Get documents about "FINANCIAL PERFORMANCE
Document Sample
F I N A N C IA L P E R F O R M A N C E
f o r th e t we l ve m o n t h s e n d e d 3 1 M a rc h 1 9 9 9
Change
1999 1998 %
Gr oup results (Rm)
Operating income 216,9 135,9 60
Funds management 40,8 55,1
Advisory 33,7 1,7
Investing 40,1 (10,4)
Banking and treasury 102,3 89,5
Attributable earnings 192,7 107,3 80
Dividend proposed 56,1 –
Shar e performance (cents per shar e)
Earnings per share (basic and diluted) 206,8 124,5 66
Dividends per share 60,0 –
Tangible net asset value per share 987,8 604,2 63
Closing share price – 31 March 1999 3 695 –
Financial statistics
Shares in issue (m) 93,48 86,16 8
Weighted average shares in issue (m) 93,22 86,16 8
Market capitalisation at 31 March 1999 (Rm) 3 454 –
Average shareholders’ funds (Rm) 853 485 76
Return on shareholders’ funds (%) 23 22
Dividend cover (times) 3,4 –
Three year compound growth in earnings per share (%) 91 –
Brait Merchant Bank capital adequacy ratio (%) 25,5 19,2 33
1
CONTENTS
Page
GR OUP PR OFILE inside front cov er
FINANCIAL PERFORMANCE 1
CONTENTS 2
ANNU AL HIGHLIGHTS 3
GR OUP A CTIVITIES 4
CHAIRMAN’S STA TEMENT 6
CHIEF EXECUTIVE’S REPORT 8
FINANCIAL PHILOSOPHY AND POLICIES 18
EMPLO YMENT REPORT 20
SHARE ANAL Y SIS 22
• Distribution of shareholders 22
• Stock Exchange performance 23
GR OUP STA TISTICS 24
• Financial definitions 24
• Statistics 25
RISK MANAGEMENT REVIEW 26
DIRECTORS 34
BO ARD COMMITTEES AND MANA GEMENT 36
ADMINISTRATION inside back cov er
Brait S.A.
Société Anonyme
(formerly Tolux S.A.)
Incorporated in Luxembourg
(RC Luxembourg B-13861)
ANNU AL HIGHLIGHTS
f o r t h e t we l ve m o n t h s e n d e d 3 1 M a r c h 1 9 9 9
FINANCIAL
• Attributable earnings up 80% in extremely difficult market conditions
• Three year compound growth in earnings per share 91% per annum
• Return on shareholders’ funds 23%
• Maiden dividend proposed
S T R AT E G I C
• Earnings mix improvement
• Holding company structure bedded down
• Successful restructuring and listing of Decillion investment
• Non-core activities disposed of or restructured
– Property operations sold
– Fincorp sold
• Merger integration substantially complete
O P E R AT I O N A L
• Two private equity funds raise additional R2 800 million
• Unit trusts attract R340 million
• Brait Asset Managers reaches critical mass and profitability
• Strong growth in the group’s advisory and treasury activities
• Increasing commitment to technology and innovation investing
2 3
GR OUP A CTIVITIES
FUNDS
M A N AG E M E N T
• Private equity funds
• Unit trust funds
• Retirement, institutional,
unlisted and empowerment
funds
A DV I S O R Y
BR AI T S. A. INVESTING
S E RV I C E S
• Corporate finance • Group operations
• Structured finance • Strategic investments
• Research and decision • Private equity
support
• Investment banking
• Legal and commercial • Management of capital
support
B AN KI N G
AN D T R E A S U R Y
• Secured corporate and
private lending
• Asset-based finance
• Money markets
• Trading
• Capital markets
• Equity markets
• Derivatives
• Stockbroking
C o n s i d e ra b l e p ro g re s s h a s b ee n m a d e i n th e
s h ar i n g of s ki ll s an d p ro d u c t s
C H A I R M A N ’ S S TA TEMENT
group’s operations are based, was devastating.
Equity prices plunged, interest rates spiralled
and business confidence fell to an all time low.
Notwithstanding these adverse conditions we
have achieved earnings of R192,7 million or
206,8 cents per share, up some 80% on the
1998 results. Although these earnings are not
yet in line with our target mix, they have been
achieved as a result of a concerted effort from
the group’s operations. It is particularly pleasing
to note the growth in income from the
advisory and non-trading treasury activities
which serve to balance the group’s earnings
between annuity and market risk income.
The group has achieved some important
milestones this year. Brait has raised the
Mer vyn King (Chairman) South African Private Equity Fund III which has
to date secured commitments in excess of
R2 500 million. This fund positions Brait as
H I S TO R Y South Africa’s pre-eminent private equity
The Brait group was created by the merger in manager with some R4 200 million under
August 1998 of Capital Alliance Holdings’ management. Soon after the year-end, the first
banking interests and Capital Partners’ closing of the Brait Technology and Innovation
private equity operations with Tolux S.A., Fund I was announced, putting the group in a
an investment holding company listed in position to capitalise on smaller technology and
Luxembourg, Johannesburg and London. As a innovation opportunities. The group’s advisory
consequence of the merger approximately business has grown significantly and now
85,6 million new shares were issued, increasing constitutes 16% of operating earnings. Brait
the number of shares in issue to 93,5 million. Asset Managers produced an acceptable profit
Tolux was renamed Brait S.A. in August 1998. for the first time. Our unit trust management
business has had an exceptional start and was
G E N E R A L O V E R VI E W able to announce a meaningful profit in its first
OF TH E Y E A R full year of operation. Brait increased its
This is the first reporting period of the Brait banking activities by introducing corporate
group since the merger and it is with some lending and asset-based finance. The refocusing
pride that I am able to report a very of the group, as announced at the interim, has
satisfactory performance for the year ended culminated in the disposal of the group’s
31 March 1999. interests in Seeff and Fincorp. The group
In July 1998, the group announced a profit supported and participated in the successful
forecast for the year to March 1999 of and profitable restructuring of its Decimax
R186,7 million or 199,8 cents per share in its interest into the newly listed Decillion.
listing particulars. Within weeks of that
forecast, the Asian contagion struck emerging S TA K E H O L D E R S
markets the world over. The effect on South Brait’s policy is to build reciprocal relationships
African marke t s ,w h e re the majority of the with its direct and indirect stakeholders.
C H A I R M A N ’ S S TA TEMENT
( c o n t i nu e d )
This approach recognises the contribution to difficult as we know only too well from this
be made by stakeholders to Brait’s sustained year’s experience. Looking forward, however, I
business success. can say that the group is well placed to grow
To date we have identified Brait’s direct from its current base of skills and resources.
stakeholders as our shareholders,clients, We have the expertise and the capital to enable
investors and employees and our indirect us to create material opportunities and to add
stakeholders as the South African community in value. Consequently, I am confident that the
which the group has substantial operations. group will continue to produce encouraging
We foster relationships with our clients by results.
going the extra mile and responding quickly to
clients’ requests, approaches or enquiries. They GENERAL
appreciate our integrated approach to their This has been a year of finding our feet in a
financial needs and our ability to invest with new and exciting group. In doing so, we have
them. The investors in our funds receive laid our long-term go a l s ,b e l i eve strongly in
regular updates and may be represented on our values and are determined to manage our
advisory boards. relationships with our stakeholders for mutual
Brait employees are treated with dignity and benefit.
respect. Most of our employees are incentivised Whilst the stewardship of Brait has been a
through a share scheme and performance challenging one during its founding year, we
bonuses. are equipped and well prepared for the
We are finalising the formation of the Brait challenges ahead.
Foundation, a vehicle through which Brait will We are confident of producing sustained
be able to assist young financially disadvantaged business success and we are in good heart. In
South Africans who have demonstrated ability. this mood we relish the challenges in the
The Foundation will focus on education and the financial year ahead.
development of commercial skills and support
the group’s black empowerment initiatives. A P P R E C I AT I O N
My appreciation goes to all my colleagues on
D I V I DE N D P O L IC Y the board, management and staff for their
Brait will retain earnings while it has sufficient contribution to a successful initial year and I
investment opportunities which exceed its cost record a special thank you to our clients and
of equity. At the same time, it is recognised investors for their support.
that dividend growth is an important
component of shareholder wealth creation.
Consequently, while the quality of the group’s
earnings are satisfactory and the taxation
inefficiencies are not too burdensome, the
group will propose annual dividend declarations Mer vyn King
to its shareholders. Chairman
The board has, therefore, taken the decision to
propose a maiden dividend of 60 South African 24 May 1999
cents per share.
YE AR A H E A D
Forecasting earnings accurately is not easy.
Producing the results in volatile markets is
6 7
C H I E F E X E C U T I V E ’ S R E P O RT
creation of Brait and have evolved further over
the year. We have now disposed of the
personal financial planning and property
businesses that we felt did not fit our longer-
term plans, and supported the development and
successful spin-off of our former associate,
Decimax Limited, through Decillion Holdings
Limited, into an independent and public form.
Brait has also significantly enhanced the level of
private equity fund commitments under
management in the year, and built profitable
business lines across our advisory, banking,
funds management and unit trust management
operations.
Brait’s focus in southern Africa remains strong
Mark Barnes (Group Chief Executive)
as the opportunities in this market are
expected to deliver extraordinary results in
Brait has concluded its first year on a very times of unprecedented corporate renewal in
positive footing. The process of negotiating, the region.
structuring and concluding the merger and Set out below is a review of Brait by its
reverse listing of the group culminated in principal business activities.
the launch of a new corporate image and
implementation of the strategy on 3 August P R I V AT E EQ UI T Y
1 9 9 8 .E x t reme market volatility negatively Our private equity business comprises the
impacted on the group’s trading results in the management of funds raised internationally
months that followed. Fuelled by unfounded from institutional investors. Brait Capital
r u m o u r s ,B r a i t ’s share price declined Partners leverages its specialised skills in
precipitously, testing the support of our clients, realising superior returns from investment in
shareholders and staff alike. It is therefore with privately negotiated transactions of expansion
a feeling of accomplishment and some resolve or replacement capital, alongside able and
that Brait announces its first set of annual incentivised management teams.
results, exceeding its rand-denominated profit At the time of the merger Brait managed two
forecast. unlisted funds: The first of these was Fund I,
In the context of the year’s uncertainty, Brait the Fedsure Capital Fund, an open-ended trust
made progress in adapting its structure. Its aim that generally invests between R5 million and
is to deliver investment and merchant banking R20 million, taking minority equity positions in
deals that meet the challenges its customers established but developing businesses. Brait co-
are facing in the corporate world, particularly invests in each of these enterprises. The
in South Africa. We see globalisation, second fund was Fund II, comprising
sharpening fo c u s ,g rowth of intellect, teamwork predominately offshore and institutional capital,
and efficient use of capital as the essential making investments between $5 million and
components of this challenge. These same $25 million, including control positions.
drivers of corporate change promoted the Since its first investments in February 1992 to
T h e o pp o r t u n i t i e s in t hi s m a r ke t a re ex p e c t ed t o
d e l i ve r ex t ra o rd i n a r y r es u lt s i n t im e s o f
u n p r e c ed en te d co rp or a te r e n e wa l
We f os t e r r e l a ti on s h i p s by
g o i n g t h e e x t ra m il e
C H I E F E X E C U T I V E ’ S R E P O RT
( c o n t i nu e d )
31 March 1999, Fund I had generated a realised Entertainment through share swap transactions
gross annual internal rate of return (“IRR”) of for its previously unlisted interests in radio
40% in rand terms, while Fund II’s equivalent stations Jacaranda and Algoa.
return was 84% expressed in US Dollars. Valuations of listed investments came under
Importantly this track record has enabled severe pressure in the year due to the decline
Brait Capital Partners to increase its fund in the Johannesburg Stock Exchange.
commitments under management materially Internationally, sentiment towards emerging
during the year under review. Commitments for market bourses turned sharply negative in the
Fund III (the South African Private Equity third quarter of calendar 1998, and the
Fund III) have reached R2,5 billion resultant impact on interest rates also hurt
($420 million) and a final closing is anticipated valuation ratings and operating performance.
by the end of June 1999. Fund III will target Consumer and manufacturing investments
transactions of between $10 million and were affected harshly, particularly Cornick
$75 million which, together with leverage and Astrapak in the fund portfolios. The
outside the fund, will enable Brait to effect performance and value of Toco, under the
significant transactions in the years ahead. management of Brait Turnarounds,suffered in
In addition, after year-end Brait has achieved a this env i ro n m e n t .C ape Star’s value also declined
first closing of a new fund, Brait Technology and as sentiment turned against listed private equity
Innovation Fund I, which will target investments funds.
up to R35 million in technology and innovation. The rand declined sharply against the dollar in
Commitments to date of R250 million include a the period. International investor confidence in
number of South African institutions which have emerging markets declined relative to buoyant
not invested with Brait or in private equity mainstream equities in developed economies.
before. This fund will include early stage The environment for raising fresh private
investments within its mandate, and builds upon equity commitments for deployment principally
the experience of Brait’s record in investment in southern Africa became unfavourable. The
in this area including the prototype venture achievement of reaching $420 million of
capital activity which Brait had conducted commitments for Fund III so far was therefore
previously on balance sheet. especially pleasing.
During the year the private equity team In contrast, the capital raising environment
concluded investments across a diverse set of for Brait’s private equity funds from South
s e c t o r s .N ew unlisted positions included African institutions was significantly more
Nortech (electronics), Unispan (formwork), favourable than when Fund II commenced in
Somerset Educational (microscience),Frankipile 1995. The performance of Brait’s funds
(construction), DGB (wine and spirits relative to a largely stagnant public market in
distribution), Rubico (ERP Software) and the same period, together with the growing
Laundresse (appliance technology). Of the team and reputation of Brait Capital Partners,
group’s existing inve s t m e n t s ,G r ay Security resulted in a high level of acceptance.
Services joined the Johannesburg Stock Institutions have also come to appreciate that
Exchange, whilst successful listed positions in unlisted private equity funds under the
USKO and Computer Configurations were management of a successful and reputable
p a rt ly realised. In media, the funds took listed investment team represent an attractive
positions in Kagiso Media and African Media alternative asset class.
10 11
C H I E F E X E C U T I V E ’ S R E P O RT
( c o n t i nu e d )
The private equity team has grown further rapidly to a position where they constitute a
during the year and is the largest team material 16% of the group’s profit before tax.
operating in the South African market. We have This is a low risk activity utilising the Brait
added a strategy research and analysis unit to franchise and intellectual capital with a limited
support the full investment cycle. draw on the group’s financial resources. We
Private equity profitability in the year was are targeting a further improvement in
satisfactory, although behind target. Income in contribution from advisory activity, although as
the year to March 2000 is likely to improve as a a percentage of group earnings advisory income
result of the increased volume of capital is not expected to grow as rapidly as over the
commitments and gains expected from Brait’s last year.
participation in value appreciation from
investments made in these funds. TREASUR Y AND TRADING
Treasury had an excellent year under difficult
A DV I S O R Y trading conditions. With the increase in
Advisory services across Brait made excellent the bank’s capital during the year to over
progress. The advisory teams within the group R500 million and a concerted marketing effort,
have been established in the last two years and we were able to diversify our client base
have met or exceeded ambitious targets this dramatically. With the volatility in the markets,
year. Brait’s corporate finance team finished there was an increase in client trading and we
fifth by number and sixth by value in the Ernst were able to take advantage of interest rate
and Young Review of Merger and Acquisitions moves via an increased presence in the FRA
Activity for 1998, completing transactions and asset market.
valued at R17,6 billion. In the first half of the year, Brait suffered
The project finance team also made a strong trading losses from a series of long positions
contribution,particularly in the second half- in the bond market during a period of
year. Most of these deals have a long lead-time, sustained weakness as interest rates spiralled.
and there are a number in the pipeline which These losses were offset by other trading
look promising for the next financial year. profits resulting in a net R22 million loss at
We are now well positioned to take advantage half-year. This setback was followed by a
of deal flows that are originating from other period of tightened risk parameters which
areas within the group. in turn may have denied the trading operation
The transaction execution activity comprising opportunities in the period of declining
principally commercial legal work for group rates and continued volatility that endured
investments and third-party deals also made a for the balance of the year. Our risk
strong profitable contribution in its first full management capabilities have been
year of operations. enhanced through appointment of additional
Brait established an operation in Mauritius in personnel.
March 1999 to provide advisory services to Brait Securities operated profitably during the
both local and offshore businesses. Mauritius year, with its stockbroking agency activities
represents a growing entrepreneurial nation shifting towards equity execution and away
within SADC, with an attractive legislative from bonds. The business continues to evaluate
framework for offshore services. developments in online trading using internet-
Taken together, advisory fees have grown enabled technology.
C H I E F E X E C U T I V E ’ S R E P O RT
( c o n t i nu e d )
BANKING AFRICA
Brait built on its banking business during the Our African operations are housed in a 50%
year by enhancing its corporate banking team held associate, African Alliance, which has
and lending book and introducing asset-based continued to grow off a strong historical
finance. presence in Swaziland. We have moved
Corporate banking had a good year, and successfully into Botswana this year, where
although we did not achieve our budgeted most of our new activities have become
advances, wider margins assisted in meeting the fo c u s e d .O ver the last year we launched more
shortfall. Brait has also developed some new unit trusts and a small private equity fund. This
structured corporate products which were put is an operation that has grown substantially
in place in the second half-year and these are over the last year, and from next year will be
encouraging prospects for next year. run as a more autonomous unit, with the
Asset-based finance has become well administration being undertaken in Botswana
established in its first year, with a number itself.
of new clients. We achieved our targeted loan Our Mauritian operations are Brait
book by year-end and look well set to meet subsidiaries and were established in March
our forecasts for the coming year. We are 1999. In addition to structuring benefits
seeing a number of opportunities arising in this offered, we see Mauritius becoming increasingly
area for private equity and investment banking integrated with South African financial markets
and vice versa. particularly arising from its membership of
Brait Merchant Bank ends the financial year the SADC bloc.
with a healthy and conservative capital
adequacy ratio of 25,5% which provides not A S S E T M AN A GEMENT
only depositor and client confidence, but also Brait Asset Managers, now concluding its fourth
significant further growth prospects in its year of operations, has a staff complement of
banking activities. 20 people and assets under management
The loyal response of Brait Merchant Bank’s exceeding R2,5 billion.
client base to the unfounded rumours circulating The past financial year was characterised by
during the year bore testament to the trust and high levels of market volatility and staff
relationship built up over many years. turnover in the asset management industry.
12 13
G l o b a l i s a t i o n , s h a r p e n i ng f o c u s , g row t h o f i nt el l e c t , t e a m w o r k
a nd e f f i c i e n t u s e of c a pi ta l a re th e e s s e nc e o f o u r ch a ll e n g e
C H I E F E X E C U T I V E ’ S R E P O RT
( c o n t i nu e d )
In this environment Brait Asset Managers was Within the constraints of the Unit Trust Control
pleased to report an increase in funds under Act in South Africa we have fashioned unique
management of more than 30% and, for the and sustainable theme funds that should provide
first time, a respectable overall profitability. investors with reliable long-term investment
Investment performance in the unit trust funds returns.
managed was outstanding. In the retirement Four unit trusts were launched in February
funds returns were disappointing for the 1998 1998 and this year we added the Brait
calendar year, but results for 1999 to date are International Growth Fund of Funds, the Brait
encouraging. Superhighway Fund, the Brait Growth Fund of
A number of challenging mandates were Funds and the Brait Money Market Fund.
acquired during the year, including retirement On the performance front, the Brait
fund, specialised equity and bond investment Accelerated Growth Fund was the only general
mandates and unlisted development funds. Brait equity fund in South Africa to achieve a
Asset Managers’ client base now includes some positive return over a one-year period to
of South Africa’s leading corporates, and local 31 March 1999. The Brait Managed Fund
and international consultants. performed in a similar vein, returning 25,2%
The asset management industry is experiencing for the year, also securing a top position in its
increasing levels of competition and is yet to South African peer group. All the other funds
feel the full impact of the globalisation which have also performed well and have been ahead
has already changed the face of the local of their designated benchmarks.
securities industry. The past year has been a tough one in
Brait will continue to focus on its chosen investment markets, with new entrants
niches which involve the deployment of particularly under pressure. Despite this, Brait
specialised asset management skills to large unit trusts have made their mark with the net
South African corporates and targeted retail inflows into our funds placing us in the top half
markets through the group’s unit trusts. of the South African industry peer group.
Brait Asset Managers has a strong heritage of The unit trust operation made a profit, an
empowerment at grassroots level and continues achievement of which we are justifiably proud
to foster the ethos of profitable empowerment due to the nature of the business being
and development, both in our team and our strongly biased to a large annuity base.
investment selection. Brait plans to develop further theme products
and to increase the value of unit trust funds
U N I T T RU S T S under management in the year ahead. In this
Brait Management Company has enjoyed a endeavour we will be partnering with
steady increase in its unit trust assets under innovative global experts and building our
management in its first full year of operations. own capability in design, marketing and
At year-end assets approximated R340 million investment. Unit trusts are playing a dominant
at an average size of around R690 000 per role in a more transparent and increasingly
client, which is exceptionally high by industry specialised investment environment, and
standards. This achievement is a tribute to our Brait is well positioned as a successful
focus and an ongoing commitment to provide emerging competitor in this growing sector
solutions for our clients’ investment needs. in South Africa.
14 15
C H I E F E X E C U T I V E ’ S R E P O RT
( c o n t i nu e d )
G R OU P CA P I TAL A N D synergy with other Brait skills and it was felt
P R I N C I P A L IN V E ST I N G that new ownership would benefit these
The reverse listing transaction that gave rise to independent operations.
the launch of Brait on 3 August 1998 included The personal financial planning operations
the injection of approximately R255 million of managed under the Fincorp brand were sold
additional capital in the group. This raised the during the year, with Alexander Forbes
shareholders’ funds employed by Brait acquiring the more significant Johannesburg
Merchant Bank at the beginning of the year to branch. The profit on discontinuance of this
R480 million and significantly enhanced the operation, net of its trading results for the year
bank’s capital adequacy and attractiveness to amounted to some R6 million.
depositors. For the balance of the financial year, Also, Brait Properties was restructured through
this additional capital was primarily invested in the sale to management of its agency
low risk money market assets. A similar franchising and mortgage origination businesses
strategy was employed in disposing of the operated under the Seeff brand as well as the
investment portfolio previously held by Tolux disposal of the group’s property management
and holding this capital in dollar-dominated operations and part of its development
near cash investments. portfolio. In accounting terms, the losses on
While this low-risk capital investment strategy discontinuance, taken together with the
was timely in a year of unprecedented operating losses for the year are expected to
turbulence, Brait intends to shift its stance on amount to R18 million. This has been included
deployment of capital towards positions in in the operating results for the year ended
which returns can be generated to exceed the 31 March 1999.
cost of such capital. For example, the group is During the year, the group’s strategic stake in
able to invest in the private equity funds under risk management and derivatives business,
its management and participate in their Decimax (Pty) Limited, was restructured and
superior investment performance. In addition, exchanged for an interest in a broader risk
within best practice parameters of risk management services group, Decillion Limited,
management, Brait is able to take investment which was successfully listed on the
banking positions on its own balance sheet Johannesburg Stock Exchange in March 1999.
accessing its proprietary and growing deal flow We were supportive of these developments
across all business units. This is expected to and they have added significantly to the value
leverage Brait’s intellectual capital for the of our investment. The injection of new
benefit of shareholders without exposing the institutional capital into Decillion and
group to unacceptable risk. the exercise of a call option by Decillion
management on a portion of Brait’s interest
BU S IN E S S U N I T changed the nature of this holding from a
R E S T R UC T U R I NG AND strategic to an investment stake. By year-end,
DISPOSALS the group’s participative holding in Decillion
As noted earlier, a number of businesses had been reduced as a consequence of these
inherited by Brait from the non-insurance transactions and represented less than
assets of Capital Alliance Holdings were re- 20% of Decillion’s equity. The net effect on
evaluated and determined not to be core to the results of the group for the year from
the new strategy. There was found to be little the realised gain on the dilution of our
C H I E F E X E C U T I V E ’ S R E P O RT
( c o n t i nu e d )
investment in Decillion was approximately including earnings per share. However, we are
R24 million. not bold enough to make a forecast for the
years ahead other than to underscore our
M E R GE R B E N EF I T S passion for shareholder value and to state our
Considerable progress has been made in the desire to deliver consistent and significant
sharing of skills and products, and managing earnings growth.
relationships and deal flows to optimise value While the year has been both difficult and
for Brait, its shareholders, investors and clients ultimately successful, I am sure that my
alike. The relationship between the private colleagues at Brait will make the years that
equity and merchant banking business has follow no less extraordinary. The times in
already shown results and significant potential which we live and the talent we have assembled
exists for both these aspects of the group. We demand nothing less.
find strong market acceptance of the Brait
name and franchise, as well as a growing
understanding from our client base and
shareholders of the strategy and benefits
inherent in the merger.
Mark Barnes
C O N C LU D I N G R EM A R K S Group Chief Executive
Our intention is to maintain a focus on
intellectual capital and not to rely on our own 24 May 1999
balance sheet strength, preferring rather to
manage significant capital for investors in fund
formats. In keeping with this philosophy to
desist from hoarding capital, we have elected to
recommend a dividend to shareholders.
Nevertheless, we expect to grow and deliver to
our stakeholders a return well in excess of
risk-adjusted cost of capital in the years ahead.
I welcome the active participation of our non-
executive board members and express our
appreciation to the Brait team which has
remained dedicated and stable through this
extraordinary year. Our thanks and good
wishes go also to our friends and former
partners at Capital Alliance and Decillion who
are also forging successful and focused
franchises in their chosen niches.
Working with the responsibility and pressure of
a profit forecast in a year of weak and volatile
financial markets has been a challenge that we
have mostly relished. We are confident of
growth across all important benchmarks
16 17
FINANCIAL PHILOSOPHY AND POLICIES
R E P O RT I N G C A P I TA L
Brait is committed to transparent reporting and Brait is committed to using its capital optimally
disclosure. Information provided to all to maximise long-term shareholder wealth. The
stakeholders, including financial results and the group has set itself ambitious return on equity
annual report, are presented in a meaningful targets which considerably exceed its current
and relevant manner so as to enable users to cost of capital.
gain a proper and objective perspective of the
group. DIVIDENDS
The group will retain earnings while it has
S H A RE H O L D E R W E A LT H sufficient investment opportunities which
Brait aims to maximise shareholders’ return on exceed its cost of equity. Nonetheless, Brait
their investment through sustainable share recognises that dividend growth is an important
price appreciation and appropriate dividend component of shareholder wealth creation and
yield. that while the quality of the group’s earnings is
satisfactory and the taxation inefficiencies are
RISK within reason, the group will propose annual
Brait is in the business of managing risk to dividend declarations to its shareholders.
enhance shareholder value. The group has an
established culture of risk management which
incorporates all activities of the group and is
closely monitored at both operational level and
the centre. The group’s operations invest in
systems and procedures to ensure that best
business practice is applied in this area.
O u r co ll ea g u e s wi l l m a ke t he ye a r s th a t
f o l l ow n o l es s ex t ra o rd i n a r y
E M P L O Y M E N T R E PO RT
P R O FI L E O F B R AI T ’S P E OP L E O P P O RT U N I T Y
Brait employs 201 staff, incorporating 109 The group is an equal opportunity employer
professionals with an average age of 34 with and respects the rights of all its staff. The
211 tertiary qualifications. Its people are teamed principal criteria for advancement in the group
in tightly integrated and autonomous units are performance and merit. Brait also
which reflect a broad cultural, disciplinary and recognises in its South African operations the
talent diversity. Brait places great value on the need to draw on staff from those communities
competence and experience of its people which have had restricted opportunities in the
despite their youth. This is proudly past, and to place emphasis on their training
demonstrated in earnings performance for the and development.
year of some R958 000 per member of staff.
The people of Brait are the force and energy S H A R I N G OF I NF OR M A TION
behind its vision. The group places a higher Brait encourages and practises a participative
value on performance and creativity than on the style of management in which its staff can
traditional corporate hierarchies. The group’s contribute to the shape and direction of the
teamwork and ability to present a holistic group and also through this process can realise
service to its customers are critical to its their own full potential.
success. These factors set Brait apart in the
South African financial services environment. C O M P E N S AT I O N
The distribution of staff amongst the group’s Brait has aligned the interests of the majority
operations is as follows: of its staff to those of its shareholders through
various performance incentive and profit
sharing schemes. These schemes are designed
to encourage a culture of both individual
excellence and outcome oriented teamwork.
DEVELOPMENT
The group aims to ensure all staff are given the
opportunity to develop to their full potential.
Great emphasis is placed on recruiting people
with above average skills and those who fit the
Brait culture favouring a “hands on” and team-
based approach. Brait thus offers an effective
platform for releasing and developing the
already established and exceptional talent in its
people.
• Abe Mohamme • Alistair Lea • Allan Allison • Ana Bib is • A n d r e Har t z en berg •
• A n d r e Louw • A n d r ew Brad ley • A n d r ew Shel don • A n g el a Gray • Angus Ma cRobert •
• Anita de Sousa • Ann a Pel ser • Annelies F a r quharson • A n s l e y-J ane H ailes • A n t o n y Ball •
• A n t h o n y Hew at • An ton Eser • Arnold Sha p i r o • Ayand a Sisulu • Bafana Simelane •
• Barr y O’Mahony • Belinda Lourens • Bennie Gouws • Bernard Katz • Bev Cham berlai n •
• Bi ll Clucas • Brett Moshal • Brett Stacey • Bruce MacRobe rt • Bruce R ichards on •
• Carla R obinson • C arol Hutama • Carol Michau • Ce leste van der Brock • Chad Smart •
• Charles Graha m • Charmaine Ho • Ch armaine Nel • Chris Newlan d • Chri s Tayelor •
• Chris to Strydom • Clai r Honnet • Colin Drew • Colin Warner • Coli n Weathe rston •
• Craig Ch amberlain • Crai g Clucas • Craig Polk inghorne • Craig Sm ith • Dale Hun ter •
• D aleen Ve nter • Dap hne Phil lip s • David Field • David Han sf o r d • D avid Lake •
• Deir d r e Li Green • Deon R enney • Deon Swar t • Des Mahony • Desirée Winnaar • Devi Pillay •
• D ianne Murphy • D irk Bredenhan n • Dylan Fros t • Eduardo Garcia • Elizabeth Scullard •
• Elize Ni enaber • Enoch Dube • Esme Gr o b ler • Estelle Botes • Faith Khanyil e •
• Fred erick Magerman • Ge offrey Motsepe • Ge orgina Mariouklas • George Williams on •
• Gerhard K o t z e • Gerhard Malan • Gladys Lekgoathi • Glen Zamudi o • Grae me Ste phe ns •
• Graham H ope • Greg Voigt • Gregg Lis ter • Gr e go r y F e r rans • Guillaume Roux • Hasso Engel •
• Hawa-Bibi Kha n • Ha y l e y Philli ps • Heidi Wolter • Hennie Ras • Hi lda Ndlovu • Jackie Pule •
• J acob Makgai • Jacob Malebo • Jacqui Lloyd • James F a i r cliff • Jam es Sheldon • Jasandra Nyke r •
• Jayne van der Merwe • Jeanette Mogale • J e f f r y R amathieledza • Joan Ra demeyer •
• Jo-Ann Reynolds • John Che maly • John Gnodde • John Huddy • Jonat han Sweidan •
• Joseph Madhl ala • Kagiso Moe rane • Kara Thomson • Kathl een Dougl as-Henr y •
• KeaObak a Mah uma • Ke ith Br e a c k ell • Kenneth Moloi • Kim du Toi t • Kurauwane Chihota •
• Lara Kuhlenthal • Liana Wessels • Liesl Roe sch • Lizelle Del port • Loma Petersen •
• Lorraine H anna • L ouise Kruger • Luc Albi nsk i • Lyne tte Lemmer • Lynne Jennings •
• Ma g g y Morei • Mandy Pain ting • Mandy Seccombe • Mark Barnes • Mark Ev e r dij •
• Mark Gevers • Marle ne Jafth a • Mar y Har tigan • Mar y Mali k o m u • Matthews Moloko •
• Maureen Khumalo • Mayuri K e s s o w • Merle Bh ayat • Mer vyn Kin g • Mer vyn Moodie •
• Michelle He nni ng • Nathaniel Mbongo • Neil Horne • Neill Davies • Nevill e Cooper •
• Nicki Iv o r y • Nicolette Davids • Nual a Flannagan • Pat Abrahams • Patrick Lav e r ty •
• Paul Bot ha • Paul Jessiman • Paulina Sigasa • Peter Baird • Peter Edmond s • Peter Moloi •
• Phares Mkwan azi • Ph ind i Ngub ane • P o l l y C arr • Pope Leye • P o r tia Maleb ane •
• Price Dhlamini • Quinton Dicks • Ria Booysen • Robert Macd onald • Ronel Rogers •
• Samantha Lee • Saman tha Smith • Schalk Roos • Sean Dougherty • Shaun McMe namin •
• Sh aun Rosenthal • Sikonathi Mants hantasha • Simon Lentsoan a • Sindiswe Magi •
• Solly Baloyi • Sonja H ladik • Stacey Kafanda • Stefan F e r reira • Stephen Maritz
• Steve Arnold • Steve De Bruyn • Steve Schn ell • Stua rt Cunn ingham • Stuart Mcar thu r •
• Sylvia Pul e • T a n ya Te ichmann • Th elma Moleko • Theunis K o t z ee • T h i e r ry Dalais •
• Thomas Gontsana • T i m o t h y Mabuza • T o n y de Castro • Vanessa Nyschens •
• Vin cent Dlam ini • Vi nce nt Mabuz a • Walter Hirzebruch • Wi lle m J o n k er •
• Xholisane Khum alo • Yoges h Parbhoo Nars ing • Zainap Allie •
SHARE ANAL Y SIS
D i s t r i b u ti o n o f s h a r e h o l d e r s a s a t 3 1 M a rc h 1 9 9 9
Shareholders Shar es held
Number % Number %
Anal ysis of shar eholding
Insurance companies 10 0,3 788 578 0,8
Pension and provident funds 63 1,7 2 023 118 2,2
Investment and trust companies 89 2,4 32 353 275 34,6
Other corporate bodies including
nominee companies 294 8,0 34 576 746 37,0
Directors, management and staff 127 3,5 16 014 832 17,1
Individuals 3 085 84,1 7 726 670 8,3
3 668 100,0 93 483 219 100,0
Rang e of shar eholding
1 to 10 000 3 473 94,7 1 893 882 2,0
10 001 to 50 000 134 3,7 2 912 134 3,1
50 001 to 100 000 19 0,5 1 310 822 1,4
More than 100 001 42 1,1 87 366 381 93,5
3 668 100,0 93 483 219 100,0
To the best knowledge of the directors and after reasonable enquiry, as at 31 March 1999, the spread of
shareholders was as follows:
Shar eholder spr ead
Public shareholding 3 658 99,7 82 137 787 87,9
Non-public shareholding 10 0,3 11 345 432 12,1
3 668 100,0 93 483 219 100,0
Major shar eholders
The following major shareholders are directly or indirectly beneficially interested in 5% or more of
Brait’s share capital.
Shar es held
Number %
Standard Bank Nominees Tvl (Pty) Limited 18 045 410 19,3
Nedcor Bank Nominees Limited 10 098 941 10,8
Ball Family Trust 4 993 623 5,3
The Thierry Dalais Family Trust 4 993 623 5,3
S HA R E ANAL Y SIS
S to ck E x c h a n g e p er fo r m a n c e f o r th e e ig h t m o n t h s e n d e d 3 1 M a r ch 1 9 9 9
Price perf ormance
Traded prices (cents per share)
– year-end closing price 3 695
– high 5 900
– low 1 640
– weighted average price per share traded 3 252
Price-earnings ratio (on closing price) 17,9
Volume perf ormance
Number of shares in issue (000s) 93 483
Volume of shares traded (000s) 39 057
Number of transactions 10 531
Volume traded as percentage of average shares in issue (%) 42
Number of shareholders (at 31 March 1999) 3 668
Value perf ormance
Value of shares traded (Rm) 1 270
Market capitalisation at 31 March 1999 (Rm) 3 454
Yield
(For the twelve months ended 31 March 1999)
Earnings yield (%) 5,6
Dividend yield (%) 1,6
The information disclosed above includes all trades on the Luxembourg, Johannesburg and London
Stock Exchanges.
22 23
FI N A N C I A L D E F I N IT IO N S
Av era ge shareholders’ funds Earnings yield
Average of the capital employed at the Earnings per share expressed as a percentage
beginning and end of the financial year. For of the closing price per share.
1999 the opening capital at 1 April 1998 has
been increased by R255 million to include the Net asset value per share
new equity issued by Brait S.A. and used to Shareholders’ funds excluding treasury shares
further capitalise Brait Merchant Bank with divided by the number of shares in issue
effect from 1 April 1998. excluding treasury shares, expressed in cents.
Closing price Price-earnings ratio
The closing market price of a Brait share on The closing price per share divided by the
the Johannesburg Stock Exchange at the group’s earnings per share.
financial year-end.
Return on shareholders’ funds
Dividend cov er Attributable earnings as a percentage of
Earnings per share expressed divided by the average shareholders’ funds.
proposed dividend per share.
Return on total assets
Dividend per share Attributable earnings as a percentage of
The dividend proposed by the directors of average total assets.
Brait S.A., to be approved by shareholders at
the annual general meeting on 3 August 1999, Tr easur y shar es
divided by the number of shares in issue, Brait S.A. ordinary shares held by the company
expressed in cents. and/or its subsidiaries.
Dividend yield Weighted av era ge number of shar es
Dividend per share expressed as a percentage The pro forma number of shares in issue at the
of the closing share price per share. beginning of the year, plus shares issued during
the year, less treasury shares acquired during
Earnings per employ ee the year, weighted on a time basis for the
Attributable earnings divided by the number of period during which they have participated in
employees in service at the group’s financial the income of the group.
year-end.
Earnings per share
Earnings attributable to shareholders divided by
the weighted average number of shares in issue,
expressed in cents.
G R O U P S TA T I S T I C S
f o r t h e t we l v e mo n t h s en d e d 3 1 M a r c h 1 9 9 9
1999 1998
Income statement
Operating income (Rm) 216,9 135,9
Attributable earnings (Rm) 192,7 107,3
Earnings per share – basic and diluted (cents) 206,8 124,5
Earnings yield (%) 5,6
Proposed ordinary dividend per share (cents) 60,0
Dividend cover (times) 3,4
Dividend yield (%) 1,6
Three year compound growth
– attributable earnings (%) 95,7
– earnings per share (%) 90,7
Balance sheet
Shareholders’ funds (Rm) 913,7 538,6
Average shareholders’ funds (Rm) 853,4 485,0
Return on shareholders’ funds (%) 22,6 22,1
Total assets (Rm) 3 083,6 2 060,1
Return on total assets (%) 7,5
Net asset value per share (cents)
– including intangible assets 995,2 625,1
– excluding intangible assets 987,8 604,2
Assets under management (Rm)
– private equity commitments 4 200
– Brait Asset Managers 2 500
– African Alliance 1 000
Share information
Shares in issue (m) 93,5
Shares in issue – excluding treasury shares (m) 91,8
Weighted average shares in issue (m) 93,2 86,2
Personnel
Number of employees at year-end (1998: 1 August) 201 286
Earnings per employee (R000) 958 375
Brait Merchant Bank Limited
Capital adequacy
Risk-weighted assets (Rm) 1 493,7 888,6
Primary capital
– bank (Rm) 380,9 170,7
– trading (Rm) 100,0 –
Total capital (Rm) 480,9 170,7
Primary capital – bank to risk-weighted assets (%) 25,5 19,2
24 25
R I S K M A N AG E M E N T R E V I E W
Managing risk to enhance shareholder value Currently exposure to price risk is controlled
goes to the very heart of Brait’s business. The by the use of Market Factor Sensitivity limits
group places great importance and priority on and informal Stop Loss limits for fundamental
its approach to risk management. Direct positions. These limits are set at three different
responsibility for the formulation of policy and portfolio levels:
the systems of control and review lie with the • Bank level: this is the aggregate risk to which
board of directors at both subsidiary and group the bank as a whole is exposed, should all
level. The group has a strong culture of risk price variables move against the bank.
management and recognises that risk is an • Activity area level: this is the risk to which
integral component of most transactions. the bank is exposed in each of the three
Within Brait Merchant Bank (the bank), a main trading areas, ie money, bond and
comprehensive and independent process of equity markets.
risk management has been implemented to • Dealer level: this is the risk to which the
effectively identify, evaluate and assess all its bank is exposed on the lowest portfolio level
risks. As part of this pro c e s s ,c l e a r ly defined and/or single instrument level.
policies have been set and international Trading limits are approved by the bank’s board
standards including the best practice advocated and reviewed during the financial year
by the “Group of Thirty” have been depending on market conditions. Dealers are
implemented. expected to remain within overnight limits.
The major risks to which the group are
exposed are market risk (price, liquidity and
interest rate risk), credit risk, solvency risk,
operational risk, documentation/legal risk,
compliance risk, technology risk and strategic
risk. The majority of trading activity is
conducted through and controlled by the bank.
Each of these risk factors, and in particular its
effect on the bank, are considered below.
MARKET RISK
Product risk profiles are prepared for all trading
activities to ensure that financial risk is properly
identified beforehand. Trading in new products
cannot commence until this has been completed
and approved.
The basis for setting trading limits depends on The above price risk measures the worst
the targeted income budget for the financial expected loss that the bank can suffer during a
year. Value at Risk (VAR) limits will be set as a trading day. It is necessary to supplement this
percentage of annual targeted income. This technique in order to evaluate the impact of a
percentage is determined by several variables significant event risk or a market crash on a
such as market volatility, liquidity, dealer portfolio by stress testing the portfolio. Losses
expertise or previous performance. under stress testing should be at acceptable
M a n ag i n g ri s k to e n h a n c e s h a re h o l d er va l u e go es
to t h e v e r y h e a r t o f B ra i t ’s bu s i n es s
R I S K M A N AG E M E N T R E V I E W
( c o n t i nu e d )
levels and an assessment is made of the bank’s undertaken on behalf of clients. Brait manages
ability to alter strategies or liquidate positions. this risk by setting prudent exposure limits,
The bank measures the current profit and loss constant measurement of current credit
on trading positions by marking them to market exposures, estimation of maximum potential
on a daily basis. Controls are in place to ensure credit exposures that may arise over the
that transactions are booked at prevailing duration of a transaction, and responding quickly
market rates and that positions are revalued at when corrective action needs to be taken.
current market prices. Mark to market profit The board has established a credit committee
and loss reports and risk reports are compiled in the bank, which includes appropriate
and distributed on a daily basis. Risk reporting is representation of non-executive dire c t o r s ,w i t h
also distributed to the bank’s board and reports the task of managing credit risk. Delegated
include the current risk profile and historical levels of authority have been established in
utilisations of market risk limits. respect of the different types and durations of
Computer models used in the dealing room and exposures. All credit and counterparty risk
the market risk measurement process are requires written authority at the appropriate
validated to ensure that they make relevant level. Compliance with limits is measured daily
assumptions and correct calculations. and monitored both internally and by the risk
Risk management within the bank and the group management function.
as a whole operates with clear independence In its evaluation of proposed credit exposures,
and authority from the operations and reports the credit committee takes into account:
to senior management and the board .I n • appetite for risk in relation to the bank’s
general, the market risk management function is own capital;
responsible for sound systems, models and • the exposure in relation to the client’s
procedures. financial situation;
C RE D I T A ND • target market, industry and geographic
C O U N T E R PA R T Y R IS K considerations;
Credit and counterparty risk refers to the • qualitative aspects of the client;
effects on future cash flows and earnings of • the aggregation of exposures across the
borrowers, trading counterparties, or issuers of group and across pro d u c t s ;a n d
instruments, held either in the portfolio or as • relationships that may exist between current
collateral, defaulting on their obligations. Such and potential clients.
risk arises in the banking operation primarily Once established, all limits are subject to
from lending, trading and investment activities regular review at least annually.
and also from the settlement of proprietary Cognisance is being taken of the fact that the
financial market transactions and those bank is growing into new areas of activity and
R I S K M A N AG E M E N T R E V I E W
( c o n t i nu e d )
measures are being developed to strengthen conditions, while also allowing for the
the credit risk management function to unexpected.
facilitate this. The bank takes a conservative view on
mismatches in its balance sheet structure and
I N T E RE S T R AT E A ND holds liquid assets and readily realisable AAA
L I Q U I D I T Y RI S K S assets to meet any eventuality.
Interest rate risk refers to the impact on future
cash flows and earnings of assets and liabilities S O L V E NC Y R I SK
repricing either at different points in time or on It is essential to ensure that the group is
different bases (eg prime overdraft rate as adequately capitalised to absorb potential losses
opposed to BA rate). The effect of changes in in its activities, to maintain the confidence of all
interest rates on instruments held for trading those with whom it does business, and to fund
purposes is considered to be market risk and is the future growth of its operations. It is also
managed as described above. important to ensure that losses in one
Liquidity risk arises in the general funding of the operation do not contaminate the others. The
bank’s activities and also in its trading operation. group has therefore been structured such that
It refers to the ability of the bank to meet its distinct operations are housed in separately
financial obligations as they fall due and capitalised legal entities with transactions
managing the mismatch in the maturity of assets between companies in the group being
and liabilities. It also refers to the ability to conducted on a strictly arm’s length basis.
liquidate trading positions in a timely manner at Regulatory authorities have established
reasonable prices. minimum standards for the capitalisation of
Interest rate and liquidity risks are related in banks taking into account the particular risks to
that funding reprices at the time contracted which each bank may be exposed.
for renewal, replacement or withdrawal However, as a bank including wholesale and
(ie the asset and liability books are structured trading activities in inter-bank and institutional
with both maturity and repricing objectives). markets requiring limits for the settlement of
Trading positions should be liquid so as to significantly large financial market transactions, it
facilitate the repayment of funding when called has been important to maintain capital
upon to do so. considerably in excess of the requirements of
The bank has historically traded in only the the authorities. The bank’s capital adequacy
more liquid financial instruments and the setting ratio is currently 25,5% compared to the
of issuer limits by the credit committee takes required level of 8% of risk-weighted assets.
into account the marketability of instruments. The bank is therefore very well placed for the
The primary function of the assets and liabilities anticipated growth in the years ahead.
committee is to manage the term structure of
the bank’s balance sheet taking into account the OPERA TIONAL AND
funding requirement of lending and trading T E C H NO L OG Y R I S K S
activities, the depositor profile and spre a d ,t h e Operational risk is the potential for loss caused
bank’s view on future trends in interest rates by a breakdown in information,communication,
and expected changes in money market transaction processing, and settlement systems
28 29
R I S K M A N AG E M E N T R E V I E W
( c o n t i nu e d )
and procedures. The high value and complexity occurrence would not significantly impact on
of transactions in financial markets makes the profitability.
potential costs of such breakdowns very high. It The final target date for completion of Y2K
is therefore critically important that the group compliance as regards internal systems is
maintains comprehensive systems of internal 30 June 1999 and the group is well on its way
controls, and sound policies and practices in the to compliance. The majority of the outstanding
areas of information technology, human issues revolve around external software
re s o u rc e s ,p hysical security and insurance. suppliers and it is expected that all necessary
The enforcement and monitoring of compliance upgrades will be satisfactorily concluded and
with such policies and standards of practice is a implemented timeously.
vital component of operational risk
management. L E GA L A N D C OM P L I A NC E RI S K
The group audit committee, which has Brait is committed to ensuring that all work
responsibility, inter alia, for overseeing of the meets the highest standards of quality and
management of operational risk, comprises non- compliance, particularly as certain activities
executive directors to whom both external and include structured non-standard transactions.
internal auditors have direct access. The The group does have an internal legal capability.
functioning of this committee is dealt with more Wherever appropriate, use is also made of
fully under the corporate governance section of suitably experienced external attorneys.
the annual financial statements.
The specialised nature of the bank’s trading R I S K M A NAG E M E N T F O R
operations and the need to ensure continual F U N D I NV E ST M E N T
compliance with international best practice in The group acts as manager for a number of
this area, led to the board’s decision to funds financed primarily by third party capital.
outsource the internal audit function of the Each of these funds is typically subject to a
bank to reputable professionals in this field and number of governance controls with risk
industry. management effects,including:
In the area of information technology, the group • Fund mandates setting out investment
has established disaster recovery procedures, parameters including targeted markets,
with off-site back-up facilities, and business transaction types and investment limits
continuation plans which will ensure that • Controlled investment processes including
operations will continue in the event of appropriate approval by investment
computer systems collapse or catastrophic committees
damage to the systems or premises. An IT • Investor review by way of periodic reporting
steering committee has been established to set and performance evaluation
the IT standards which must be maintained • Advisory committee review for resolution of
across the group. certain potential conflicts of interest
It is policy to insure all appropriate risks • Statutory and regulatory controls
through brokers who have expertise in Brait’s internal control processes ensure that
the group’s areas of operation, and to fund mandates are adhered to, and these
set deductibles at levels such that any controls are subject to internal audit and thus
R IS K M A N AG E M E N T R E V I E W
( c o n t i nu e d )
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.
C ON CL U S I ON
It should be recognised that as a result of its
chosen position, Brait is exposed to South
African country risk and, directly and indirectly,
to its equity markets in particular.
The group is rapidly growing and diversifying
into broader financial market activities. A strong
culture of risk awareness is in place, and the
risk management capability is being expanded to
ensure future plans are implemented in a
prudent and controlled manner.
30 31
Back row f rom le ft : J ean Bod oni , T h i e r r y Da la i s, Je n s M onta na na, Mar k Barn es , Alla n Rose nzwei g, R i c h a rd Ko c h
Front row from le ft : D e re k Rabi n, M e r vyn Ki ng, Chri s Ta ye l o r, A n t o ny B al l, C raig C luca s
D I R E C TO R S
Mer vyn Eldred King* (61) Mark Angus Barnes* (43)
BA, LLB (Cum Laude) H Dip Tax (Wits) B Bus Sci (UCT), PMD (Harvard)
Non-executive Chairman Group Chief Executive
Mervyn King was a co-founder of Capital Mark Barnes has had 17 years of experience in
Alliance Holdings and its first Chairman. He is a financial services. After two years with an
Senior Counsel and former Judge of the actuarial consultancy firm, Mark joined Standard
Supreme Court of South A f r i c a .M e rvyn has Merchant Bank (“SMB”) in 1984. After heading
chaired and been a director of several the Corporate Finance and Treasury Divisions,
companies listed on the Johannesburg Stock he was appointed to the board of SMB in 1991.
Exchange, including First National Bank SMB later merged with the corporate areas of
Holdings Limited and Frame Group Holdings the Standard Bank Group (“SCMB”) and Mark
Limited. In South Africa, he is the Chairman of was appointed as Deputy Managing Director of
the King Committee on Corporate SCMB with operational responsibility for the
Governance, Chairman of the Insider Trading Group’s Treasury and Project Finance Divisions.
Task Group, a member of the Policy Board for He was a member of the Standard Bank
Financial Services and Regulation, President of Group’s Executive Committee until he resigned
the Advertising Standards Authority and Deputy in November 1996 to take up the position of
Chairman of the Standing Advisory Committee Group Chief Executive of Capital Alliance
on Company Law. He is presently Chairman of Holdings. Mark is currently Group Chief
the Automobile Association of South Africa and Executive of Brait and Chairman of Brait
Dunlop Africa Limited and a director of JD Merchant Bank. He is also serving his fourth
Group Limited. term as Chairman of the South African Futures
Exchange.
Anton y Charles Ball* (40)
BCom (Hons), MPhil (Oxon), CA(SA) Jean Ernest Bodoni + (49)
Joint Deputy Chairman Commercial Engineer
Antony Ball is a co-founder of Brait Capital Non-executive Director
Partners. He has led the raising and governance Jean Bodoni was a member of the board of
of Brait Capital Partners’ principal funds as well directors of Tolux S.A. and continued in that
as being responsible for investments in the capacity following the merger of the Brait
media, communications, retail, electrical and business with Tolux in 1998 and that company’s
security sectors. He was formerly with Price subsequent change of name to Brait S.A. He has
Waterhouse before founding The Strategy an in-depth knowledge of the company and of
Group in 1986, which grew to a substantial the Luxembourg environment and regulatory
division within Deloitte & Touche Management systems. Jean was born in and is a resident of
Consultants and where he led and executed Luxembourg.
strategy, organisation and merger and Jean has had 29 years of experience in the
acquisition engagements. Luxembourg banking sector and currently holds
the position of Senior Vice President with
Ra ymond Thier ry Dalais* (40) Banque Internationale à Luxe m b o u r g ,w h i c h
BCom, BAcc, CA(SA) company had a close working association with
Joint Deputy Chairman Tolux for a number of years. Jean is a director
Thierry Dalais is a co-founder of Brait Capital of a number of Luxembourg resident
Partners. He has led the formulation of companies. Jean’s tertiary education was
investment policy, with overall responsibility for undertaken at the University of Nancy (France)
transaction structuring and financial and the Institute of Nancy (ICN).
engineering, as well as being responsible for
investments in the information technology, Craig Lewis Clucas* (38)
transportation, health care, food, packaging, BCom (Wits)
distribution, manufacturing and other sectors. Executive Director
Thierry was formerly with Deloitte & Touche Craig Clucas is the Chief Executive Officer of
before joining Merchant Shippers, a subsidiary Brait Merchant Bank Limited. He has 14 years
of Merhold Investment Corporation Limited. In of experience in the financial services industry
1987, he was appointed director of Merhold of which the last seven years have been as
Corporate Limited, the group’s investment and Chief Executive Officer of Brait Merchant Bank
service arm and was responsible for (formerly known as Capital Alliance Bank
establishing and managing a successful principal Limited and NDH Bank Limited). Craig was
investment portfolio, developing expertise in all formerly an executive with the Sechold Group
aspects of private equity investing. and with Prudential Life Assurance.
D I R E C TO R S
( c o n t i nu e d )
Richar d K och** (48) Derek is a director of various listed and
MA (Oxon), MBA (Wharton) unlisted companies and is the Chairman of
Non-executive Director Honeywell South Africa (Proprietary) Limited.
Richard Koch is an entrepreneur, investor and Derek is a graduate of the University of the
strategy consultant who has advised the chief Witwatersrand, South Africa where he received
executive officers and chairmen of many blue- a Diploma in Law and is admitted as an
chip American and European corporations as a Attorney in the High Courts of the Republic of
founder of The LEK Partnership, a partner of South Africa and Lesotho.
Bain & Co and a consultant with the Boston
Consulting Group. Richard invested in and Allan Mark Rosenzw eig* (44)
managed the turnaround of Filofax and was the BA ,L L B , H Dip Tax
principal backer of Belgo, a Belgian restaurant Non-executive Director
chain, and MSI, an hotel chain. Richard has Allan Rosenzweig was an international tax
worked closely with the Brait Capital Partners advisor and corporate financier with Price
and is an investor and promoter in private Waterhouse including its New York office and
equity investment. Richard has written and co- Intertax, a South African international tax
written eleven books on strategy and consultancy which he established and ran in
investment themes. conjunction with Deloitte & Touche and
Webber Wentzel from 1986 to 1996. In that
Jens Peter Montanana** (38) capacity, he advised many multi-national
BSc companies and investment corporations
Non-executive Director regarding the inward and outbound investment
Jens Montanana is an entrepreneur and strategies in relation to South Africa.
businessman with an outstanding international Allan is a director of both listed and unlisted
track record. In 1985, Jens co-founded Datatec companies. In 1996, he joined the MIH Group
Limited which has become a leading networking as Executive Director of Corporate Finance of
and internet technology group supplying Nethold B.V. and currently, based in the
products and services in Europe, North Netherlands, acts as the MIH Group Director
America and South Africa and is listed on the of Corporate Finance. Allan is a graduate of
Johannesburg Stock Exchange. the University of the Witwatersrand, South
Jens was instrumental in the rapid and Africa where he received degrees in law and
successful development of the US Robotics taxation.
business in the United Kingdom and Europe
and is also an investor and promoter of private Christopher John Tay elor* (42)
equity and venture capital investment. The BAcc, CA(SA), AMP (Harvard)
principals of Brait Capital Partners have been Finance Director
associated with Jens since 1988 through Chris Tayelor is a Chartered Accountant. He
investment and advisory relationships. Jens is a articled with Price Waterhouse and held the
graduate of Reading University in the United position of National Technical Manager
Kingdom where he received degrees in Southern Africa in 1984. He joined
electronics and telemetry. Johannesburg Consolidated Investment
Company Limited (“Johnnies”) in 1985 in
Der ek Henry Rabin* (48) Corporate Finance and headed the division as
Dip Law General Manager from 1990 to 1994. During
Non-executive Director this period, he was appointed, amongst others,
Derek Rabin is an attorney and senior partner to the boards of Times Media Limited
of the corporate and commercial law firm Consolidated Metallurgical Industries Limited
Rabin Van Den Berg & Pelkowitz. The firm is and S.A. des Minerais where he was Chairman
the Johannesburg member of the Mallinicks law from 1995 to 1998. Following the unbundling of
group and the South African representative of Johnnies in 1995, Chris was appointed Financial
the International Lawyers Group. Director of JCI Limited and to the boards of its
Prior to the establishment of Rabin Van Den listed operations. He left this position prior to
Berg & Pelkowitz, Derek was a partner at joining Brait in May 1998.
Godfrey Rabin and Partners and Werksmans,
which firms merged in 1987. Derek has Nationality
practised as an attorney since 1977 apart from * South African
a three-year period in commerce in the United + Luxembourger
States. ** British
34 35
BO ARD COMMITTEES
Audit committee The Brait Share Incentive T rust
ME King* (Chairman) ME King* (Chairman)
RT Dalais DH Rabin*
DH Rabin*
Brait Merchant Bank credit committee
Chairman’ s committee MA Barnes (Chairman)
ME King* (Chairman) GZ Burg*
AC Ball CL Clucas
MA Barnes D Swart
CL Clucas CJ Tayelor
RT Dalais
CJ Tayelor * Non-executive
Rem uneration committee
ME King* (Chairman)
AC Ball
RJ Koch*
M A N AG E M E N T
The other senior management of the group’s
operations include:
Funds manag ement Financial control
Private equity Polly Carr
Neill Davies Graham Hope
John Gnodde
Anthony Hewat Advisory and decision support
Walter Hirzebruch Paul Botha
Paul Jessiman
Bruce MacRobert Turnarounds
Theunis Kotzee
Institutional, re t i re m e n t ,u n l i s t e d
and empowerment In vestments
Willi Jonker Investment banking
Sello Moloko Pat Abrahams
Arnold Shapiro Bill Clucas
Unit trusts Banking and tr easur y
Andrew Bradley Money markets and funding
Christopher Newland
African Alliance
Tony de Castro Risk management
André Louw
Advisor y ser vices
Corporate finance Corporate lending
Colin Drew David Field
Bernard Katz Craig Polkinghorne
David Lake
Shaun Rosenthal Asset-based finance
Graeme Stephens Colin Warner
Structured finance Stockbroking
Steven de Bruyn Brett Stacey
