Brait SE FY 2013 financial results presentation (South Africa)

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Brait SE FY 2013 financial results presentation (South Africa)

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Brait SE FY 2013 financial results presentation (South Africa)

  1. 1. AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2013 Brait SE (Registered in Malta as a European Company) (Registration No. SE1) Share code: BAT ISIN: LU0011857645 Share code: BATP ISIN: MT0000680208 (“Brait”, the “Company” or “Group”)
  2. 2. Contents Section 1: Results presentation FYE 31 March 2013 Section 2: Appendices to the results presentation Section 3: Audited results announcement 3 85 125 Disclaimer This booklet contains certain forward-looking statements with respect to the financial condition and results of operations of Brait SE group and its underlying portfolio company investments, which by their nature involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Audited results for the year ended 31 March 2013
  3. 3. RESULTS PRESENTATION FYE 31 MARCH 2013
  4. 4. Agenda • Highlights FYE 31 March 2013 • Audited NAV at 31 March 2013 • Portfolio performance review • Iceland Foods • Premier Foods • Pepkor • Rest of investment portfolio • Audited results FYE 31 March 2013 • Treasury management • Conclusion • Q&A 4 4 Audited results for the year ended 31 March 2013
  5. 5. Highlights FYE 31 March 2013 5 5 Audited results for the year ended 31 March 2013
  6. 6. Highlights FYE 31 March 2013 • NAV per share up 29% for the year to R26.64 • Increase in NAV attributable to operational performance of investment portfolio with no change in valuation multiples • Proposed ordinary share bonus issue (with cash dividend alternative) of 26.64 cents per share (up 29% on prior year) • Preference share dividend of R66 million (440.79 cents per share) for the six months ended 31 March 2013 declared on 28 May 2013 • Normalised headline earnings per share (1) up 34% to R5.79 per share • R274 million cash inflows from investment portfolio: - R128 million from Pepkor’s R346 million dividend - R28 million received from the servicing of loans by Premier Foods and Iceland Foods - R118 million from realisations within PE Fund and Other Investments • R1.5 billion capital raised in August 2012 from the issue of perpetual preference shares • Cash and facilities of R2.7 (1) Normalised billion available for new investments HEPS is headline earnings for the year divided by ordinary shares outstanding at year-end 6 6 Audited results for the year ended 31 March 2013
  7. 7. Highlights FYE 31 March 2013 Performance against targets Performance metric 1 NAV CAGR > 15% per year over any 3 year period 2 Dividend: 1% - 2.5% of NAV starting latest FY13 (bonus shares or cash election) Position at 31 March 2013 • 27.1% CAGR since 31 March 2011 • FY13: 1% of R26.64 NAV proposed (29% up on FY12) • FY12: 1% of R20.59 NAV declared 3 Operating costs: < 0.85% to Brait AUM • 0.68% to Brait AUM • 0.34% net after fee income 4 Minimal cash drag: < 25% of NAV • 3.7% of NAV (3.3% of total assets) 5 Primarily unlisted investments • Unlisted investments 99.9% of total assets • R274 million cash inflows: 6 Demonstrate cash flow within underlying investments - R128 million from Pepkor dividend - R28 million from Premier Foods and Iceland Foods - R118 million realised from PE Fund and Other Investments 7 7 Audited results for the year ended 31 March 2013
  8. 8. Audited NAV at 31 March 2013 8 8 Audited results for the year ended 31 March 2013
  9. 9. Audited NAV at 31 March 2013 31 Mar 2013 % TA R’m 31 March 2012 % TA R’m 13,114 9,278 1,463 1,449 594 330 Total assets (“TA”) 9,961 6,701 1,191 998 584 487 84% 57% 10% 8% 5% 4% 9% 3% 1% 1,284 523 6 20 12% 4% - 15,141 Loan receivable (1) Cash and equivalents Property and equipment Accounts receivable 87% 61% 10% 10% 4% 2% 1,399 503 10 115 Investments Pepkor Premier Foods Iceland Foods PE Fund investments Other investments 100% 11,794 100% Borrowings Deferred tax liability Accounts payable and provisions (141) (22) (51) (1,370) (40) (63) Total liabilities (214) (1,473) Preference share equity (1,469) Net Asset Value (“NAV”) 13,458 10,321 505.2 501.3 # of issued ordinary shares (‘m) (excl treasury) NAV per share (Rands) (1) 26.64 Commercial loan to Investment Team 20.59 9 9 Audited results for the year ended 31 March 2013
  10. 10. NAV at 31 March 2013 Rolling 12 month % growth in reported NAV NAV per share (R) 35% 26.64 30.00 24.70 30% 20.59 21.66 23.01 25% 29.4% 20.00 25.5% 24.8% 20% 25.00 28.6% 21.7% 15.00 15% 10.00 10% 5.00 5% 0% 31-Mar-12 30-Jun-12 30-Sept-12 31-Dec-12 31-Mar-13 Reported NAV Performance benchmark: NAV CAGR>15% per year over any 3 year period Rolling 12 month % growth in reported NAV Note: The 24.8% quoted for 31-Mar-12 represents the growth in NAV since 1 April 2011 assuming an opening NAV of the R16.50 Rights Offer Price 10 10 Audited results for the year ended 31 March 2013
  11. 11. Total assets at 31 March 2013 R’m 16 000 15,141 14,106 14 000 13,176 12,348 11,794 12 000 10 000 9,789 10,310 10,512 13% 8 000 16% 16% 12% 12% 12% 14% 6 000 11% 10% 10% 11% 10,964 15% 12% 9% 12% 8% 10% 8% 10% 4% 10% 4% 10% 7% 11% 8% 9% 9% 9% 10% 10% 3% 9% 7% 10% 10% 9% 10% 10% 61% 60% 59% 4 000 50% 51% 52% Rights-offer 2 000 4% 4% 5-July-11 30-Sept-11 R16.50 R17.80 R18.33 55% 57% 57% 31-Mar-12 30-Jun-12 30-Sept-12 31-Dec-12 31-Mar-13 R21.66 R23.01 R24.70 R26.64 NAV per share Pepkor Premier Foods 31-Dec-11 R19.21 Iceland Foods R20.59 Other investments Loans receivable Other investments in the above chart comprises: Fund investments, Other investments, Property and equipment and Accounts receivable balances 11 Audited results for the year ended 31 March 2013 Cash 11
  12. 12. Portfolio performance review 12 12 Audited results for the year ended 31 March 2013
  13. 13. Brait valuation multiples EV/EBITDA multiples as at 31 March 2013 % Discount Brait valuation multiple Peer group average multiple Pepkor Multiple % discount 60% 15.0 x Pepkor peer group Mr Price 13.0 x 11.0 x Truworths 9.0 x The Foschini Group 35% 39% 34% 7.0 x Brait’s valuation of Pepkor is based on an 8.0x EV/EBITDA multiple 45% 48% 42% 5.0 x 21% 15% 0% 30-Sep-11 31-Dec-11 31-Mar-12 Pioneer Foods Brait’s valuation of Premier Foods is based on a 6.5x EV/EBITDA multiple 30-Jun-12 30-Sep-12 31-Dec-12 60% 11.0 x 9.0 x 31-Mar-13 Premier Foods 13.0 x Premier Foods peer group Tiger Brands 45% 46% 36% 35% 44% 30% 35% 34% 25% 7.0 x 15% 5.0 x 0% 30-Sep-11 Iceland Foods peer group 31-Dec-11 31-Mar-12 30-Jun-12 30-Sep-12 31-Dec-12 14% 15% 10% 7.0 x 5% 6% WM Morrison Brait’s valuation of Iceland Foods is based on a 6.5x EV/EBITDA multiple 31-Mar-13 Iceland Foods 8.0 x Tesco Sainsbury 30% 27% 2% 4% 4% 30-Jun-12 30-Sep-12 31-Dec-12 6.0 x 0% 31-Mar-12 31-Mar-13 13 13 Audited results for the year ended 31 March 2013
  14. 14. Iceland Foods 14 14 Audited results for the year ended 31 March 2013
  15. 15. Overview of Performance Iceland Foods Group 15 15 Audited results for the year ended 31 March 2013
  16. 16. FY13 Performance 16 16 Audited results for the year ended 31 March 2013
  17. 17. FY13 Performance - Highlights Trading • Full year Group sales of £2,640m (exc VAT) • Total Group sales grew by 2.0% (exc Cooltrader) year on year • On a 52 week comparable basis, sales grew by 4.2% year on year • Like for Like sales of 1.1% (6.0% in the previous year) • Home Delivery sales grew by 11% year on year (9% like for like), accounting for over 17% of total sales Store Estate • Opened 36 new stores (33 net of closures / resites) • Disposed of Cooltrader business (53 shops) • Acquired a Food Manufacturing business (Loxtons Foods) during the year 17 17 Audited results for the year ended 31 March 2013
  18. 18. FY13 Performance - Highlights • EBITDA of £226m ( prior period £230m covered 53 weeks ), 8.5% of sales (8.8% of sales LY) • Total Capex of £36.5m, driven by new store openings • Free cash flow (post tax and capex) 73% of EBITDA (71% prior year) • Debt Repricing exercise in February 0.5% margin reduction (annual saving of £4m) • Disposal of the Cooltrader business resulted in net sale proceeds of £12.6m (EBITDA multiple of 6.3x) • Total loan repayments of £82.5m (£15m mandatory and £67.5m voluntary) • Group Book Debt at year end of (£922m) • Net Debt / EBITDA Multiple of 3.0x (3.7x previous year end) 18 18 Audited results for the year ended 31 March 2013
  19. 19. The Plan 19 19 Audited results for the year ended 31 March 2013
  20. 20. The Plan • The UK Business • Vertical Intergration • International Expansion 20 20 Audited results for the year ended 31 March 2013
  21. 21. The Plan: UK Business • More Stores • Home Shopping • Infrastructure Investment 21 21 Audited results for the year ended 31 March 2013
  22. 22. UK Business: More Stores • Open 40 new stores this year • Refit Relay another 75 stores • Target to end this year with 825 stores • Plan to get to 1,000 stores in the UK 22 22 Audited results for the year ended 31 March 2013
  23. 23. The Plan: Home Shopping • 25 store trial underway • Soft launch ( via email ) to customers within a 3 mile radius of trial stores • First 1,000 orders now delivered • Over 30,000 website visits • Average customer spend £45 ( average spend of £11 in store ) • Roll out to 300 stores by August/September. National rollout by year end (April 2014) 23 23 Audited results for the year ended 31 March 2013
  24. 24. 24 24 Audited results for the year ended 31 March 2013
  25. 25. The Plan: Home Shopping • A new, purpose built, Centre of Excellence, at Deeside Head Office • Newly Appointed Drivers & existing drivers taking delivery of new van to attend 2 days course • Over 1,200 drivers expected to attend training course this year • Budgeted cost savings in reduced accident damage & third party claims • New Mercedes Sprinter Vans ( over 300 new & replacement vans ) 25 25 Audited results for the year ended 31 March 2013
  26. 26. 26 26 Audited results for the year ended 31 March 2013
  27. 27. UK Business: Infrastructure Investment • Introduced wireless network in all stores • Auto-route scheduling for Home Deliveries • New HHT's, printers, staff room PC's and scanners • Investment in chip and pin technology • Development of Matra • New central staff database 27 27 Audited results for the year ended 31 March 2013
  28. 28. The Plan: Vertical Integration • Acquired Loxtons Foods (renamed Iceland Manufacturing Ltd) • 40% of our Ready Meals business • Almost £1m sales per week • Protect the integrity of our Food • Accelerate rate of product innovation • Protect Margins 28 28 Audited results for the year ended 31 March 2013
  29. 29. Sales of £75k per week Sales of £45k per week Sales of £35k per week Sales of £40k per week 29 29 Audited results for the year ended 31 March 2013
  30. 30. International Expansion 3 ways of expanding internationally • Franchise • Stand alone stores • Wholesaling 30 30 Audited results for the year ended 31 March 2013
  31. 31. International Expansion Franchise Operations : Key Customers • Spain and Portugal - Overseas imports • Republic of Ireland - AIM Group • Channel Islands - Sandpiper • Isle of Man - Shoprite Other customers in Germany, Cyprus, Malta, India and Libya • All packaging currently the same as UK • Packaging will change to remove flash Joint Venture • Czech Republic 31 31 Audited results for the year ended 31 March 2013
  32. 32. Packaging - Franchise Before After 32 32 Audited results for the year ended 31 March 2013
  33. 33. Spain & Portugal – Overseas Imports 33 33 Audited results for the year ended 31 March 2013
  34. 34. Republic of Ireland – AIM Group 34 34 Audited results for the year ended 31 March 2013
  35. 35. Channel Islands – Sandpiper CI 35 35 Audited results for the year ended 31 March 2013
  36. 36. Isle of Man - Shoprite 36 36 Audited results for the year ended 31 March 2013
  37. 37. Joint Venture Partners – Czech Republic • 1 Iceland store operating in Plzen • 2 stores planned to open in Prague and Kladno • Plan to open 12 further stores this year subject to the performance of the first two stores • If retail model proves successful we may open more stores in Czech Republic, Slovakia, Hungary and Poland • All packaging will be in Czech 37 37 Audited results for the year ended 31 March 2013
  38. 38. Joint Venture : Czech Republic (Plzen) 38 38 Audited results for the year ended 31 March 2013
  39. 39. Kladno Prague 39 39 Audited results for the year ended 31 March 2013
  40. 40. South Africa : Shoprite Group • Shoprite Group operate 900 supermarkets across South Africa and the African continent • Retail brands are Shoprite, Checkers and U-Save • Currently supplying over 120 Iceland own label frozen products • Products currently on sale in up to 430 stores . Plan to roll out to whole estate • Other opportunities in Africa - we now have certification for shipment to Namibia 40 40 Audited results for the year ended 31 March 2013
  41. 41. 41 41 Audited results for the year ended 31 March 2013
  42. 42. Geographical Spread 42 42 Audited results for the year ended 31 March 2013
  43. 43. Packaging changes Nutrition table amended to meet SA legislation French & Portuguese translations Price flash removed 43 43 Audited results for the year ended 31 March 2013
  44. 44. Landmark Group : Middle East • Landmark Group operate multiple non food retail outlets across the Middle East • Landmark have a very strong presence in the biggest Middle East market - Saudi Arabia (population c30m), & UAE (population c8m) • 75 products with Arabic ingredient labelling planned to launch in July • All meat based products to be Halal and manufactured in the Middle East under license 44 44 Audited results for the year ended 31 March 2013
  45. 45. Landmark Group : Middle East 45 45 Audited results for the year ended 31 March 2013
  46. 46. Landmark Group : Middle East Saudi Arabia Over 30m population 60% under 30 years old 46 46 Audited results for the year ended 31 March 2013
  47. 47. Landmark Group : Middle East United Arab Emirates (UAE) 8m population 50% under 30 years old 47 47 Audited results for the year ended 31 March 2013
  48. 48. Other Achievements • Accredited as “Best Big Company to work for” in Sunday Times “Top 100 Companies To Work For” (2012) • Placed second in 2013 survey • Second only to Tesco for hourly rates of pay for store staff • Voted by our own staff as No. 1 for ‘fair pay’…………second was Goldman Sachs! • Numerous “Rising Star” Awards (Retail Week) • Won the Supply Chain “Team of the Year” Award 48 48 Audited results for the year ended 31 March 2013
  49. 49. Iceland Foods Brait’s audited valuation 31-Mar-13 £’m Maintainable EBITDA 31-Mar-12 £’m 226 Brait’s carrying value in Rands 81.2 79.7 1.5 R1,449m (2) 18.7% 103.2 102.2 1.0 Fair value of Brait’s investment in Iceland Foods Equity value Loan claim (1) 6.5x 1,495 (1,068) 427 18.7% Brait’s shareholding in Iceland Foods 230 6.5x 1,469 (922) 547 EBITDA multiple Enterprise value Less: net debt Equity value R998m Notes (1) £0.5m repaid during April 2012 (2) £ / Rand impact on carrying value Carrying value Uplift Attributable to £ / Rand £ / Rand rate £’m At acquisition (9-Mar-11) R11.96 81.2 971 - - - 31-Mar-12 R12.29 81.2 998 27 27 100% 31-Mar-13 R14.04 103.2 1,449 451 187 42% 478 214 45% R’m Total since acquisition R’m R’m % of uplift 49 49 Audited results for the year ended 31 March 2013
  50. 50. Iceland Foods Attractions to Brait Demonstrated through Attractions • Alignment Strong, experienced management team aligned with Brait through equity ownership (management hold 43%) largest holding by any shareholder is by the founder at 19.9% quality investment partners with significant international retail experience Management team • • Entrepreneurial management style and positive culture permeates throughout the organisation Since their return in 2006, the management team has demonstrated its ability to deliver significant value creation through earnings growth, cash flow conversion and loyalty from customers and employees Market leader • • Market leader in frozen foods that focuses on the cash consumer by providing value for money Quality and innovative private label products at attractive prices, driving superior margin Well positioned • • • Extensive footprint of 790 Iceland Foods stores nationwide Well positioned to perform in current and medium-term economic climate prevailing in the UK The Iceland Foods brand and services such as home delivery considered strong competitive differentiators Cash consumer • Customers are low LSM's Clear strategy • • • Targeted procurement strategy allows Iceland Foods to be relevant to specific brands, leveraging buying power Clear value message through round sum pricing Highly effective streamlined business model • Strong cash flow generation from operations – average over past three years: Pre capex: 102% of EBITDA Post capex: 89% of EBITDA Post capex and tax: 70% of EBITDA • Investment base case achieves Brait's investment target return of 25% IRR assuming low growth Cash flow generative IRR >25% 50 50 Audited results for the year ended 31 March 2013
  51. 51. Premier Foods 51 51 Audited results for the year ended 31 March 2013
  52. 52. Premier Foods Business overview • A leading South African staple foods producer • Produces, distributes and sells wheat, maize and bread products • Founded in 1882 in Port Elizabeth • Leading national brands: Snowflake (flour), Iwisa No 1 (maize meal) and Blue Ribbon (bread) • Operates 11 bakeries, 5 wheat mills, 1 maize mill and 15 distribution depots in South Africa, Swaziland and Lesotho • Significant exposure to the informal market which accounts for over 60% of bread sales • In excess of 22,000 deliveries to customers daily with a fleet of 600 bakery trucks exploiting a national footprint in milling distribution • Employs 6,300 people • Platform to drive growth through: Optimising existing milling and baking operations Acquisition of FMCG brands in South Africa Geographical expansion in the rest of Africa 52 52 Audited results for the year ended 31 March 2013
  53. 53. Premier Foods Trading update H1 FY13 (July 2012 – Dec 2012) R’m 3,186 Net revenue H2 FY12 (Jan 2012 – Jun 2012) 2,812 EBITDA 214 221 % margin 6.7% 7.9% EBIT 173 184 5.4% % margin 6.5% (1) Net revenue is after discounts, trade spend and rebates (2) EBITDA and EBIT are before extraordinary items • Current trading for the first 6 months of this year in line with expectations • Market volumes in milling and baking have been declining since fourth quarter of 2012. Premier has largely maintained its volumes through this period • Continued focus on cost control resulted in a below inflation increase in costs and contributed to recording EBITDA on budget • In line with commitment to increase investment in brands and people, c.R30 million incremental spend in H1 FY13 • Net debt has increased primarily due to working capital requirements driven by commodity price increases (absorbed R125 million in H1 FY13) and on-going expansionary capex programme (in H1 FY13 invested R93 million) 53 Audited results for the year ended 31 March 2013 53
  54. 54. Premier Foods Focus for year ahead Key focus areas for optimising the existing milling and baking business • Improve quality of product and service in the bakeries • Reduce costs • Build a winning team • Develop competencies and leadership Progress acquisitive growth strategy • Integrate Premier’s first non milling and baking acquisition that was completed in May 2013 • Expect to conclude further acquisitions in the next 6-12 months 54 54 Audited results for the year ended 31 March 2013
  55. 55. Premier Foods Kraft acquisition • Premier acquired the “Manhattan”, “Super C”, “Romantics” sugar confectionary brands, the Riviera biscuit brand, land and buildings, related production facilities and human capital from Kraft Foods South Africa (Pty) Limited, as a going concern • The acquisition completed on 5 May 2013 • This business will run off Premier’s shared services and use its milling and baking sales and distribution platform • These brands currently generate revenue of R129 million with the opportunity for significant growth 55 55 Audited results for the year ended 31 March 2013
  56. 56. Premier Foods Despite a general decline in market volumes..... Flour Bread 10% 3.0% 2.1 1.8 5% 1.0% 0% -1.9 -1.6 -5% 0.2 0.6 -1.0% -1.4 -3.4 -5.1 -4.3 -3.0% -3.1 -4.4 -5.0% -10% Apr-13 Dec-12 Apr-13 Dec-12 12MM 6MM 3MM Maize Cake mixes 15.0% 10.0% 4.0% 12.6 11.8 9.5 8.4 2.0% 7.5 7.4 0.0% 5.0% -2.0% -2.0 -2.2 -4.0% 0.0% Dec-12 Apr-13 Each chart based on % package change per category Dec-12 -1.8 -2.4 -2.6 Source: Nielsen Dec 2012 and April 2013 data 56 Audited results for the year ended 31 March 2013 -2.7 Apr-13 56
  57. 57. Premier Foods …..Premier Foods has performed relatively well in its major product categories over the past year Bread 450 413 Flour 407 200 135 134 150 92 92 128 134 149 145 150 300 100 51 50 0 31 19 51 40 29 16 41 0 MAT LY Bread Premier Foods Tiger Brands MAT TY MAT LY MAT TY Flour Pioneer Foods Premier Foods Maize Tiger Brands 5 200 88 51 35 4.7 3.7 2.8 103 81 23 8.5 7.7 309 94 Spar Cakes mixes 10 400 315 Pioneer Foods 47 23 30 2.7 0.5 0.4 0 0 MAT LY Maize Premier Foods MAT TY Tiger Brands Pioneer Foods Spar Ruto Mills MAT TY MAT LY Cake Mixes Each chart based on respective manufacturer’s volume sales (‘mil) Premier Foods Tiger Brands Pioneer Foods Source: Nielsen April 2013 data 57 57 Audited results for the year ended 31 March 2013
  58. 58. Premier Foods Brait’s audited valuation 31-Mar-13 R'm Maintainable EBITDA 31-Mar-12 R'm 421 Less: net debt (1) 6.5 x 2,738 Enterprise value 363 6.5 x EBITDA multiple 2,358 (1,232) Brait’s economic shareholding in Premier Foods (2) Fair value of Brait’s investment in Premier Foods Equity value Shareholder loan claims (3) Financial derivative asset (4) (946) 1,506 Equity value 1,412 79.9% 65.8% 1,463 1,204 247 12 1,191 930 241 20 Notes (1) Net debt includes Brait shareholder loan claims and the fair value of the minority interest in Premier Swaziland Bakeries (2) Increase in economic shareholding due to exercise of option agreements with former management of Premier Foods Note that during H1 FY13, new management subscribed for a 5% shareholding (3) Premier Foods has serviced monthly interest since July-12 (R20m received to 31 March 2013) (4) Fair value of remaining option agreements held with former management of Premier Foods 58 58 Audited results for the year ended 31 March 2013
  59. 59. Premier Foods Attractions to Brait Attractions Demonstrated through Alignment • Shareholders are Brait and management Management team • Depth and significant industry experience Market leader • Market leading staple food brands • Includes some of the oldest brands in the country Clear strategy • Target acquisitions in a wide range of food categories in which Premier Foods doesn’t currently have an offering • Investing in a number of internal projects with attractive returns Well positioned • Distribution platform – opportunity for other product sets • Sizeable footprint and reach – not easy to build / replicate • Operating leverage – ability to expand GP margins and improve production efficiencies Cash consumer • Well exposed to cash consumer in high growth LSM 1 – 6 categories Cash flow generative • Strong cash flow characteristics due to nature of the product basket that is focussed on cash sales into the informal market 59 59 Audited results for the year ended 31 March 2013
  60. 60. Pepkor 60 60 Audited results for the year ended 31 March 2013
  61. 61. Pepkor Business overview • Founded in 1965 and headquartered in Cape Town, Pepkor is a leading South African based retailer selling mainly clothing, footwear, house wares, personal accessories, cellular products and financial services • Retail interests focused on the cash retail value market and exposure to high-growth LSM 1-6 categories, operating in 14 countries across 3 continents: Region Retailer Southern Africa Pep, Ackermans, Shoe City, John Craig, Dunns, JayJays, Flash and Power Sales Australia Best & Less, Harris Scarfe Eastern Europe Pepco • Employs approximately 34,000 people • Core businesses: Pep and Ackermans • Extensive store network operating over 3,300 retail outlets representing 11 retail brands • Other retail support businesses: clothing factory (RSA); sourcing office (China); cellular wholesale distributor (RSA); a micro finance business (RSA) and group services (Credit, IT, Property, Treasury, Logistics and QA) 61 61 Audited results for the year ended 31 March 2013
  62. 62. Pepkor Retail environment Pepkor’s perspective Geography South Africa South Africa Lower growth rates Product offering aimed at lower LSM categories Consumer under pressure – impact of unsecured lending Value offering – customers trade down Pressure on growth in government wage bill Sizeable footprint allows for increased scale Pepkor’s non-RSA footprint expanding Pressure on growth in government grants Defensive nature of product offering Rand weakness Largely hedged Rest of Africa Rest of Africa Exciting opportunity but very challenging logistics Higher growth prospects. Only achieve higher margins once critical mass achieved Each country presents its own set of hurdles to overcome Pepkor has demonstrated the ability to work in Africa Need a sizeable presence in each country to get a proper read Nigeria still early days but trading well in challenging regulatory and cost environment Securing sites for stores Easier to cross geographies as a cash rather than credit retailer Eastern Europe Pepco Expansion opportunity Aggressive roll out of stores in Poland continues Language and currency changes First 2 stores opened in Slovakia Planned expansion into other neighbouring countries Currency Polish Zloty has strengthened against ZAR by c.7% HY 2013 v HY 2012 Australia Pepkor South East Asia Challenging retail environment Harris Scarfe acquisition complements Best & Less offering Currency Strong Australian led management teams Favourably located relative to other South East Asian emerging markets Australian dollar has strengthened against ZAR by c.12% HY 2013 v HY 2012 62 62 Audited results for the year ended 31 March 2013
  63. 63. Pepkor HY 2013 results at a glance (R’m) Sales HY 2013 15,795 EBITDA 1,913 % Margin 12.1% EBIT 1,610 % Margin 10.2% EBT 1,469 % Margin Tax charge 9.3% 432 Effective % of EBT 29.4% PAT 1,037 % Margin 6.6% Growth 22% 36% 38% 47% 49% 46% HY 2012 FY 2012(1) Commentary 12,969 26,406 • Favourable pricing points; defensive cash sale offering with wide access to low income mass market • Expanding footprint (2). For 6 months to Dec 2013: Retail space up 12% (1,558,000m2) Retail outlets up 5% (3,311 stores) 1,410 3,005 10.9% 11.4% • Continued margin improvement through focus on operating efficiencies 1,163 2,410 9.0% 9.1% 997 2,130 7.7% 8.1% 289 618 29.0% 29.0% 708 1,512 5.5% 5.7% • Function of higher profitability • Increased depreciation charge in line with capex • Function of increased profitability and reduced net interest charge: HY 2013: R138 million (HY 2012: R166 million) • Mix of earnings across geographies and respective tax rates • Implied PE multiple for HY 2013:13.4x (3) (1) FY2012: • Earnings exclude deal related extraordinary items. • Tax charge excludes STC payment on dividends paid to shareholders pre Brait acquisition (2) Including acquisition of HS on annualised earnings, using Brait’s March 2013 equity valuation (27,752 / (2 x 1,037)) (3) Calculated 63 63 Audited results for the year ended 31 March 2013
  64. 64. Pepkor HY 2013 results at a glance (R’m) HY 2013 Net debt 1,958 • Net debt at June 2012 was R1,650m • HY2013 level a result of strong cash generation absorbed by group investments made and significant strategic investment in working capital (inventory) Cash from operations 1,841 % EBITDA 96.2% • Function of increased profitability and cash sales (>90% of total), as well as timing differences Capex Free cash flow (1) % EBITDA Group investments made: 689 1,152 60.2% 1,295 HY 2013 Commentary • Net number of stores opened in HY 2013 is 155 vs 50 in HY 2012 • (110 net new stores in 2012) • Aggregate of above • Aggregate of below - equity 634 • Acquisition of Harris Scarfe and Flash - loan books 661 • Funding provided to Capfin and Tenacity (1) Free cash flow post tax and capex 64 64 Audited results for the year ended 31 March 2013
  65. 65. Pepkor Pep (1) Sales R6.9 bn sales: YOY up 14.2% # of stores 1,528 (51 opened in period) Clothing, footwear and home market shares calculated as c.11.5% Ackermans (2) Sales R2.9 bn sales: YOY up 11.1% # of stores 534 (5 opened in period) Prior year comparable includes Hang Ten business that was closed in December 2011 Pep Africa Sales Highlights # of stores HY 2013 (26 weeks trading vs 27 weeks in PY) R0.6bn: YOY up 21.1% (3) 143 (16 opened in period). On track with >15% 3 year CAGR on FY11’s # of 118 Continued steady store roll out in Nigeria and Angola Only achieve higher margins once critical mass achieved Pepco (Poland) Sales R1 bn: YOY up 47.4% (4) # of stores 403 stores (44 opened in period). Targeting 500th store in calendar year 2013 Significant sales growth relative to performance in comparative period complimented by aggressive store roll out program Pepkor South East Asia Sales R3.3bn : YOY up 56% (5) following Harris Scarfe acquisition # of stores 271 stores; 17 opened; 49 acquired (Harris Scarfe) Bedding down acquisition of Harris Scarfe. Best & Less new executive team in place (1) (2) (3) (4) (5) Pep is presented including BLNS countries Ackermans is presented including Shoe City and JJ’s Excludes Zimbabwe (Power Sales) which has undergone a restructure and consolidation process Pepco sales YOY includes c.7% currency (Zloty) gain Pepkor South East Asia sales YOY includes c.12% currency (AUD) gain 65 Audited results for the year ended 31 March 2013 65
  66. 66. Pepkor Retail sales • Sales for the third quarter to March 2013 increased as follows over the third quarter 2012: Pep 17% up Ackermans 16% up Pepco 35% up Pepkor group • R346 million Pepkor dividend declared and paid 25 March 2013. Brait’s share is R128 million: Update: R83 million received from direct 24% shareholding R45 million on indirect 13% shareholding retained by SPV and applied as prepayment on its gearing Q3 FY 2013 • Official launch of Global Product Sourcing (“GPS”) in Shanghai Pepco expansion • 1st step in expanding cross border completed: 2 stores opened in Slovakia during April 2013 • Continuing the aggressive store roll-out within Poland Pepkor South East Asia • Harris Scarfe opened its revamped Rundle Mall store in Adelaide • At 10,000m2, it’s the largest single store in the Pepkor group 66 66 Audited results for the year ended 31 March 2013
  67. 67. Pepkor Sales and footprint growth No. of stores Sales R’m Dec 2011 Pepkor Group Dec 2012 Increase 12,969 15,795 22% (1) # Dec 2012 Increase 3,156 3,311 5% (1) 2000 6 920 7 500 Jun 2012 Pepkor Group (3) (3) 6 061 1 528 1,477 1500 5 000 2 636 2 500 2 929 3 297 1000 2 114 500 1 038 636 525 - Dec 2011 Pep Ackermans (2) South East Asia Pepco ‘000m2 (1) Pep (3) Dec 2012 Increase 1,397 1.558 251 South East Asia Pepco Pep Africa Brait’s 2013 interim results presentation quoted the number of Pep stores for June 2012 as an aggregate total (including Pep Africa) of 1,757 stores. The table below sets out this reconciliation: 12% No. of stores Jun 2012 600 Pep (RSA) 339 400 403 271 280 Dec 2012 (2) Ackermans 618 602 359 Jun 2012 Pep Africa Jun 2012 800 205 0 Dec 2012 Retail space Pepkor Group 534 529 704 337 300 No. of stores Dec 2012 1,308 1,357 Change # % 49 3.7% 1.2% Pep (BLNS) 81 Jun 2012 Pep Ackermans (2) South East Asia 169 171 2 1,477 1,528 51 3.5% 127 143 16 12.6% Power Sales (4) 130 115 81 Total “Pep” Pep Africa 171 200 153 108 (45) (29.4%) Total Pep Africa 280 251 (29) (10.4%) 1,757 1,779 22 1.3% Dec 2012 Pepco Pep Africa Total (1) (2) Pepkor Group totals include Dunns and John Craig As shown in previous Brait results presentations, Ackermans is presented including Shoe City and JayJays (4) Power Sales (operates in Zimbabwe) is in the process of restructuring 67 Audited results for the year ended 31 March 2013 67
  68. 68. Pepkor Pepkor’s ‘Rest of Africa’ footprint (excluding Zimbabwe) Pep Africa (1) June 2012 Zambia Mozambique Dec 2012 127 stores_ 143 stores_ 6% 2% 17% Commentary 15% On track with 3 year store growth target to exceed 15% CAGR on June 2011’s 118 stores 33% Angola 35% Malawi 21% 22% Nigeria 24% 25% 257 stores BLNS countries 259 stores # of stores # of stores Pep BLNS Pep Ackermans BLNS Ackermans Shoe City BN Shoe City Dunns BLNS Dunns Total footprint Pep 169 Zambia 7% Expansion into rest of Africa is currently targeted outside the BLNS countries 31 Shoe City 6 5 Dunns 50 384 stores (2) 171 Ackermans 32 52 402 stores 7% 12% 12% Mozambique 8% Angola 8% 25% 25% Malawi 7% 8% Net 18 stores opened during HY2013 (4.7% increase) Nigeria 6% 5% Botswana Lesotho Namibia 1% 10% 2% 10% 25% 23% Swaziland (1) (2) Entered Africa in 1995 Total ‘Rest of Africa’ footprint shown excludes Power Sales (Zimbabwe - founded there in 1978) which has undergone a restructure and store consolidation process 68 Audited results for the year ended 31 March 2013 68
  69. 69. Pepkor Brait’s audited valuation 31-Mar-13 R'm 3,714 Maintainable EBITDA EBITDA multiple 31-Mar-12 R'm 2,825 8.0 x Less: net debt 8.0 x 29,710 Enterprise value 22,602 (1,958) Equity value (1,936) 27,752 Fair value of investment in Pepkor Direct shareholding in Pepkor Indirect shareholding in Pepkor through SPV (1) 20,666 37.0% 24.0% 13.0% 9,278 6,658 2,620 6,701 4,958 1,743 26.1% 7,244 (1,994) 5,250 5,394 (1,901) 3,493 49.9% 2,620 1,743 Notes (1) Indirect investment through SPV • Shareholding in Pepkor • SPV gearing • NAV of SPV Brait's attributable share of SPV (2) The Pepkor dividend received in March 2013 by the SPV (R90 million) reduced the SPV gearing 69 69 Audited results for the year ended 31 March 2013
  70. 70. Pepkor Attractions to Brait Attractions Demonstrated through Alignment • Strong, aligned shareholder base (Titan, Brait and management) Management team • Deep bench with very experienced exco team Market leader • Pep and Ackermans are two of the most recognised retail brands in South Africa Clear strategy • Pep – discount market positioning and peri-urban focus • Ackermans – value based market positioning • Expansion into Africa and Eastern Europe Well positioned • Distribution platform – opportunity for other product sets • Sizeable footprint and reach – not easy to build / replicate • Operating leverage – ability to expand GP margins and improve sales densities Cash consumer • Well exposed to cash consumer in high growth LSM 1 – 6 categories Cash flow generative • Strong cash flow generation from operations – average over past three years: - pre-capex 70% of EBITDA - post capex 41% of EBITDA; 80% of PAT 70 70 Audited results for the year ended 31 March 2013
  71. 71. Rest of investment portfolio 71 71 Audited results for the year ended 31 March 2013
  72. 72. Rest of investment portfolio 31 March 2013 R’m 31 March 2012 Carrying value % of Total Assets Carrying value % of Total Assets PE Funds 594 4% 584 5% Other investments 330 2% 487 4% Total 924 6% 1,071 9% Commentary on movements from March 2012 to March 2013: • Other investments includes what has previously been classified as Asset Management Units • Realisations during the year amounted to R191 (1) million: R118 million received during year R73 million included in accounts receivable at year-end (received 4 April 2013) (1) Investments realised: • PE Funds: AEP, Brait III’s remaining investment in Wilderness Holdings • Other investments: KSB Pumps, Medu Holdings, Molash, Brait Solutions 72 72 Audited results for the year ended 31 March 2013
  73. 73. Audited results FYE 31 March 2013 73 73 Audited results for the year ended 31 March 2013
  74. 74. Summarised income statement Audited results March 2013 R’m 3,201 Income Operating expenses 34 2,391 Normalisation Adjustment (434) R’m (1) March 2012 R’m 2,825 (124) (117) (434) 2,708 (5) (62) - - - - 3,013 Profit before taxation - 2,274 (5) (2) (117) 35 (59) Finance costs 6 3,077 Profit from operations Indirect taxation Variance % March 2012 Normalised R’m 36 2,212 (434) 2,646 (62) (1) (97) (39) - (39) 3,012 39 2,173 (434) 2,607 (20) - - - - (66) - - - - - - - 434 (434) 2,926 35 2,173 - 2,173 579 34 433 - 433 Headline earnings per share (cents) 581 7 545 - 545 Ordinary shares in issue (‘m) 510 1 506 - 506 Ordinary shares outstanding (‘m) 505 1 501 - 501 Weighted average shares in issue (‘m) 504 26 399 - 399 Direct taxation Profit for the year Preference share dividend paid Dec 2012 Preference share dividend declared May 2013 (3) Capital item Headline earnings Normalised headline earnings per share (cents) (4) (1) The inclusion of a R434 million capital profit in FY2012 earnings was disclosed in the FY2012 Annual Report (note 7.1) (2) The indirect tax relates to VAT not claimed as a result of an increase in FY 2013’s proportion of exempt dividends to total income (3) For the six months ended 31 March 2013 (4) Normalised HEPS is headline earnings for the year divided by ordinary shares outstanding at year-end 74 Audited results for the year ended 31 March 2013 74
  75. 75. Analysis of income Audited results March 2013 March 2012 Normalised R’m R’m Variance % 2,713 27 Interest 183 29 142 Dividends and other income 170 4,150 4 Fees 62 (19) 77 Foreign exchange gains 73 115 34 3,201 34 2,391 Investment gains Total income 2,134 (1) Note: (1)The inclusion of a R434 million capital profit in FY2012 earnings was disclosed in the FY2012 Annual Report (note 7.1) 75 75 Audited results for the year ended 31 March 2013
  76. 76. Analysis of expenses Audited results March 2013 R’m Variance % March 2012 R’m 80 8 74 Non-executive directors’ fees 7 (13) 8 Audit fees 7 - 7 Professional fees 6 - 6 Travel & accommodation 4 - 4 12 9 11 Depreciation 3 - 3 Brait Foundation 1 - 1 Insurance 1 - 1 Other costs 3 50 2 124 6 117 Staff costs Office related costs Total operating expenses 76 76 Audited results for the year ended 31 March 2013
  77. 77. Summarised cash flows Audited March 2013 results (R’m) Investment proceeds Dividends - Pepkor 261 111 (1) 83 - Other investments Realisation of PE Fund and Other investments Iceland Foods loan claim repayment (2) Interest received 28 118 8 24 Fees received Operating expenses paid Interest paid Taxation paid 61 (135) (59) (24) Operating cash flow (excluding purchase of investments) Purchase of investments (3) Premier Foods PE Fund and Other investments 104 (386) Net cash outflow used in operating activities Acquisition of property and equipment Proceeds from issue of preference shares (net of costs) Repayment of long term borrowings Buyback of treasury shares Preference share dividend paid Ordinary share dividend paid (cash election) Net decrease in cash and cash equivalents (1) (2) (3) (273) (113) (282) (8) 1 469 (1 231) (2) (20) (16) (90) R83m received on Brait’s 24% direct shareholding in Pepkor. Brait’s R45m effective share of the Pepkor dividend received through its indirect shareholding was retained by the SPV and applied as prepayment on its gearing. Includes R20m interest received on Premier Foods shareholder loan. Purchase cost for the increased shareholding acquired in Premier Foods through exercise of option agreements with former management 77 Audited results for the year ended 31 March 2013 77
  78. 78. Analysis of cash position Audited results March 2013 R’m (90) Net (decrease)/increase in cash and cash equivalents Effects of exchange rate changes on cash and cash equivalents March 2012 R’m 318 70 33 Cash and cash equivalents at beginning of year 523 172 Cash and cash equivalents at end of year 503 523 101 128 394 395 8 - 503 523 1,647 527 Comprising: ZAR cash USD cash (1) GBP cash Cash and cash equivalents Available from existing undrawn gearing facilities Available from preference share follow-on tap issue (2) 500 (1) USD amount (‘m) Closing exchange rate 43 R9.24 394 31 March 2012 51 R7.67 1,050 ZAR equivalent (‘m) 31 March 2013 (2) Date - 2,650 Total cash and available facilities 395 Assumes issue price of R100 per share 78 78 Audited results for the year ended 31 March 2013
  79. 79. Operating costs to AUM Performance metric: < 0.85% March 2013 R’m Total assets % of AUM March 2012 R'm % of AUM 15,141 11,794 3,202 3,027 18,343 14,821 0.85% of AUM target cap on operating costs 156 126 Operating costs 124 0.68% 117 0.79% Total fee-earning AUM Total AUM • First half of year 63 59 • Second half of year 61 58 62 0.34% 77 0.52% • First half of year 30 43 • Second half of year 32 34 62 0.34% 40 0.27% Fee income Net operating costs ratio after fee income 79 79 Audited results for the year ended 31 March 2013
  80. 80. Treasury management 80 Audited results for the year ended 31 March 2013
  81. 81. Treasury management Perpetual Preference Shares Objectives • Access to large pools of capital at short notice at lowest cost • Source permanent capital that complements Brait’s long term investment horizon with minimal dilution to the ordinary equity shareholders • Conservative debt and equity combination that optimises WACC • Seek to tap into the yield seeking investor market through the issuance of listed instruments which facilitate liquidity for investors Future plans: • Tap remaining R500 million under the existing R2 billion programme • Seek shareholder approval to increase programme size • Deploy net proceeds raised from issuances to replace drawn borrowings: Ensures minimal cash drag Retains immediate access for new investment opportunities Term debt Brait’s portfolio de-gearing, dividend inflows and NAV growth has led to the lending banks agreeing the following with effect from 1 May 2013: Interest rate reduced from 340-400 bps to 270bps above the 3 month JIBAR rate Commitment fee for undrawn facilities reduced from 125bps to 70bps 81 81 Audited results for the year ended 31 March 2013
  82. 82. Conclusion 82 82 Audited results for the year ended 31 March 2013
  83. 83. Conclusion Defensive nature has enabled strong growth in a tough macro environment Africa expansion strategy progressing well Investment portfolio Margins have expanded Significant investment made for expansion Strong cash flow generation Increased geographic and currency diversification Cash and facilities available for investment of R2.7 billion Investment vehicle Major investments carried at substantial discount to listed peer multiples Cash inflows from portfolio companies ahead of plan Heightened awareness and focus on challenging macro environment Remain opportunistic but cautious on deal flow that ‘moves the dial’ 83 83 Audited results for the year ended 31 March 2013
  84. 84. Question and answer session 84 84 Audited results for the year ended 31 March 2013
  85. 85. APPENDICES
  86. 86. Appendices Contents • Brait: – Overview – Investment objectives – Economic objectives – Valuation policy – Treasury management • Investment portfolio: – Scale of investment portfolio – Iceland Foods – Premier Foods – Pepkor – Rest of investment portfolio • Administration and contact details 86 86 Audited results for the year ended 31 March 2013
  87. 87. Brait overview Brait is an investment holding company whose shares are listed on the MTF Board of the Luxembourg Stock Exchange and also on the JSE. Brait’s portfolio mostly comprises holdings in privately owned businesses operating in a range of industries Objective Achieve superior long-term capital appreciation through majority or significant minority stakes in investments across a portfolio of primarily unlisted companies, while raising capital in the most efficient manner and providing attractive cash yield through Brait preference share Investment criteria • • • • • • • • • Timeline • Target 5 – 6 large assets over the next 3 – 5 years • Ability to hold investments for long timeframes (open ended) Transparency Investment size of up to R4 billion Target IRR in excess of 25% Demonstrate growth in earnings and/or strong cash flow generation Aligned and experienced management team Aligned shareholder base Currently, or has opportunity to be, the market leader in chosen segment Clear core strategy that is flexible in order to be sustainable over the long term Intimate understanding of customers / clients Relevant products • Disclosure of valuation metrics and summarised audited financial statements for all significant investments to enable investors to formulate their own valuations • Quarterly NAV reporting • Interim and year-end results presentations, with investee company management present 87 87 Audited results for the year ended 31 March 2013
  88. 88. Brait overview To invest alongside proven investment team and track record • Vastly experienced and highly successful Investment Team • Actively exercise ownership while partnering management of portfolio company • Investment Team fully aligned to shareholders Access to investment opportunities previously not available • Concentrated, large exposures in successful market leading private companies • Single entry point access through Brait to underlying unlisted companies • Benefit of liquidity to shareholders at any time through the public market Entry at a negotiated fair market value of market leading investments Brait’s model allows shareholders • Prudent valuations allow entry into unlisted investments held at discount to comparable listed peers Access to strong pipeline of current and near term investment opportunities • Proven ability to procure investments that will provide future gains Attractive cash yield through Brait Pref • In addition to capital growth, cash yield can be accessed through the Brait Pref To invest through a capital efficient structure • Minimal “cash drag” • No fee leakage • Prudent use of gearing • Alignment to above market and upper quartile returns 88 88 Audited results for the year ended 31 March 2013
  89. 89. Brait’s investment objectives Rationale Objective Replicate Brait’s private equity return profile through growth in NAV Provide superior return to shareholders Invest in market leading, growth oriented, entrepreneurially managed, privately owned businesses Access to quality investments through single entry point Diversified portfolio of 5 – 7 assets over the next 3 – 5 years Support platform assets with long term growth prospects Shareholder of reference in businesses with strong, aligned management teams, relevant products, cash generative Responsible long term shareholders help drive value Alignment of interests amongst shareholders, capital providers, investment team and investee management All focused on same goal, team oriented approach Raise efficient capital Enhance shareholder returns and retain flexibility over investment holding period Distribute excess cash to shareholders as dividends Provide superior return to shareholders Balanced disclosure Achieve effective and proactive communication with stakeholders Listed share as the vehicle Liquidity for investors 89 89 Audited results for the year ended 31 March 2013
  90. 90. Brait’s economic objectives Rationale Objective Invest in quality assets with solid growth in earnings Superior NAV growth Demonstrate cash flow generation within underlying assets Solid underpin to profit growth Efficient structure Minimise cost leakages No management fees or capital participation on public capital No cost leakage Minimal cash drag on balance sheet with prudent use of investment company and portfolio gearing Efficient use of capital Access cheapest form of capital Minimise cost of capital Consistent dividend policy Certainty 90 90 Audited results for the year ended 31 March 2013
  91. 91. Brait’s valuation policy Given the nature of its operations, investments are accounted for at fair value through profit and loss (scoped out of IAS 28 and into IAS 39). The Group's reported NAV is thus equivalent to a 'sum-of-the-parts' valuation. For noting • The Group's carrying value for its private equity fund investments does not as yet incorporate any share of capital participation on the Brait IV fund investments • Management fees are recognised in the accounting period in which the services are rendered - no valuation model is applied to this stream in compiling the Group's reported NAV • The Group's valuation policy is consistently applied across its investment portfolio Listed investments • Quoted market prices Unlisted investments • Valuation based on estimate value between knowledgeable, willing parties at arm's length • Valuation principles per International Private Equity and Venture Capital Valuation Guidelines and IFRS Standards Methodologies used - Primary basis is the Maintainable Earnings model - Maintainable earnings derived with reference to historic and forecast EBITDA, adjusted for any non-recurring income/expenditure from the subject company's latest financial statements - The average of comparable quoted companies is taken as the base for the valuation EV/EBITDA multiple - Points of difference in tailoring the peer average to valuation multiple for the subject company are adjusted for - The equity valuation takes consideration of the subject company’s net debt/cash on hand as per its latest financial results Cross-check bases - Discounted cash flow, NAV and recent transaction prices are used as a validation check 91 91 Audited results for the year ended 31 March 2013
  92. 92. Treasury management 92 Audited results for the year ended 31 March 2013
  93. 93. Treasury management 1% of R26.64 NAV per share Dividend per share # shares in issue Total R0.2664 FYE 2013(1) 510,122,347 R135,896,593 Bonus share issue (default election) No. of shares to be issued based on ratio of shareholding on 2 Aug 2013 in relation to the ratio of: • R26.64 to • R35.29 (Brait’s 60-day volume weighted average price (VWAP) to 31 May 2013) Ordinary shares Cash dividend (alternative election) Dividend per share # shares in issue Total R0.2059 506,200,693 R104,226,723 R20.59 to R22.62 (60 day VWAP to 4 June 2012) 85% 3,921,654 R88,709,644 Cash dividend (alternative election) paid 15% - R15,517,079 Dividend per share # shares in issue Total R4.4079 15,000,000 R66,118,500 Dividend per share # shares in issue Total R1.3563 15,000,000 R20,344,500 FYE 2012(2) 1% of R20.59 NAV per share Bonus shares issued - based on ratio of: • • Declared on 28 May 2013 (3) Preference shares Period: 1 Oct 2012 to 31 March 2013 Paid on 3 December 2012 Period: 6 Aug 2012 to 30 Sept 2013 (1) (2) (3) FY2013 ordinary dividend proposed for AGM on 17 July 2013. Circular and election form will be sent to shareholders on 24 June 2013 FY2012 bonus ordinary shares issued / cash dividend election paid on 6 August 2012 A separate announcement setting out the salient dates of this preference dividend was made to the market on 29 May 2013 93 Audited results for the year ended 31 March 2013 93
  94. 94. Treasury management Perpetual preference share capital Salient terms Instrument Cumulative, non-participating, perpetual preference shares issued at R100 per share Programme size R2 billion, with first issuance of R1.5 billion on 6 August 2012 Listing Primary listing on the LuxSE with secondary listing on the JSE Dividend rate Floating rate of 104% of RSA prime lending rate, with default rate at 144% of prime Dividend terms • Cumulative calculated 31 March (year end) and 30 September (interim) of each year • Payable semi-annually, earlier of 5 days prior to payment of ordinary dividend or within 90 days from 31 March and 30 September Preference shareholder protection • Ordinary dividends withheld should the preference dividend not be declared and paid • If the preference share dividend remains outstanding for >90 days, the default rate applies • Should tax laws change affecting a SA corporate, Brait shall increase the dividend equal to the difference caused. Thereafter, Brait has the election to voluntarily redeem the shares Voting rights Non-voting, unless: • dividend unpaid for >90 days • resolution proposal which affects rights • proposed corporate action: which will reduce Brait’s NAV <R10 billion; or will cause preference share capital to be >10% of NAV; or has the effect of delisting Brait 94 94 Audited results for the year ended 31 March 2013
  95. 95. Treasury management Borrowings Salient terms Purpose General corporate investment purposes Facility R2,150 million Lender Rand Merchant Bank; Standard Bank; and/or their nominees Advance date 4 July 2011 Term 5 years from Advance date with an option to extend for a further 5 years Repayments Prior to 1 May 2013: • Capital bullet on 5th anniversary • Tranche A Interest repayable semiannually with an option to roll into Tranche B From 1 May 2013: • Capital bullet on 5th anniversary • Interest rolled up and repayable on 5th anniversary Interest Prior to 1 May 2013: 3 month JIBAR plus margin with quarterly compounding • Tranche A Margin - 3.40%; 3.60% • Tranche B Margin - 3.80%; 4.00% From 1 May 2013: 3 month JIBAR plus margin of 2.70% with quarterly compounding Commitment Fee Prior to 1 May 2013: 125 bps per annum From 1 May 2013: 70 bps per annum Security Assets held throughout the Group structure 95 95 Audited results for the year ended 31 March 2013
  96. 96. Investment portfolio 96 96 Audited results for the year ended 31 March 2013
  97. 97. Scale of investment portfolio To provide an indication of scale, the amounts shown below are an aggregation of the Group’s direct investments, assuming we own 100% of each, based on each company’s most recent set of reported results. Investments held through the private equity fund portfolio are excluded. Amounts in R’bn 31-Mar-13 Revenue 68.0 EBITDA % Margin 6.4 9.4% EBT (1) % Margin 3.6 5.3% 1.1 29.6% Taxation Effective % PAT (1) 2.5 Cash generated from operations (pre-capex) % EBITDA 5.0 78.6% Cash generated from operations (post-capex) % EBITDA 3.5 55.5% Number of employees 66,000 # (1) Iceland Foods’ FYE 2013 results considered above exclude the £72 million goodwill amortisation charge. (The statutory finan cial statements are prepared under UK GAAP - which in contrast to IFRS permits the amortisation of goodwill - policy is to amortise goodwill over 20 years). 97 97 Audited results for the year ended 31 March 2013
  98. 98. Iceland Foods 98 98 Audited results for the year ended 31 March 2013
  99. 99. Iceland Foods Business overview • Founded in 1970 by Malcolm Walker, current CEO • UK based national food retailer focused on frozen food 13% share of the UK frozen market 2,500 SKU’s Revenue split fairly equally between frozen, chilled & grocery • Key attractions Quality, value and convenience Market leading innovation on frozen food Sizeable private label offering driving superior margin Every day low prices Round sum pricing i.e. £1, £2, £3 Home Delivery – spend £25 or more and get free home delivery • Secondary shopping destination – not a direct competitor to Big 4 but aim to take share of customer wallet • Extensive footprint across the UK 790 stores primarily located in convenient high street locations 4 state of the art distribution centres Exports branded frozen food and groceries mainly to Europe Now exporting over 120 lines to South Africa - expected to reach 150 in near term • Over 24,000 employees • Ranked 1st (2012) & 2nd (2013) in Sunday Times Best Big Company to Work For 99 99 Audited results for the year ended 31 March 2013
  100. 100. Iceland Foods UK footprint 100 100 Audited results for the year ended 31 March 2013
  101. 101. Iceland Foods Market overview FYE 2013 Market overview • Discounters (Aldi, Lidl) and Iceland are growing at expense of majors (1) indicating price / value is key focus for consumers • Iceland grew market share 2.5% to 2.6% as determined by independent research • Food retailer advertising is focused on price i.e. products and quality is comparable to the majors but better priced Iceland initiatives • International expansion Iceland continues to explore opportunities outside the UK including Czech Republic, Middle East and South Africa (via Shoprite – already over 120 lines) • Online shopping Trialled at 25 stores; national roll-out planned Infrastructure already in place so few “add-ons” • Marketing “Money off” coupons “10% off Frozen” advertising campaign “Big Brand Value” big discounts offered “I’m a celebrity” sponsorship – Iceland’s 7th year (1) Tesco, Sainsbury, Asda and WM Morrison 101 101 Audited results for the year ended 31 March 2013
  102. 102. Iceland Foods Historic performance Iceland Foods’ year-on-year growth remains ahead of the overall market (1) Kantar Worldpanel March 2013 Footprint growth (2) £’m 2 614 2 000 1 500 2 081 1 635 1 789 163 1 000 2 256 184 2 640 250 233 226 200 2 389 150 188 100 119 500 2007 2008 2009 2010 Revenue(LHS) 6 yr CAGR: 8.3% 2011 2012 302 730 650 664 659 12% 13% 14% 14% 300 250 663 2013 200 150 2007 EBITDA(RHS) 15% 350 757 742 550 2008 2009 2010 No. of stores (LHS) 15.8% 15% 400 790 600 2.9% 6 yr cagr : Home Delivery (as a % of total sales) 20% 10% 298 347 340 320 700 0 0 353 750 50 94 362 800 300 2 500 Retail space (000 m2) Revenue / EBITDA growth £’m No. of stores (1) 2011 2012 2013 Footprint (RHS) 3.3% (2) Excludes Cooltrader Private label offering (3) 16% Chilled Frozen 17% Branded Branded 32% 37% 63% 68% 5% Private label Private label 0% 2007 2008 6 yr CAGR : 2009 2010 2011 2012 2013 5.9% (3) 102 Audited results for the year ended 31 March 2013 Based on FY 2013 sales 102
  103. 103. Iceland Foods Summarised financial information Summarised income statement (March year-end) £’m Revenue % growth EBITDA % margin EBIT % margin EBT % margin PAT % margin 2013 2012 2011 2010 2009 Unaudited Audited Audited Audited Audited 2,640 1.0%(1) 226 8.5% 112(3) 4.2% 44(4) 1.7% 16 0.6% 2,614 9.4% 233(2) 8.9% 144(3) 5.5% 148 5.7% 96 3.7% 2,389 5.9% 188 7.9% 130 5.4% 129 5.4% 82 3.4% 2,256 8.4% 184 8.2% 121 5.4% 110 4.9% 70 3.1% 2,081 16.3% 163 7.8% 104 5.0% 87 4.2% 55 2.6% Revenue FY13 covers 52 weeks (FY12: 53 weeks). FY13 sales increased by 2.0% YOY (excluding Cooltrader – sold Sept 2012) EBITDA FY12 includes property income of £3m EBIT FY13 includes amortisation of goodwill of £72m (FY12: £26m) and deal fees of £8m. Depreciation charge is £34m. (FY12 includes abnormal deal related costs of 29m) (4) EBT FY13 includes a full year interest charge of £65m on debt package and £3m exchange rate movement on EURO denominated senior debt tranche (1) (2) (3) Summarised cash flow £’m Cash flow from operations % EBITDA Capital expenditure Free cash flow % EBITDA Taxation paid Cash flow post tax % EBITDA (5) The 2013 2012 2011 2010 2009 Unaudited 234 103.5% Audited 236 101.3% Audited 191 101.6% Audited 194 105.4% Audited 171 104.9% 37(5) 25 25 55 31 197 87.2% 211 90.6% 166 88.3% 139 75.6% 140 85.9% 32 46 42 40 27 165 73.0% 165 70.8% 124 66.0% 99 53.8% 113 69.3% increase in FY13 capex driven by net 33 Iceland Foods outlets opened (FY12: net 15 Iceland stores opened) 103 Audited results for the year ended 31 March 2013 103
  104. 104. Iceland Foods Summarised financial information Summarised balance sheet (March year-end) £’m Total Assets Property and equipment Intangibles Current Assets Cash Total Liabilities Trade creditors Current liabilities Debt Other Shareholders Equity Ratios and trading information ROE Number of retail outlets Iceland Cooltrader (2) Retail space ('000 m2) Iceland Cooltrader (2) Revenue per m2 (£) (3) 2013 2012 2011 2010 2009 Unaudited Audited Audited Audited Audited 1,891 166 1,421 176 128 1,456 1,933 161 1,493 194 85 1,538 819 167 409 176 67 430 809 175 434 147 53 402 983 151 460 135 237 646 316 65 1,050 25 300 100 1,110 28 278 87 50 15 246 80 59 17 209 91 321 25 435 395 389 407 337 2013 2012 2011 2010 2009 19.5%(1) 24.5% 20.6% 18.7% 17.6% 790 790 362 362 7,293 814 757 57 360 347 13 7,268 796 742 54 353 340 13 6,774 776 730 46 363 353 11 6,207 708 663 45 331 320 11 6,288 (1) ROE quoted for 2013 is pro-forma to normalise for the £72m goodwill charge. Derived as normalised FY13 PAT of £88m (actual FY13 of £16m + £72m), divided by average shareholders equity of £451m (average of FY13 normalised equity of £507m (£435m + £72m) and FY12 actual of £395m) Cooltrader sold during September 2012 (3) Calculated on total number of retail outlets (2) 104 Audited results for the year ended 31 March 2013 104
  105. 105. Iceland Foods Gearing analysis Iceland’s strong cash generation and resulting pre-payments led to the lending banks agreeing to a 50bps reduction in interest rates on the total term debt effective from February 2013 Term debt facilities Mar-13 £’m Mar-12 £’m Interest rate Term (yrs) Currency 786 860 Term loan A (amortising) Libor(1) + 450(2) bps 6 GBP 245 300 Term loan B1 (bullet) Libor(1) + 500(2) bps 7 GBP 237 265 Term loan B2 (bullet) Libor(1) + 450(2) bps 7 EUR 304 295 Total term debt Vendor loan (bullet) 10 264 250 1,050 1,110 25 25 Mar-13 £’m Mar-12 £’m Total term debt 1,050 1,110 Less: available cash considered (128) (42) 922 1,068 Total term debt Revolving Credit Facility (“RCF”) Libor + 450(2) bps 6 GBP (1) Base rate (Libor) swapped to a blended fixed rate of 1.15% across the tranches (2) Rate shown is post the 50bps reduction Reconciliation to net debt quoted in Brait's valuation of Iceland Foods Net debt per Brait's valuation of Iceland Foods 105 105 Audited results for the year ended 31 March 2013
  106. 106. Premier Foods 106 106 Audited results for the year ended 31 March 2013
  107. 107. Premier Foods Brand hierarchy Flagship national brands Other national brands Regional brands 107 107 Audited results for the year ended 31 March 2013
  108. 108. Premier Foods National and regional footprint 108 108 Audited results for the year ended 31 March 2013
  109. 109. Premier Foods Summarised financial information Summarised income statement (R’m) Pro forma June 2012(1) Cash flow generated from operations before working capital Cash effect of changes in working capital Invested in property, plant, equipment and acquisitions (4) 5,575 12% 320 5.7% (66) 254 4.6% (275) (21) (9) Audited April 2011 Audited April 2010 Audited April 2009 634 866 (141) (15) (669) 569 908 (150) 50 (456) 581 871 (17) 133 (842) 675 921 726 Pro forma June 2012(1) Summarised cash flow information (R’m) 5,298 (5%) 572 10.8% (69) 503 9.5% (161) 342 203 705 Total shareholders’ funds 4,896 (8%) 222 4.5% (87) 135 2.8% (108) 27 57 689 900 (142) 266 (1,008) Non-current tangible assets Goodwill and intangible assets Other liabilities Net current assets Net debt (3) Audited April 2009 Audited June 2012 Summarised balance sheet (R’m) Audited April 2010 5,731 17% 289 5.0% (79) 210 3.7% (136) 74 80 Revenue % Growth Operational EBITDA (2) % Margin Depreciation and amortisation EBIT % margin Net finance costs Profit/(Loss) before tax Profit/(Loss) after tax Audited April 2011 Audited April 2011 Audited April 2010 Audited April 2009 280 289 495 229 (197) (77) (307) 155 127 152 50 48 Notes: (1) Following the change in year-end from April to June, the audited results for June 2012 covered a 14 month period. For comparability, pro forma results for the 12 months ended 30 June 2012 have been shown for income statement and cash flow information. (2) Excludes abnormal profits and losses in each year (3) Net debt excludes the subordinated shareholder loans held by Brait (4) Cash flow after tax, before finance charges, capital expenditure, dividends and excluding abnormal profits and losses 109 109 Audited results for the year ended 31 March 2013
  110. 110. Pepkor 110 110 Audited results for the year ended 31 March 2013
  111. 111. Pepkor Pep: Interesting facts • Biggest single brand retailer in Africa • Double digit growth for the past 13 years (sales and operating profit) • Sales in South Africa account every year for more than: – 44% of all blankets sold – 57% of all school wear, manufactured mainly in its clothing factory in Cape Town – 30% of all baby and kids clothing – 40 million disposable nappies – 8 million pre-paid cell-phone handsets – 160 million airtime vouchers • Its 3 Southern Africa distribution centres and 14 transport hubs together occupy more than 230 000m2 - the size of 38 rugby fields • This year PEP will: – Send over 640 million products to more than 1, 504 stores – Conduct over 256 million customer transactions • There are 48 stand-alone home-ware stores called PEPhome • Over half of all PEP’s store managers are promoted from within the company • PEP’s flagship CSI project is the PEP Academy: – Ten PEP academies operate within existing schools to give around 1,600 Grade 4 learners vital education support in numeracy and literacy – Launched a custom-made library-based programme to improve the reading competence of Grade 5 learners 111 111 Audited results for the year ended 31 March 2013
  112. 112. Pepkor Growth statistics Sales and EBITDA growth R’bn Footprint growth R’bn 30 000 3 000 3 500 25 000 3 500 (1) 3 000 1 500 2 500 15 000 1 500 No. of stores Sales EBITDA 20 000 2 000 1 300 2 000 1 500 1 200 10 000 Retail space ('000m2) 1 400 2 500 1 000 1 000 5 000 500 - - 0 2007 2008 2009 2010 2011 1 100 500 1 000 2007 2012 2008 2009 2010 2011 2012 2007 Audited EBITDA Normalised EBITDA(2) Sales 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 1,531 1,804 1,286 2,502 2,547 3,005 # of stores 2,472 2,636 2,763 2,846 3,046 3,156 Retail space 1,134 1,204 1,260 1,294 1,356 1,397 1,531 1,804 1,754 2,037 2,547 3,005 14,494 16,582 18,867 20,212 22,562 26,406 5 year CAGR 5 year CAGR EBITDA 14.4% # of stores 5.0% Sales 12.8% Retail space 4.3% (1) As at June year end (2) EBITDA for 2009 and 2010 normalised for foreign exchange contracts over the 24-month trading period 112 Audited results for the year ended 31 March 2013 112
  113. 113. Pepkor Summarised financial information Summarised income statement 2012 2011 2010 2009 2008 Revenue 26,406 22,562 20,212 18,867 16,582 % Growth 17.0% 11.6% 7.1% 13.8% 14.4% 4,916(1)(2) 4,206 4,004 2,660 2,970 % Margin 18.6% 18.6% 19.8% 14.1% 17.9% EBITDA 3,005(2) 2,547 2,502(3) 1,286(3) 1,804 % Margin 11.4% 11.3% 12.4% 6.8% 10.9% 1,403 (Audited June results in R’m) EBITDA(R) 2,410(2) 2,088 2,051 855 % Margin 9.1% 9.3% 10.1% 4.5% 8.5% EBT 1,903 2,092 1,992 694 1,200 7.2% EBIT % Margin 7.2% 9.3% 9.9% 3.7% PAT 1,219 1,529 1,389 474 873 % Margin 4.6% 6.8% 6.9% 2.5% 5.3% Notes: (1) EBITDA(R) is EBITDA prior to net building operating lease expenses (2) Excludes extraordinary items (3) EBITDA in 2010 and 2009 normalised for foreign exchange hedging contracts over the 24-month trading period was R2,037m and R1,754m respectively Summarised cash flows 2012 (R’m) Cash flow from operations 2011 2010 2009 2008 2,032 Capital expenditure 1,865 1,760 1,034 1,456 67.6% % EBITDA 73.2% 70.3% 80.4% 80.7% 817 % EBITDA 837 739 488 520 1,215 Operating cash flow post capex 1,028 1,021 546 936 40.4% 40.4% 40.8% 42.5% 51.9% Net group investments made - equity 293 93 (19) 30 1 Net group investments made – loan books 544 34 - - 113 113 Audited results for the year ended 31 March 2013
  114. 114. Pepkor Summarised financial information Summarised balance sheet 2012 2011 2010 2009 2008 11,805 11,456 9,003 8,928 8,108 Fixed assets 2,679 2,331 1,887 1,609 1,559 Intangibles 1,379 1,405 1,361 1,402 1,442 Current assets 5,654 4,922 4,195 4,275 3,687 Cash 1,310 2,466 1,359 1,384 1,228 (Audited June results in R’m) Total assets Other 783 332 201 258 192 7,940 Total liabilities 5,210 4,260 5,637 5,210 Debt 3,766 511 362 1,414 1,949 Current liabilities 3,544 4,126 3,379 3,695 2,809 Other 630 573 519 528 452 Equity 3,865 6,246 4,743 3,291 2,898 Minority interest 25 Ratios and trading information ROE Retail outlets Retail space (m2 in 000’s) Revenue per m2 (in R) 24 12 11 3 3,840 Ordinary shareholders equity 6,222 4,731 3,280 2,895 2008 2012 2011 2010 2009 40%(1) 40%(1) 35% 15% 37% 3,156 3,046 2,846 2,763 2,636 1,397 1,356 1,294 1,260 1,204 18,899 16,639 15,620 14,974 13,772 Notes: (1) ROE quoted for June-12 and June-11 is based on pro-forma 5 July-11 ordinary shareholders equity. Pro forma adjustments made: - Eliminated cash on hand and debt as at 30 June-11 and introduced new R2 billion debt. - Adjusted 2011 PAT to R1.403 billion by eliminating 2011 net financing costs and introducing funding costs on R2 billion debt at 8.5% - Resulting ordinary shareholders equity for June-11 is R2.267 billion. 114 114 Audited results for the year ended 31 March 2013
  115. 115. Pepkor Overview of Pep Group Pep Home Pep Cell Founded SA, BLNS(1) SA SA 1965 Operating countries 2007 2008 Clothing, footwear, house wares, cellular Product range Positioning Bathroom & kitchen textiles, bedding, curtaining, house wares, furniture & appliances, FMCG, cellular Handsets, airtime, starter packs, modems, subscription TV SA 2001 (2) SIM cards & Flash devices which distribute airtime and electricity via informal market 24/7 Informal retail sector & Spaza shops Discount market positioning No. of stores 1,279 39 159 (See note 3) Ave store size (m2) 446.8 364 43 n/m R10.5m R6m R4.8m n/m 8 6 4 n/m Ave store sales (p.a.) Ave staff per store (1) (2) BLNS = Botswana, Lesotho, Namibia, Swaziland FutureCELL founded in 2001 – merged with Flash 1 Feb 2013 (3) Customers for Flash devices are Spaza shops (30,000+) (4) Store information as at 30 June 2012 115 Audited results for the year ended 31 March 2013 115
  116. 116. Pepkor Overview of Pepkor Africa Zambia, Mozambique, Angola, Malawi, Nigeria Zimbabwe Founded Entered Africa in 1995 1978 Product range Clothing, footwear, house wares, cellular Operating countries Positioning Clothing, footwear, house wares Discount market No. of stores 127 153 Ave store size (m2) 386 211 Ave store sales (p.a.) R6m R1.4m 9 5 Ave staff per store Store information as at June 2012 116 116 Audited results for the year ended 31 March 2013
  117. 117. Pepkor Ackermans Operating countries Founded Product range Positioning SA, BLNS 1916 Clothing, footwear, house wares, clothing accessories, cellular Value based market No. of stores 383 Ave store size (m2) 773 Ave store sales (p.a.) Ave staff per store R13.8m 12 Store information as at June 2012 117 117 Audited results for the year ended 31 March 2013
  118. 118. Pepkor SA, BN SA(1) SA SA, BLNS 1987 2006 1943 1976 Product range Footwear, clothing accessories, cellular Clothing, accessories, cellular Clothing, footwear, accessories, cellular, insurance Clothing, footwear, clothing accessories, cellular Positioning Value based Urban youth Premium branded menswear, credit based Mid market fashion retailer No. of stores 84 62 60 246 Ave store size (m2) 356 155 205 293 R4.6m R4.4m R4.2m R2.6m 7 6 4 4 Operating countries Founded Ave store sales (p.a.) Ave staff per store All store information as at June 2012 (1) JayJays represents a 50/50 joint venture with Just Group of Australia 118 Audited results for the year ended 31 March 2013 118
  119. 119. Pepkor Overview of Pepkor South East Asia Operating country Founded Product range Australia Australia 1965 1849 Clothing, footwear, house wares, owners of Mango brand Men’s and women’s apparel, homewares and manchester Value based Department store offering national & own brands No. of stores 205 52 Ave store size (m2) 840 2,540 R20.7m n/a 21 n/a Positioning Ave store sales (p.a.) Ave store sales Best & Less store information as at June 2012. Harris Scarfe acquired during Sept 2012 (store sales shown as n/a). No. of stores shown as at 31 Dec 2012 119 Audited results for the year ended 31 March 2013 119
  120. 120. Pepkor Operating country Founded Product range Poland Slovakia 2000 2013 Clothing, footwear and accessories aimed at whole family, house wares (semi-durable focussed on everyday affordable basics), household consumables, cellular airtime Positioning Discount market No. of stores 359 2 Ave store size (m2) 322 n/m R4.5m n/m 7 n/m Ave store sales (p.a.) Ave staff per store Store information for operations in Poland as at June 2012 The 2 stores in Slovakia opened in April 2013 120 Audited results for the year ended 31 March 2013 120
  121. 121. Rest of investment portfolio 121 121 Audited results for the year ended 31 March 2013
  122. 122. PE fund investments Brait IV • c.86% of Brait’s unrealised carrying value for private equity investments relates to Brait IV • c.80% of Brait IV unrealised carrying value is attributable to the following two investments: Consol - Headquartered in Johannesburg, Consol employs around 2,400 staff Consol is the largest manufacturer of glass packaging products on the African continent and has c.80% market share in South Africa - Operates 5 manufacturing sites, which comprise 15 furnaces and 36 production lines which are strategically located in close proximity to its customers - Principal supplier to all leading beverage and food companies in South Africa. Manufactures and markets an extensive range of standard and premium glass packaging products in a variety of shapes, sizes, colours and weights Primedia - Headquartered in Johannesburg, Primedia employs around 3,200 staff - A leading South African media group with more than 50 brands operating in broadcasting, advertising, marketing, promotions, sport, entertainment and digital media across both traditional and non-traditional media sectors - Diverse set of businesses including 4 radio stations based in Johannesburg and Cape Town, a range of advertising platforms and Ster Kinekor, a movie theatre and distribution business - The group’s reach extends to 3 million radio listeners, 17 million cinema attendances, 20+ million sports fans, 4 million daily commuters, 5 airports and millions of digital users 122 122 Audited results for the year ended 31 March 2013
  123. 123. PE fund investments Brait’s predecessor private equity fund performances R’m Fund Vintage year # of investments Brait I 1991 22 Realised proceeds R’m 228 417 Cost Gross multiple of cost Gross IRR 1.8x 29% Brait II 1995 12 695 1,528 2.2x 46% Brait III (1) 1999 14 2,301 10,043 4.4x 32% (1) Brait III fully realised in January 2013 Brait III ranked joint 3rd for private equity fund performance in the recent $150.6bn New York State Common Retirement Fund’s analysis of private equity funds spanning vintage years 1999 to 2004 Note: New York State Common Retirement Fund is invested in c.246 private equity funds from 1993 to 2012 123 123 Audited results for the year ended 31 March 2013
  124. 124. Other investments DGB Leading SA producer and exporter of local wine and importer of international spirit brands Formally founded in 1990, although winemaking history extends over 300 years Headquartered in Midrand, Johannesburg. Production facilities in Western Cape (Wellington and Franschhoek) Start of the art production, bottling, storage and warehousing facilities 28 company wine brands, 8 agency wine brands, 10 company spirit brands, 30 agency spirit and allied beverage brands SA agent for all Bacardi products Largest employer in the area, employing 370 staff and a number of seasonal workers Extensive distribution network with 16 national depots ensuring good coverage across SA Logistics platform to drive growth into new brands Superior quality and service offering Entrepreneurial management team 124 124 Audited results for the year ended 31 March 2013
  125. 125. AUDITED RESULTS 125 Audited results for the year ended 31 March 2013
  126. 126. Abridged group statement of comprehensive income for the year ended 31 March 2013 Audited 31 March 2012 R’m Audited 31 March 2013 R’m Audited 31 March 2013 €’m Audited 31 March 2012 €’m 2 568 257 (117) (62) – (39) 2 713 488 (124) (59) (5) (1) Investment gains Other investment income Operating expenses Finance costs Indirect taxation Direct taxation 246 46 (11) (6) – – 251 25 (11) (6) – (4) 2 607 48 3 012 163 Profit for the year Translation adjustment 275 (143) 255 (7) 2 655 3 175 Comprehensive income for the year 132 248 225 N/A 53 53 53 2.12 201 N/A 42 53 64 2.13 1 500 510 (5) 1 030 506 (5) 505 504 294 501 399 203 11.9903 35.0883 – – Notes 2 3 4 5.1 5.2 Salient features 2 059 25% 433 545 654 20.59 2 664 27% 579 581 581 26.64 10 534 506 (5) 17 752 510 (5) 501 399 2 081 505 504 3 480 – – 135.63 440.79 Net asset value per share (cents) Net asset value CAGR # Normalised headline earnings per share (cents)ƒ Headline earnings per share (cents) – basic and diluted Earnings per share (cents) – basic and diluted Proposed/paid ordinary dividend per share (cents) 6 6 Financial statistics # ƒ Market capitalisation Ordinary shares in issue (m) Treasury shares (m) Ordinary shares outstanding (m) Weighted average ordinary shares in issue (m) – basic and diluted Closing ordinary share price (cents) Preference dividend per share paid 3 December 2012 (cents) Preference dividend per share declared 28 May 2013 (cents) Compound Annual Growth Rate (“CAGR”) is calculated over any three-year period commencing on 1 April 2011 and assuming an opening NAV of the R16.50 Rights Offer price Headline Earnings for the year divided by ordinary shares outstanding at year-end 126 Audited results for the year ended 31 March 2013
  127. 127. Abridged group statement of financial position as at 31 March 2013 Audited 31 March 2012 R’m Audited 31 March 2013 R’m Audited 31 March 2013 €’m Audited 31 March 2012 €’m 11 251 14 523 ASSETS Non-current assets 1 226 1 099 9 961 1 284 6 13 114 1 399 10 Investments Loan receivable Property and equipment 1 108 117 1 973 125 1 543 618 Current assets 53 53 20 523 115 503 Accounts receivable Cash and cash equivalents 10 43 2 51 11 794 15 141 1 279 1 152 1 137 124 14 1 008 – 138 12 2 134 4 4 6 1 279 1 152 Ordinary shares in issue (m) Treasury shares (m) 510 (5) 506 (5) Outstanding shares for NAV calculation (m) Net asset value per share (cents) 505 225 501 201 Notes 7 Total assets EQUITY AND LIABILITIES 10 321 – 1 410 13 458 1 469 163 Ordinary shareholders’ equity and reserves Preference shareholders’ equity Non-current liabilities 1 370 40 141 22 Borrowings Deferred tax liability 63 51 Current liabilities 11 794 15 141 506 (5) 510 (5) 501 2 059 505 2 664 8 9 Total equity and liabilities 127 Audited results for the year ended 31 March 2013
  128. 128. Abridged group statement of changes in equity for the year ended 31 March 2013 Audited 31 March 2012 R’m Audited 31 March 2013 R’m 1 491 2 607 48 (16) – 6 389 (198) 10 321 3 012 163 (2) (16) (20) – – 10 321 13 458 – – – – – 1 500 (31) – 20 (20) – 1 469 Audited 31 March 2013 €’m Audited 31 March 2012 €’m Attributable to ordinary shareholders Ordinary shareholders balance at beginning of the year Profit for the year Translation adjustments Net purchase of treasury shares/rights Ordinary dividends paid Earnings attributed to preference shares Rights Offer and Private Placement issue (“Transaction”) Transaction costs 1 008 275 (143) – (1) (2) – – 157 255 (7) (2) – Ordinary shareholders balance at end of the year 1 137 1 008 Attributable to preference shareholders Preference share issue on 6 August 2012 Preference share transaction cost Translation adjustments Earnings attributed to preference shares Preference dividend paid 137 (3) (10) 2 (2) – – – – – Preference shareholders balance at end of the year 124 – 128 Audited results for the year ended 31 March 2013 624 (19)
  129. 129. Group statement of cash flows for the year ended 31 March 2013 Audited 31 March 2012 R’m Audited 31 March 2013 R’m Audited 31 March 2013 €’m Audited 31 March 2012 €’m 1 126 75 4 – (162) (118) (30) 126 61 24 111 (135) (24) (59) Cash flows from operating activities Investment proceeds Fees received Interest received Dividends received Operating expenses paid Taxation paid Interest paid 11 5 2 9 (10) (2) (5) 110 7 – – (15) (12) (3) 895 (6 450) 104 (386) Operating cash flow excluding purchase of investments Purchase of investments 10 (33) 87 (630) (5 555) – (282) (8) Net cash used in operating activities Acquisition of property and equipment (23) (1) (543) – – 6 389 (187) – – 1 337 (1 200) (450) (16) – – (8) – – 1 500 (31) (1 231) – – (2) (16) (20) (1) – – 127 (3) (104) – – – (1) (2) – 624 (18) – – 131 (117) (44) (2) – – 5 873 318 33 172 200 (90) 70 523 Net cash from financing activities Net (decrease)/increase in cash and cash equivalents Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of year 17 (7) (1) 51 574 31 2 18 523 503 Cash and cash equivalents at end of year 43 51 Net cash used in investing activities Proceeds from rights offer and private placement issue (“Transaction”) Transaction costs Proceeds from issue of preference shares Preference share transaction cost (Repayment of)/proceeds from long-term borrowings Loan advanced to Investment Team Repayment of redeemable preference shares Net purchase of treasury shares Ordinary dividend paid Preference dividend paid 129 Audited results for the year ended 31 March 2013
  130. 130. Extracted notes to the abridged financial statements for the year ended 31 March 2013 1. ACCOUNTING POLICIES 1.1 Basis for preparation The financial statements of the Group are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, on the going concern principle, using the historical cost basis except where otherwise indicated. The abridged financial statements are presented in accordance with IAS 34 (Interim Financial Reporting). The accounting policies and methods of computation are consistent with those applied in the annual financial statements for the year ended 31 March 2012. The Group’s financial statements are prepared using both the Euro (€/EUR) and SA Rand (R/ZAR) as its presentation currencies. The Group has three functional currencies: USD (US$), GBP (£/GBP) and SA Rand for the respective jurisdictions in which it operates. The financial statements have been prepared using the following spot exchange rates: 2013 Closing 2012 Average Closing USD/ZAR 9.2358 8.5067 7.6687 7.4507 GBP/ZAR 14.0359 13.4380 12.2900 11.8767 EUR/ZAR 11.8391 10.9589 10.2364 10.2165 USD/EUR 0.7802 0.7770 0.7492 0.7293 GBP/EUR 1.1858 1.2279 1.2006 1.1625 Audited 31 March 2012 R’m Audited 31 March 2013 R’m 2 129 434 5 2 685 – 28 801 (796) 58 (30) 2 568 2 713 Average Audited 31 March 2013 €’m 2. INVESTMENT GAINS Unrealised revaluations on investments Gain on fair value of retained investment Net gain on disposal of investments Realised gain on disposal of investments Reversal of prior year unrealised revaluation on investments Total investment gains 130 Audited results for the year ended 31 March 2013 Audited 31 March 2012 €’m 243 – 3 208 42 1 6 (3) 246 79 (78) 251
  131. 131. Extracted notes to the abridged financial statements for the year ended 31 March 2013 (continued) Audited 31 March 2012 R’m Audited 31 March 2013 R’m Audited 31 March 2013 €’m 3. OPERATING EXPENSES Includes the following: Employee costs1 Retirement funding costs Non-executive directors fees Audit fees 1 Employee costs represent 31 staff members (2012: 30) Audited 31 March 2012 €’m 7 – 1 1 6 1 1 1 67 7 8 7 76 4 7 7 51 11 59 – FINANCE COSTS Interest expense and facility fees Redeemable preference share dividends 6 – 5 1 62 59 Total finance costs 6 6 TAXATION 5.1 Indirect taxation Malta tax expense Foreign tax expense – – – – 2 (2) – 2 1 1 – 4 4. 5. – – – 5 20 11 8 19 (18) – 39 1 5.2 Taxation expense Foreign income tax expense Current Deferred Other Total taxation expense 131 Audited results for the year ended 31 March 2013
  132. 132. Extracted notes to the abridged financial statements for the year ended 31 March 2013 (continued) Audited 31 March Audited 31 March Audited 31 March Audited 31 March 2012 2013 2013 2012 R’m R’m €’m €’m 6. HEADLINE EARNINGS RECONCILIATION The calculation of the basic and diluted earnings per share and headline earnings per share is based on the following data: 2 607 3 012 Profit for the year 275 – (66) Preference dividend declared 28 May 2013 for the six months ending 31 March 2013 2 607 2 926 (434) – 2 173 2 926 1 284 1 399 Earnings Capital item Headline earnings 7. (2) – (6) – 255 – (20) 255 267 – Preference dividend paid 3 December 2012 for the period ending 30 September 2012 (42) 267 213 117 125 LOAN RECEIVABLE – The loan to the Investment Team is Rand denominated and bears interest at the Johannesburg Inter Bank Acceptance Rate (“JIBAR”) plus 3.5%, with the right to roll up interest. The loan is repayable at the end of its five-year term on 4 July 2016 with an option to extend for another five years. – There are no vesting or restrictive conditions on the 91 million Brait shares owned by the Investment Team. Bonus shares issued to the Investment Team in August 2012 are also pledged as security. As at 31 March 2013 the total Brait shares pledged by the Investment Team amount to 91.6 million shares. The closing Brait share price of R34,80 on 31 March 2013 increases the cover ratio to 228% (2012: 125%). 132 Audited results for the year ended 31 March 2013
  133. 133. Extracted notes to the abridged financial statements for the year ended 31 March 2013 (continued) Audited 31 March 2012 R’m Audited 31 March 2013 R’m – – 1 500 (31) – Audited 31 March 2013 €’m 1 469 PREFERENCE SHARES Proceeds from issue of perpetual preference shares Preference share transaction cost 127 (3) – – 124 8. Audited 31 March 2012 €’m – 12 134 Cumulative, non-participating perpetual preference shares Authorised 20 000 000 cumulative, non-participating perpetual preference shares with a nominal value of €0,01 each. Issued 15 000 000 cumulative, non-participating perpetual preference shares issued at €9.50/R100.00 per share with a nominal value of €0,01 each on 6 August 2012. The discretionary preference dividend is calculated on a daily basis at 104% of the SA Prime interest rate and is payable semi-annually at the earlier of 5 days prior to payment of ordinary share dividend or 90 days after each reporting date. Arrear preference dividends shall accrue interest at 144% of the SA Prime interest rate. The directors have the ability to issue the remaining 5 million preference shares, which have a nominal value of R500 million. 9. 1 370 141 BORROWINGS Loan from FirstRand Bank Limited (trading through its Rand Merchant Bank division) and The Standard Bank of South Africa Limited is Rand denominated. Post1 May 2013, the margin has been reduced from between 3.4% and 4.0% to 2.7% above 3-month JIBAR for a total facility of R2 150 million. Interest is repayable semi-annually, with a right to rollup. The principal amount borrowed is repayable on maturity of the facility on 4 July 2016, with an option to extend for five years, and may be voluntarily repaid earlier from proceeds on investment realisations. The facility is secured by Group assets and the commitment fee due on unutilised facilities has reduced from 1.25% to 0.70% from 1 May 2013. A significant portion of the facility was repaid in August 2012 following the issue of cumulative non-participating perpetual preference shares. 133 Audited results for the year ended 31 March 2013
  134. 134. Extracted notes to the abridged financial statements for the year ended 31 March 2013 (continued) Audited 31 March 2012 R’m Audited 31 March 2013 R’m 35 363 38 850 398 888 204 161 4 4 1 1 2 1 1 2 13 11 – 1 12 – 2 9 221 176 Audited 31 March 2013 €’m Audited 31 March 2012 €’m 3 72 3 35 75 38 14 20 – – Malta Mauritius South Africa – – – – – – – Between one and five years 1 1 Malta Mauritius South Africa – – 1 – – 1 15 21 10. CONTINGENT LIABILITIES AND COMMITMENTS 10.1 Contingencies Sureties Guarantee1 1 The guarantee has been provided to the lenders to the Pepkor SPV on certain tranches of its borrowings, is R479 million (2012: R363 million). In the current year an additional guarantee of R371 million, secured by Pepkor shares, was provided to Business Venture Investments 1499 (Pty) Ltd. Sureties and guarantees 10.2 Commitments Private equity funding commitments Rental commitments – Within one year Total commitments 10.3 Other The Group has rights and obligations in terms of shareholder or purchase and sale agreements relating to its present or former investments. 134 Audited results for the year ended 31 March 2013
  135. 135. Extracted notes to the abridged financial statements for the year ended 31 March 2013 (continued) Audited 31 March 2012 R’m Audited 31 March 2013 R’m 1 284 1 399 (8) 84 (7) 119 (13) (3) Audited 31 March 2013 €’m 11. RELATED PARTIES Statement of financial position balances Loan receivable (Note 7) Profit from operations include: Non-executive directors fees Interest income on loan receivable Statement of changes in equity Transaction costs (amount charged directly to equity) – M Partners S.à r.l. Audited 31 March 2012 €’m 117 125 (1) 11 (1) 8 – (1) 12. SUBSEQUENT EVENTS No events have taken place between 31 March 2013 and the date of the release of this report, which would have a material impact on either the financial position or operating results of the Group. AUDITOR’S OPINION The external auditors, Deloitte Audit Limited, have issued an unmodified audit opinion on the Group’s financial statements for the 31 March 2013 year end. The audit was conducted in accordance with International Standards on Auditing. These abridged provisional financial statements have been derived from the Group financial statements and are consistent in all material respects with the Group financial statements. A copy of their audit report is available for inspection at the Company’s registered office. Any reference to future financial performance included in this announcement, has not been reviewed or reported on by the Company’s auditors. The auditor’s report does not necessarily cover all of the information contained in this announcement/financial report. Shareholders are advised that in order to obtain an understanding of the nature of the auditor’s work, they should obtain a copy of that report from the registered office of the company. 135 Audited results for the year ended 31 March 2013
  136. 136. Review of operations THE BUSINESS OF BRAIT Brait is an investment holding company whose shares are listed on the Euro MTF Market of the Luxembourg Stock Exchange and also on the JSE. Brait’s portfolio mostly comprises holdings in privately owned businesses operating in a range of industries. The Board of Directors (Board) is pleased to report on the final results for the year ended 31 March 2013. VALUE DRIVERS Growth in NAV is the Company’s key performance measure and the following additional factors are the other core value drivers of the business: • Minimal cost leakage; • Minimal balance sheet cash drag; • Significant cash flow within the underlying assets; and • Predictable and consistent ordinary dividend to NAV yield. GROWTH IN NAV Brait targets growth in its NAV per share at a compound rate of at least 15% per annum (CAGR) over any three-year period commencing 1 April 2011 and assuming an opening NAV of the ZAR16.50 Rights Offer Price. The two-year CAGR for the period to 31 March 2013 is a pleasing 27%. The Group’s NAV per share of ZAR26.64 at 31 March 2013 represents a 29% increase on the ZAR20.59 NAV at 31 March 2012, which compares favourably to the 15% benchmark performance measure. Growth in EBITDA and cash flow generation of investee companies continue to be the drivers of the Group NAV, with the EV/EBITDA valuation multiples applied remaining unchanged. 136 Audited results for the year ended 31 March 2013
  137. 137. Review of operations (continued) The Group’s valuation policy is in accordance with the principles of the International Private Equity and Venture Capital (IPEVC) guidelines and IFRS. At reporting date, the EV/EBITDA valuation multiples for the significant portfolio investments are Pepkor at 8x; Premier Foods at 6.5x; Iceland Foods at 6.5x. The current NAV break-down is as follows: 31 March 2012 ZAR’m 31 March 2013 ZAR’m 9 961 13 114 6 701 1 191 998 584 487 9 278 1 463 1 449 594 330 1 284 523 6 20 1 399 503 10 115 11 794 1 473 15 141 214 1 370 40 63 141 22 51 – 10 321 1 469 13 458 501 2 059 505 2 664 31 March 2013 EUR’m 31 March 2012 EUR’m 1 108 973 61% 10% 10% 4% 2% 784 124 122 50 28 655 116 97 57 48 9% 3% – 1% 117 43 1 10 125 51 1 2 100% 1 279 18 1 152 144 12 2 4 134 4 6 124 1 137 – 1 008 505 225 501 201 % Investments Pepkor Premier Foods Iceland Foods PE fund investments Other investments Loan receivable Cash and cash equivalents Property and equipment Accounts receivable Total assets Total liabilities Borrowings Deferred tax liability Current liabilities Preference share equity Net Asset Value Number of issued shares (’mil‚ excluding treasury shares) Net asset value per share (cents) 137 Audited results for the year ended 31 March 2013

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