
may authorise in writing such person as it thinks fit to act as its representative at the meeting subject to the production
to Brait S.A. of such evidence of authority as the board may require. The instrument appointing a proxy, and the written
authority of a representative, together with evidence of the authority of the person by whom the proxy is signed (except
in the case of a proxy signed by the shareowner), shall be deposited at the registered office of the company or a transfer
office, two clear business days (in the Grand Duchy of Luxembourg or the jurisdiction where the relevant transfer office
is located) before the time for the holding of the meeting or adjourned meeting (as the case may be) at which the person
named in such instrument proposes to vote. No instrument appointing a proxy shall be valid after the expiration of twelve
months from the date of its execution.

A form of proxy is enclosed with this annual report, the completion of which will not preclude a shareowner from
attending and voting at the meeting in person to the exclusion of any proxy appointed.

By order of the board of directors




M E King
Chairman

26 June 2002




                                                             119
                                                  Brait Annual Report 2002
ADMINISTRATION

Registered office                                             Registrar
Brait S.A.                                                    Dexia Banque Internationale à Luxembourg
69, route d’Esch                                              69, route d’Esch
L-2953, Luxembourg                                            L-2953, Luxembourg
Tel: +352-4590-2180                                           Tel: +352-4590-2180
Fax: +352-4590-3641                                           Fax: +352-4590-3641

Brait South Africa Limited                                    Transfer agents
9 Fricker Road                                                United Kingdom
Illovo Boulevard                                              Capita IRG plc
Illovo                                                        Bourne House
Sandton                                                       34 Beckenham Road
Tel: +27-11-507-1000                                          Beckenham
Fax: +27-11-507-1001                                          Kent, BR3 4TU
                                                              United Kingdom
Domiciliary and listing agent                                 Tel: +44-208-639-2000
Dexia Banque Internationale à Luxembourg                      Fax: +44-208-639-2342
69, route d’Esch
L-2953, Luxembourg                                            South Africa
Tel: +352-4590-2180                                           Computershare Investor Services Limited
Fax: +352-4590-3641                                           11 Diagonal Street
                                                              Johannesburg, 2001
Independent auditors                                          or
Deloitte & Touche SA                                          PO Box 1053
3, route d’Arlon                                              Johannesburg
L-8009 Strassen                                               2000
Luxembourg                                                    Tel: +27 11 370 5000
Tel: +352-45145-2417                                          Fax: +27 11 370 5487
Fax: +352-45145-2407
                                                              JSE and LSE issuer name and code
Legal advisors to the company                                 Issuer long name                      –   Brait S.A.
Elvinger, Hoss & Prussen                                      Issuer code                           –   BRAIT
2, Place Winston Churchill                                    Instrument alpha code/ticker symbol   –   BAT
L-2014, Luxembourg                                            JSE ISIN                              –   LU 0011857645
Tel: +352-446-6440
Fax: +352-44-2255                                             Website: http://www.brait.com




SHAREOWNERS’ DIARY
Announcement of results                                                                                    12 June 2002
Annual report issued                                                                                    End of June 2002
Annual general meeting                                                                                      31 July 2002
Proposed final dividend – declaration                                                                       31 July 2002
                        – last date to register                                                          23 August 2002
                        – payment                                                                        26 August 2002
Interim report                                                                                  early November 2002
Interim dividend – declaration and payment                                                               November 2002
Financial year-end                                                                                       31 March 2003




                                                       120
                                              Brait Annual Report 2002
PROXY FORM

Form of proxy for the annual general meeting of shareowners to be held at 69, route d’Esch, L-2953 Luxembourg on Wednesday,
31 July 2002 at 09:30.
A shareowner entitled to attend and vote at the annual general meeting is entitled to appoint a proxy, or proxies, to attend, speak and
vote thereat in his/her stead. A proxy need not also be a shareowner of the company.
Number of shares held by the shareowner/shareowners
I/We
of
being a shareowner/shareowners of the abovementioned company, hereby appoint:
                                                                                                                              or failing him/her
the chairman of the annual general meeting,
to whom he/she gives all powers to represent him/her at the said meeting, to take part in all deliberations and to vote in his/her name according
to the instructions set out below and to perform all acts necessary to give effect to the resolutions contained in the agenda as follows:
 1. To receive and adopt the consolidated financial statements of the company and of the group for the year ended 31 March 2002,
    and to receive and adopt the reports of the directors and of the auditors for the year then ended.
 2. To ratify transfers to reserves.
 3. To ratify and confirm the payment of an interim dividend for the six months ended 30 September 2001.
 4. To approve the payment of the final dividend, as recommended by the directors.
 5. To grant discharge to the directors, officers and statutory auditors in respect of the execution of their mandates for the year ended
    31 March 2002.
 6. To renew and confirm the limited authority of the directors to issue ordinary shares.
 7. To renew and extend the authority of the company to repurchase its own shares until the conclusion of the next annual general
    meeting of shareowners which will be held in July 2003.
 8. To re-appoint the directors for a further term of office in accordance with the provisions of the company’s articles of incorporation.
 9. To re-appoint Deloitte & Touche SA as statutory and independent auditors.
10. Miscellaneous.
Notes
1.     In terms of article 17.3 of the company’s articles of incorporation, a shareowner may appoint a proxy who need not be a
       shareowner of the company. Any corporation being a shareowner of the company may execute a form of proxy under the hand of
       a duly authorised officer.
2.     To be effective, the form of proxy, duly completed, must arrive at the registered office of the company or transfer office not less
       than 48 hours before the time fixed for the meeting.
Signed at                                                              this                      day of                                    2002
Address



Signature
Shareowners should please indicate by writing the number of votes in the appropriate spaces below, as to how you wish their votes in
respect of the proposed resolutions to be cast. If you return this form duly signed, without any specific directions, the proxy shall be
entitled to vote as he/she thinks fit.
                                                                              Number of              Number of               Number of
                                                                               votes for            votes against          abstention votes
       Resolution number 1
       Resolution number 2
       Resolution number 3
       Resolution number 4
       Resolution number 5
       Resolution number 6
       Resolution number 7
       Resolution number 8
       Resolution number 9
       Resolution number 10




                                                           Brait Annual Report 2002
G R A P H I C O R   2 6 0 7 8
Brait South Africa Limited
Tel: +27-11-507-1000, Fax: +27-11-507-1001


www.brait.com

				
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