Trading statement
For the year ended 31 March 2009, the Brait directors estimate a decrease in basic earnings per share by 57% to 62%…In terms of the Listings Requirements of the JSE Limited, companies are required to publish a trading statement as soon as they become aware that the financial results for the period to be reported upon next will differ by at least 20% from the financial results of the previous corresponding period.
For the year ended 31 March 2009, the Brait directors estimate the following decreases when compared to the year ended 31 March 2008:
– Basic earnings per share by 57% to 62%
– Diluted earnings per share by 57% to 62%
– Basic headline earnings per share by 37% to 42%
– Diluted headline earnings per share by 37% to 42%
The Group has performed below plan for the year to 31 March 2009, posting a 24% reduction in profit from operations.
Whilst disappointing, this variation from planned performance is principally explained by two items, which together account for write-downs of approximately R175m.
The Group has significant exposure to Net 1 UEPS. Whilst the company continues to show strong operational performance, the share price has fallen from $22.55 at 30 September 2008 to $15.21 at 31 March 2009. The Group had various exposures to junior resource stocks, as part of its investment programme with Pangea. This investment programme has served the group well over the years. However, this sector has been negatively impacted by global events.
The private equity portfolio has held up well, given the difficult valuation environment. Brait’s private equity portfolio companies have, in aggregate, shown strong improvement in operational performance, which has provided a sound underpin to the valuation of assets at 31 March 2009.
The Public Markets business performed materially better than last year, and is likely to show earnings of approximately R90m for the year. This result is due to an outstanding performance by the Capital Management Team, and particularly the investment performance from Brait’s Multi Strategy, Matrix Fixed Income and Ruby Equity Funds. This more than compensated for the financial impact of the redemptions from the Brait Absolute South Africa. Pleasingly, Brait Absolute South Africa is again delivering better investment performance. According to the latest Alexander Forbes Fund of Hedge Funds Manager Watch Survey, the Brait Absolute South Africa was ahead of the median return for the most recent quarter as well as over the last 12 months.
A higher proportion of Group profits were delivered from our South African business than in previous years. As a result of this, there is a higher tax charge and an increased allocation of profits to Brait’s BEE partner, which owns 26% of Brait South Africa Limited.
Currency movements have played their part in the Group results, where a weaker rand against the USD has resulted in a material appreciation of the Rand value of the Group’s USD treasury assets.
Additionally, as was reported as a subsequent event in the interim results to 30 September 2008, a gain of R169.8m arose in October 2008 from the unwinding of the Brait hedge of its investment in South Africa. This amount has been included in the 31 March 2009 results as a net gain of R90.4m after taking into account the premium on the new hedging instrument.
Management has responded to current market conditions with caution and accordingly, cash resources have been conserved and amounted to R410m as at 31 March 2009.