| SEGMENTAL
REVIEW |
| GROUP
INVESTMENTS (CONTINUED) |
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|
| Capital
Alliance Finance |
The group has a 50% joint venture interest in
Capital Alliance Finance ("CAF") with a carry value R17,3 million,
represented primarily by a loan advance. CAF operates in South
Africa and provides affordable loan products to the lower income
market and credit accessibility to its clients. CAF's historical
target market is typically formal income earners, who were not
considered "bankable" by the formal retail banking sector and
are generally employees of the government and private sector.
CAF's micro-lending business remained profitable for the year
and generated surplus cash. In line with its strategy, business
volumes were maintained at existing levels to allow the cash
generated by the business to be applied in the repayment of
shareholder loans. |
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| During the year under review, the National Credit
Regulations were introduced in the newly promulgated National
Credit Act to replace the Usury Act and the Credit Agreements
Act. The new regulations have been designed to fix interest
rates, to regulate administration and monthly service fees and
prohibit reckless lending. Initial indications are that the
new regulations will have a material impact on the entire industry
which could lead to a consolidation within the industry. CAF
is in the process of assessing the impact that the regulations
will have on its operations and strategy. |
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| Mezzanine
Partners (Proprietary) Limited |
In November 2005, the group established an independent
mezzanine fund management business. Mezzanine Partners, a joint
venture between Brait South Africa Limited,
Old Mutual Asset Managers and its executive management, is South
Africa's first independent mezzanine fund manager. At year-end,
the fund had committed capital of US$45 million. It concluded
its maiden investment subsequent to year-end. |
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| Financial
results and commentary |
Earnings from the group's strategic investments
have increased by 38% to
US$11,6 million from US$8,4 million with Bayport continuing
to be the largest single contributor with the balance coming
from CAF and treasury operations. Return on average capital
employed of US$62,9 million was 18% compared with 17% in the
prior year. |
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