Licence/AGM/Cautionary Ancmnt

RNS Number:5425V
Brait S.A.
7 May 2002


TO: CITY EDITORS      7th May, 2002

FOR IMMEDIATE RELEASE


                                   BRAIT S.A.

Intention to apply for deregistration of the banking licence earnings, net asset
value impact cautionary announcement and notice of change of date of the Annual
                                General Meeting

The Banking Licence

The Boards of Brait S.A. ("the Group") and Brait Merchant Bank Limited ("the
Bank Structure") announce that they intend to apply for deregistration of the
banking licence held by the Bank Structure, and have consulted with The South
African Reserve Bank in this respect.

The Group has approximately R600m (currently close to 50% of its capital)
invested in the Bank Structure. The Group's strategy for the last two years has
been to view the Bank Structure as a vehicle through which certain of the
Group's operations are conducted. The intention to apply for deregistration of
the banking licence has no effect on a significant portion of the Group's
activities.

A considerable corporate commitment has been made during this period to enhance
the utility of the Bank Structure, through increased gearing and lengthening the
average term of deposits. It is only when these features occur, that a bank is a
value proposition, particularly when consideration is given to the considerable
administrative, risk management, information technology, regulatory support and
deposit-taking infrastructures required to sustain a bank.

Until recently, some progress was achieved with respect to the goals set for the
Bank Structure. The storms of bank failures over the past five years were
successfully weathered, largely due to the low gearing of the Bank Structure.
However, recent events in the banking industry and required levels of gearing,
have persuaded the Boards that the banking licence, at the levels of
capitalisation which the Group has the means to support, is not sustainable. 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. Importantly,
sustaining the banking licence places significant financial risk on the Group as
a whole.

It is for these reasons that the Boards intend to apply for deregistration of
the banking licence. It is anticipated that this deregistration will occur on or
about 30 September 2002.


Impact on Stakeholders

Depositors and other counterparties

The Bank Structure is in a position, and has satisfied The South African Reserve
Bank, that deposits can, and will, be repaid as they fall due. Existing
depositors' and counterparty obligations will continue to be serviced, and new
deposits will be taken subject to a term limitation to 30 September 2002.

Staff

Certain operations of the Group have relied on the Bank Structure more than
others. Trading in equities and derivatives have been discontinued, and the
operations of Interest Rate Trading, Treasury, Money Market, Securities and
Lending will be affected, in addition to the infrastructural support provided by
the Group required to drive these operations. Consultation with staff will begin
immediately in those areas.

The operations of Advisory Services, Private Equity, Funds Management,
Specialised Debt and Structured Finance will not be affected by the proposed
deregistration of the banking licence. The latter two operations have
successfully oriented themselves to act as arrangers and structurers of debt
assets.

Clients

Clients of Advisory Services, Private Equity, Funds Management and Brait's
preference share book, are in no way affected by the decision to apply for
deregistration of the banking licence. Clients managed by Brait's Specialised
Debt and Structured Finance operations, where advances have been made, will be
advised that facilities will not be renewed once expired. Officers of the Group
will be in contact with depositors and other institutional clients, for whom we
act, as broker, or back-to-back principal, in respect of our trading businesses
in order to assess the impact.


Earnings and Net Asset Value Impact

The Bank Structure has operated on the basis of a "going concern" and,
accordingly, has a number of structured transactions and contractual
arrangements that will be difficult to wind-down, as would be expected for an
active investment bank. Accordingly, write-downs will be made to reflect the net
realisable value of such assets in the new circumstances.

In addition, the Boards have resolved to realise a significant component of the
banking assets, associated assets in the banking holding company and certain
other on balance sheet assets of the Group. This action has been taken to
enhance the return on capital of the Group through the reduction of capital
deployed in under-performing assets and activities. 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
reflect greater interruption and economic loss to the continuing operations of
the Group.

The resulting provisions will be made against the carrying value of assets held
at 31 March 2002. Accordingly, this will have a material impact on the earnings
of the group, as a whole, for the year. These provisions are unlikely to be more
than R100m.

Save for the impact of the asset impairment reflected in the Financial
Statements to 31 March 2002, the proposed deregistration of the banking licence
will have no material impact on earnings and net asset value, which will be
highlighted in the financial statements.

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 R65m and will be provided for in the year ended 31 March
2003, against discontinuing operations.

In terms of International Accounting Standards, which are followed by the Group,
these provisions and closure costs will be recognized against the income and
shown in discontinuing operations.

In summary, therefore, the earnings and net asset value of the Group are likely
to be reduced by no more than 185 cps, of which 110 cps will be shown at 31
March 2002 and 75 cps at 31 March 2003.


Cautionary Announcement

The Board of Brait S.A. further announces that the Group is in discussions,
which, if concluded, may be price sensitive. Shareowners are therefore urged to
exercise caution in dealing in their shares until a further announcement is
made.


Notice of Extraordinary General Meeting of Brait S.A.

In view of the cautionary announcement, referred to above, the directors of
Brait S.A. have resolved to move the date of the Annual General Meeting of the
Group from Tuesday, 16 July 2002 to Thursday, 29 August 2002. This decision is
necessary in order to delay the provisional results announcement, due to be
released on 29 May 2002, and to defer the distribution of the Annual Financial
Statements of the Group to members so that the outcome of the discussions giving
rise to the cautionary announcement can be incorporated into the results. The
date of the Extraordinary General Meeting has been set for on or about 24 July
2002. A notice in this regard will be posted to shareowners shortly.

Co Sponsor -                                            Lead Sponsor -

Brait Advisory Services                                 ING Investment Banking









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