Brait SE FY 2014 financial results presentation

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Brait SE listed on the Johannesburg Stock Exchange has released their Full Year Results Presentation. Check out insights into this company in their presentation which appears below. Sign up to theinvestormailinglist.com to recieve earnings presentations of all listed companies in Africa by email.

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Brait SE FY 2014 financial results presentation

  1. 1. 2014 AUDITED RESULTS 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”) FOR THE YEAR ENDED 31 MARCH 2014
  2. 2. Audited results for the year ended 31 March 2014 Contents Page references 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. Section 1: Results presentation FYE 31 March 2014 3 • Highlights FYE 31 March 2014 5 – 6 • Brait NAV analysis 7 – 10 • Investment portfolio: Performance review   —  Pepkor 11 – 21   —  Premier Group 22 – 30   —  Iceland Foods 31 – 47  — Other investments 48 • Other assets 49 • Overview of results: Brait FYE 31 March 2014 50 – 53 • Conclusion 54 Section 2: Appendices 55 • Brait overview 56 – 63 • Investment portfolio: Summarised five year financial and other information   —  Pepkor 64 – 73   —  Premier Group 74 – 76   —  Iceland Foods 77 – 79 • Overview of other investments 80 – 85 Section 3: Audited results announcement 87
  3. 3. RESULTS PRESENTATION FYE 31 March 2014
  4. 4. 4  Audited results for the year ended 31 March 2014 Agenda • Highlights FYE 31 March 2014 • Audited NAV at 31 March 2014 • Portfolio performance review • Audited results: FYE 31 March 2014 • Conclusion 4 ‒ Pepkor ‒ Premier Group ‒ Iceland Foods ‒ Other investments ‒ Other assets
  5. 5. 5  Audited results for the year ended 31 March 2014 Highlights FYE 31 March 2014 • NAV per share: - 19.9% increase for FY2014 to R31.95 - 24.6% CAGR for three years to 31 March 2014 on reported NAV per share - Uplift attributable to operational performance of investments – solid profit growth and cash flow generation • Dividends: - Proposed ordinary share bonus issue (with cash dividend alternative) of 31.95 cents per share - Preference share dividend of R89.9 million (449.34 cents per share) for the six months ended 31 March 2014 declared on 27 May 2014 • R1.8 billion invested primarily into: - Funding of Premier Group’s investments in Lil-lets and Star Bakeries - Acquisition of 37% of Southern View Finance, an international financial services business • R354 million cash inflows from investment portfolio • Treasury management: - R500 million raised from perpetual preference share tap issue in June 2013 - R1 billion received in March 2014 from refinance of loan receivable • R2.7 billion available cash and facilities for new investments 5
  6. 6. 6  Audited results for the year ended 31 March 2014 Highlights FYE 31 March 2014 6 Performance against targets Performance metric Position at 31 March 2014 1 NAV CAGR > 15% per year over any 3 year period  • 24.6% CAGR since 31 March 2011 ‒ 25.2% CAGR including bonus shares issued / dividends paid 2 Dividend: 1% - 2.5% of closing NAV ‒ (bonus shares or cash election)  • FY14: 1% of R31.95 NAV proposed (20% up on FY13) ‒ FY13: 1% of R26.64 (91% of shareholders elected bonus shares) 3 Operating costs: < 0.85% of Brait AUM  • 0.66% of Brait AUM • 0.33% net after fee income 4 Minimal cash drag: < 25% of NAV  • 2.1% of NAV (1.8% of total assets) 5 Primarily unlisted investments  • 96.8% of total assets 6 Demonstrate cash flow within underlying investments  • Historic 3 year average cash flow post capex as % of EBITDA ‒ Pepkor 69% ‒ Premier Group 25% ‒ Iceland Foods 84% • Brait received R354m cash inflows from portfolio
  7. 7. 7  Audited results for the year ended 31 March 2014 NAV analysis Audited Audited Audited Amounts in R'm 31 March 2012 31 March 2013 31 March 2014 Investments 9,961 84% 13,114 87% 17,211 93% Pepkor 6,701 57% 9,278 61% 11,145 60% Premier Group 1,191 10% 1,463 10% 3,053 17% Iceland Foods 998 8% 1,449 10% 1,513 8% Other investments 1,071 9% 924 6% 1,500 8% Loan receivable 1,284 12% 1,399 9% 523 3% Cash and equivalents 523 4% 503 3% 339 2% Property and equipment 6 - 10 - 8 - Accounts receivable 20 - 115 1% 342 2% Total assets 11,794 100% 15,141 100% 18,423 100% Borrowings (1,370) (141) (164) Accounts payable and provisions (103) (73) (48) Total liabilities (1,473) (214) (212) Preference share equity - (1,469) (1,964) NAV: ordinary shareholders 10,322 13,458 16,247 # of issued ordinary shares ('m) excl treasury 501.3 505.2 508.5 NAV per share (cents) 20.59 26.64 31.95 7 Brait’s NAV performance target is to exceed 15% over any 3 year period. At 31 March 2014, the NAV per share CAGR is 24.6% from the R16.50 at 1 April 2011
  8. 8. 8  Audited results for the year ended 31 March 2014 NAV analysis 8 Rolling CAGR: reported NAV FY 2012 FY 2013 FY 2014 1-Apr-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 R16.50 R18.33 R20.59 R23.01 R26.64 R29.17 R31.95 23.4% 24.8% 24.8% 27.1% 25.6% 24.6% - - R0.2059 R0.2059 R0.4723 R0.4723 - - R0.2059 R0.2059 R0.2059 R0.2059 - - - - R0.2664 R0.2664 R18.33 R20.59 R23.22 R26.85 R29.64 R32.42 23.4% 24.8% 25.6% 27.6% 26.4% 25.2% • Brait’s performance benchmark for NAV growth is to exceed 15% CAGR over any three year period • Actual results for the three year period 1 April 2011 – 31 March 2014 are: Reported NAV per ordinary share Rolling 3-year CAGR Adjustment: ordinary share dividend • 1% of March 2012 NAV of R20.59 (1) • 1% of March 2013 NAV of R26.64 (2) Adjusted NAV per ordinary share Rolling 3-year CAGR (incl dividends) (1) 85% of shareholders elected to receive bonus shares (2) 91% of shareholders elected to receive bonus shares
  9. 9. 9  Audited results for the year ended 31 March 2014 Assets and % weighting 9 (1) Reported NAV per share (2) The Other investments category in the above chart includes property and equipment and accounts receivable balances - 2,500 5,000 7,500 10,000 12,500 15,000 17,500 20,000 Rights-offer 30-Sept-11 31-Mar-12 30-Sept-12 31-Mar-13 30-Sept-13 31-Mar-14 R’m Pepkor Premier Group Iceland Foods Other investments Loan receivable Cash R16.50 R18.33 R20.59 R23.01 R26.64 R29.17 R31.95(1) (2) 57% 59% 59% 50% 61% 52% 60% 8% 8% 9% 10% 11% 14% 10% 9% 7% 8% 7% 12% 12% 10% 9% 11% 10% 10% 10% 17% 10% 11% 9% 12% 3% 10% 13% 16% 4% 4% 3% 3% 2% R9,789 R10,512 R11,794 R13,176 R15,141 R16,964 R18,423
  10. 10. 10  Audited results for the year ended 31 March 2014 Brait’s valuation uses 8.0x EV/EBITDA multiple Brait’s valuation uses 6.5x EV/EBITDA multiple Brait’s valuation uses 6.5x EV/EBITDA multiple Brait valuation multiples Valuation multiples to 31 March 2014 % Discount Brait valuation multiple Peer group average multiple 35% 39% 42% 48% 34% 32% 34% 31% 31% 0% 15% 30% 45% 60% 6.0 x 8.0 x 10.0 x 12.0 x 14.0 x 16.0 x Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 DiscountMultiple Pepkor 36% 34% 35% 46% 44% 50% 52% 52% 51% 0% 20% 40% 60% 80% 4.0 x 6.5 x 9.0 x 11.5 x 14.0 x Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Premier Group 6% 2% 4% 4% 14% 2% 14% 10% 3% 0% 5% 10% 15% 5.5 x 6.5 x 7.5 x 8.5 x Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Iceland Foods Pepkor peer group Mr Price Truworths The Foschini Group Premier Group peer group Tiger Brands Pioneer Foods Iceland Foods peer group Tesco Sainsbury WM Morrison 10
  11. 11. 11  Audited results for the year ended 31 March 2014 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 higher growth LSM 1-6 categories, operating in 15 countries across 3 continents: • Employs approximately 33,000 people • Core businesses: Pep and Ackermans • Extensive store network operating over 3,500 retail outlets representing 11 main retail brands • Other retail support businesses: clothing factory (RSA); sourcing office (China); cellular wholesale distributor (RSA); and group services (Credit, IT, Property, Treasury, Logistics and QA) Region Retailer South Africa (including BLNS) Pep, Ackermans, Shoe City, John Craig, Dunns, JayJays, Flash Africa Pep, Power Sales Australia Best & Less, Harris Scarfe Eastern Europe Pepco 11
  12. 12. 12  Audited results for the year ended 31 March 2014 Pepkor Retail environment Geography South Africa Lower growth rates Impact of labour unrest resulting in lost wages Pressure on growth in government wage bill Pressure on growth in government grants Rand volatility Rest of Africa Exciting opportunity but challenging environment Each country presents its own set of challenges Need a sizeable presence in each country to get a proper read Currency volatility Eastern Europe Exciting expansion opportunity off established base in Poland Language and currency Currency volatility Pepkor’s perspective South Africa Product offering aimed at lower LSM’s (c.80% of Pep customers LSM 1-6); trading down Consumer under pressure Sizeable footprint allows for increased scale Pepkor’s non-RSA footprint expanding Defensive nature of product offering Largely hedged Pepco Aggressive roll out of stores in Poland continues Entry into Czech Republic and Slovakia has gone well and further expansion in progress Polish Zloty has strengthened against ZAR by c.24% HY 2014 v HY 2013 Pepkor South East Asia Strong Australian led management team to effect transformation Margin improvement will have a substantial positive impact on overall group margin Australian dollar has strengthened against ZAR by c.4% HY 2014 v HY 2013 Australia Challenging retail environment Favourably located relative to other South East Asian emerging markets Currency volatility 12 Rest of Africa Higher growth prospects. Only achieve enhanced margins once critical mass achieved Demonstrated the ability to work in Africa – currently operating in 10 countries Nigeria trading well in challenging environment Easier to cross geographies as a cash rather than credit retailer
  13. 13. 13  Audited results for the year ended 31 March 2014 Pepkor HY 2014 results at a glance (R’m) HY 2014 Growth HY 2013 FY 2013 (1) Commentary Sales 19,172 21% 15,795 33,592 • More competitive pricing points and improvement in stock availability; defensive cash sale offering with wide access to low income mass market benefitting from down-trading in softening economic environment • Strong performances in SA, Africa and Eastern Europe • Expanding footprint - growth for 12 months to Dec 2013: o Retail space increased 6.2% to 1,644,000m2 o Retail outlets increased 7.9% to 3,573 stores EBITDA % Margin 2,317 12.1% 21% 1,913 12.1% 3,757 11.2% • Continued focus on operating efficiencies • SA, Africa and Eastern Europe operating margin expansion EBIT % Margin 1,954 10.2% 21% 1,610 10.2% 3,051 9.1% • Function of higher profitability • Increased depreciation charge in line with capex EBT % Margin 1,792 9.4% 22% 1,469 9.3% 2,780 8.3% • Function of increased profitability Tax charge Effective % of EBT 498 27.8% 15% 432 29.4% 909 (2) 32.7% • Mix of earnings across geographies and respective tax rates PAT % Margin 1,294 6.8% 25% 1,037 6.6% 1,871 5.6% • Result of above (1) FY 2013 amounts shown exclude R43m extraordinary items (2) FY 2013 effective 33% tax rate a function of the write-off of certain deferred tax assets 13
  14. 14. 14  Audited results for the year ended 31 March 2014 Pepkor HY 2014 results at a glance (R’m) HY 2014 Growth HY 2013 FY 2013 HY 2014 Commentary Cash from operations % EBITDA 3,157 136% 37% 2,302 120% 3,754 99.9% • Function of increased profitability, cash sales (>90% of total sales) and collections on Capfin book Capex 513 (26%) 689 1,330 • Gross number of stores opened in HY 2014 is 167 (HY 2013: 210) Operating cash flow post capex % EBITDA 2,644 114% 64% 1,613 84.3% 2,424 64.5% • Aggregate of above Tax and interest paid 571 24% 461 1,216 • Increase largely due to tax paid - mix of earnings across geographies Operating cash flow post capex, tax and interest paid % EBITDA 2,073 89.5% 80% 1,152 60.2% 1,208 32.2% • Aggregate of above Group investments made: 237 (82%) 1,295 1,669 • Aggregate of below - equity - n/m 634 628 • HY 2013: acquisition of Harris Scarfe and Flash - loan books 237 (64%) 661 1,041 • HY 2014: funding provided to Tenacity • 2013: funding provided to both Tenacity and Capfin (Capfin ceased granting loans in Sept 2013) 14
  15. 15. 15  Audited results for the year ended 31 March 2014 Pepkor Highlights HY 2014 Pep (includes BLNS countries) Pep Africa Pepco (Poland) Pepkor South East Asia Ackermans (includes BLNS countries) Sales R8.1 bn sales; YOY up 16.6% Retail space (1) 1,641 stores (net 113 opened; 7.4% growth) ; 646 000m2 (4.6% growth) Strong LFL sales growth and continued improvement in stock availability. 95% of products priced <= competition Sales R3.4 (2) bn sales; YOY up 14.5% Retail space (1) 563 (2) stores (net 29 opened; 5.4% growth) ; 341 000m2 (1.1% growth) Strong LFL sales growth; new stores trading well; increased credit sales (Ackermans card) contribution from 15% to 18.6% of sales Sales R0.9 bn; YOY up 46.3% (includes currency gains of c.17%) Retail space (1) 159 stores (net 16 opened; 11.2% growth) (3) ; 86 000m2 (5.6% growth) Strong sales growth from all countries Sales R1.7 bn; YOY up 65.2% (includes currency gains of c.24%) Retail space (1) 508 stores (net 105 opened (Poland 76, Slovakia 23, Czech Republic 6); 26.1% growth) ; 166 000m2 (27.3% growth) Aggressive store roll out program continues with new stores outperforming Sales R4.0 bn; YOY up 22.5% (includes currency gains of c.4%) Retail space (1) 279 stores (net 8 opened; 3.0% growth) ; 311 000m2 (3.6% growth) Australian retailing environment continues to be challenging - sales momentum taking place; focus continues on integrating new executive team and margin enhancement; progressing down 3 year plan (1) Retail growth quoted refers to the 12 month period ended Dec 2013 (2) Ackermans numbers include Shoe City (89 stores) and JayJays (60 stores) (3) Pep Africa stores quoted excluding Zimbabwe which is undergoing a restructure and consolidation process (4) Total for net stores opened discussed above is 271; John Craig opened 12 stores and Dunns 2; Power Sales (undergoing a store consolidation process) closed 23 stores; giving net group total of 262 stores opened for the 12 months to Dec 2013 15
  16. 16. 16  Audited results for the year ended 31 March 2014 Pepkor Pepkor group • R346 million Pepkor dividend declared and paid 30 January 2014. Brait’s share is R128 million: − R83 million received from direct 24% shareholding − R45 million received from indirect 13% shareholding Update: Q3 FY 2014 Retail sales • Sales for the third quarter to March 2014 increased as follows over the third quarter 2013: Pep 17% up Ackermans 15% up Pepco (1) 33% up Pep Africa 27% up (1) In Polish Zloty 16
  17. 17. 17  Audited results for the year ended 31 March 2014 Eastern Europe Pepkor No. of retail outlets Jun-04 Jun-08 Jun-13 Dec-13 Mar-14 Poland 15 116 437 479 493 Slovakia - - 14 23 25 Czech Republic - - - 6 7 Total 15 116 451 508 525 9 year CAGR 46% 5 year CAGR 31% Notes: 1. Distribution Centre (DC) opened in Poland during 2008 2. Pepco is targeting expansion into countries neighbouring Poland. Entered Slovakia in April 2013 and Czech Republic in November 2013 3. Translated into ZAR, June 2013 net sales are R2.148 billion Number 1 non food discount retail chain in Poland and one of the fastest growing in the region PLN ‘m Jun-04 Jun-08 Jun-13 Net sales 21 177 770 9 year CAGR 49% 5 year CAGR 34% Distribution of the 479 stores in Poland (Dec-13) 17
  18. 18. 18  Audited results for the year ended 31 March 2014 30% 23%23% 13% 12% 159 stores 31% 22% 22% 13% 11% 152 stores Pepkor Pepkor’s ‘Rest of Africa’ footprint (excluding Zimbabwe) Pep Africa (1) BLNS countries Total footprint (2) Commentary Zambia Mozambique Angola Malawi Nigeria • 7 stores opened in six month period (5% increase); of which Angola 3, Nigeria 2 and Mozambique 2 Pep BLNS Ackermans BLNS Shoe City BN JayJays N Dunns BLNS Pep 184 Ackermans 36 Shoe City 6 JayJays 2 Dunns 55 442 stores • 11 stores opened in six month period (4% increase); of which Namibia 7, Botswana 2 and Lesotho and Swaziland 1 (1) Entered Africa in 1995 (2) Total ‘Rest of Africa’ footprint shown excludes Power Sales (Zimbabwe - founded there in 1978) which is undergoing a restructure and store consolidation process (85 stores HY 2014) 283 stores • Total of 18 stores opened during period HY14 (4.3% increase) • Including Power Sales, ‘rest of Africa’ footprint is a total of 527 stores Zambia Mozambique Angola Malawi Nigeria Botswana Lesotho Namibia Swaziland # of stores June 2013 Pep 175 Ackermans 35 Shoe City 6 JayJays 2 Dunns 54 424 stores 272 stores # of stores 11% 8% 8% 5% 4% 22% 9% 26% 7% 11% 8% 8% 5% 4% 22% 9% 27% 7% Dec 2013 18
  19. 19. 19  Audited results for the year ended 31 March 2014 Pepkor Operations based on geography No. of stores Turnover EBITDA HY 2014 Commentary for 6 month period • Group increased by a net 155 stores from June (4.5%); split RSA/non-RSA 63%/37% • Eastern Europe fastest growing region with 57 stores added (12.6% growth) RSA and BLNS Eastern Europe Rest of Africa Australia EBITDA % margin FY 2013 21% 7% 4% 68% R33.6bn 5% 7% 2% 86% R3.8bn 14.1% 12.3% 7.0% 2.4% 11.2% 8% 13% 7% 72% 3,418 8% 14% 7% 71% 3,573 12.1% • Eastern Europe’s growth results in an increased contribution towards the group’s turnover from 7% to 9% 19 21% 9% 5%65% R19.2 bn R2.3bn 1% 12% 6% 81% 15.0% 16.1% 15.5% 0.6% • Strong growth in EBITDA % contribution and margin for both Eastern Europe and Rest of Africa • Margin expansion for RSA and BLNS • Australian retailing environment challenging; focus continues on integrating new executive team
  20. 20. 20  Audited results for the year ended 31 March 2014 Pepkor 31-Mar-14 31-Mar-13 R'm R'm Maintainable EBITDA (2) 4,176 3,714 EBITDA multiple 8.0 x 8.0 x Enterprise value 33,407 29,710 Less: net debt (3) (399) (1,958) Equity value 33,009 27,752 Fair value of investment in Pepkor (4) 37.1% 11,145 37.0% 9,278 Direct shareholding in Pepkor 23.9% 7,875 24.0% 6,658 Indirect shareholding in Pepkor through SPV (1) 13.2% 3,270 13.0% 2,620 Notes (1) Indirect investment through SPV • Shareholding in Pepkor 26.0% 8,567 26.1% 7,244 • SPV gearing (2,137) (1,994) • NAV of SPV 6,430 5,250 Brait's attributable share of SPV (4) 50.9% 3,270 49.9% 2,620 (2) FY 2014 Maintainable EBITDA has been adjusted to exclude Capfin which ceased the granting of loans in Sept 2013 (3) Net debt is adjusted to recognise the Tenacity loan book (FY2014: R878m), which arises on Ackermans credit card sales, at a 1x price-to-book value. Tenacity EBITDA has been removed in deriving maintainable EBITDA (4) Shareholding % changes a result of the issue of treasury shares by Pepkor for value during Oct 2013. Pursuant to this, Brait increased its holding in the SPV (5) Brait received R128m from Pepkor’s January 2014 dividend of R346m. This results in Brait having realised distributions from Pepkor of R256m since 4 July 2011 Brait’s audited valuation 20
  21. 21. 21  Audited results for the year ended 31 March 2014 Pepkor • Strong, aligned shareholder base (Titan, Brait and management) Attractions to Brait Alignment Cash flow generative • Strong cash flow generation from operations – average over past three financial years: - pre-capex: 101% of EBITDA - post-capex: 69% of EBITDA - post-capex, interest and tax: 38% of EBITDA Market leader • Pep and Ackermans are two of the most recognised retail brands in South Africa • Pepco retail footprint one of the largest in the region • Significant African footprint operating in 10 countries Clear strategy • Pep – discount market positioning and peri-urban focus • Ackermans – value based market positioning • Expansion into Africa and Eastern Europe • Distribution platform – opportunity for other product sets • Sizeable footprint and reach – not easy to build / replicate • Operating leverage – ability to expand operating margins and improve sales densities Well positioned Cash consumer Demonstrated throughAttractions Management team • Deep bench with very experienced exco team • Well exposed to cash consumer in higher growth LSM 1 – 6 categories 21
  22. 22. 22  Audited results for the year ended 31 March 2014 Premier Group 22 Business overview • Founded in 1882, Premier is a leading South African staple foods producer • Leading national consumer brands with strong heritage : Snowflake (wheat flour), Iwisa No 1 (maize meal), Blue Ribbon (bread), Lil-lets (feminine hygiene), Manhattans and Super C (sugar confectionery) • Milling business also supplies wheat flour to industrial users, independent bakeries and packs house brands for retailers • Operates 16 bakeries, 5 wheat mills, 2 maize mills, a sugar confectionery plant and 15 distribution depots in South Africa, Swaziland and Lesotho, with a Lil-lets sales office in the UK • Significant exposure to the informal market which accounts for over 60% of bread sales • Premier produces and sells approximately 500 million loaves of bread and 800 000 tons of maize and wheat per year • Following recent corporate acquisitions, makes in excess of 30,000 deliveries to customers daily with a fleet of c.750 bakery trucks and employs over 7,000 people
  23. 23. 23  Audited results for the year ended 31 March 2014 Premier Group 23 HY 2014 results at a glance (R’m) (1) HY 2014 Growth HY 2013 FY 2013 Commentary Revenue 3,476 9% 3,186 6,272 • Volumes on prior period up 4% for bread and 7% for maize; down 10% for wheat (2) EBITDA (3) % Margin 260 7.5% 22% 214 6.7% 422 6.7% • EBITDA margin expansion continues (Q1 2014: 7.3%) • Cost management together with continued focus on consistency of quality and efficienciesEBIT (3) % Margin 204 5.9% 18% 173 5.4% 336 5.4% Cash from operations % EBITDA 132 50.8% 110% 63 29.4% 397 94.1% • Investment in net working capital up 9% on prior year driven by increased sales and maize prices towards the end of HY 2014 • New short term facility in place Dec 2013 to fund working capital Capex (177) 90% (93) (203) • In year 2 of a 5 year refresh / expansion programme funded from operational cash flows • Major projects include new bakery lines at Durban and Cape Town sites, technology upgrades to all bakeries and warehouse extensions at various mills Operating cash flow post capex % EBITDA (45) (17.3%) (50%) (30) (14.0%) 194 46.0% • Aggregate of above Investments made (1,347) n/m - (125) • HY 2014: acquisition of Lil-lets and Star Bakeries • FY 2013: acquisition of Manhattan and Super C Shareholder funding 1,382 n/m - - • Shareholder loan funding provided by Brait (1) HY 2014 excludes any contribution from Lil-lets and Star Bakeries (both acquired during November 2013) (2) Wheat volumes impacted by the closure of Thaba ‘Nchu (town in Free State, SA) wheat mill in August 2013 (3) Before non recurring gains and losses
  24. 24. 24  Audited results for the year ended 31 March 2014 Premier Group 24 Profitability • Operational EBITDA of R102 million generated in Q3 resulting in YTD EBITDA of R362m (up 28% on prior year) Update: Q3 FY 2014 Revenue • R1.7bn for Q3 resulting in YTD revenue of R5.1bn (11% up on prior year) − Q3 volumes on prior period up 7% for bread and 10% for maize; down 10% for wheat − Affected by buy in of maize ahead of price increases during the quarter Capex • Invested a further R104 million during Q3, as part of the long term refresh / expansionary capex programme, into: ‒ Further bakery upgrades ‒ Replacement of fleet with finance leases (strategic change having used operating leases in the past) • Resulting YTD capex investment is R281 million
  25. 25. 25  Audited results for the year ended 31 March 2014 Premier Group Source: Nielsen Total Basket Report April 2014 data Manufacturer’s share of formal retail market based on sales values Market Tiger Brands Ruto Mills Mondelez Int Premier Group Pioneer Foods Spar Lodestone Premier’s formal market share (sales value) Apr-11 Apr-12 Apr-13 Bread 19% 20% 19% Flour 37% 36% 37% Maize 28% 28% 27% Cake mixes 45% 48% 51% 25 R3,592 R3,795 19% 20% 36% 36%32% 29% - 1,000 2,000 3,000 4,000 MAT LY MAT TY Bread R’m R1,064 R1,122 37% 31% 12% 12% 20% 24%24% 24% - 400 800 1,200 MAT LY MAT TY Flour R1,708 R1,813 27% 27% 16% 15% 35% 36% 8% 7%7% 6% - 500 1,000 1,500 2,000 MAT LY MAT TY Maize R’m R218 R240 51% 53% 22% 23% 5% 4% - 100 200 300 MAT LY MAT TY Cake Mixes R’m R1,755 R1,911 7% 7% 43% 43% 9% 7%7% 8% - 500 1,000 1,500 2,000 2,500 MAT LY MAT TY CandyR’m (1) (1) Wheat volumes impacted by the closure of Thaba ’Nchu mill in Aug-13 R’m
  26. 26. 26  Audited results for the year ended 31 March 2014 Premier Group 26 Progress on five year strategic plan Premier’s 3 pillar growth strategy: Progress to date: 1 Optimising milling and baking operations: • change bread positioning in the market • develop the people agenda to build a winning team and bolster the company leadership • Long term expansionary capex plan of R700 million approved in 2012, of which R300 million invested to date with significant projects currently underway: ‒ upgrade Cape Town bakery (installing new plant and expanding the site) ‒ upgrade the Durban bakery to expand capacity ‒ upgrade the Durban mill to expand capacity • Re-launched Blue Ribbon bread and launched new value added range in 2013 • Continued to recruit new skills into the organisation in 2014 2 Conversion from a staple food producer to an FMCG branded business by: • acquiring businesses operating in other FMCG categories • organic expansion through innovation using existing brands to enter new product categories • Invested ~R1,6bn in acquisitions to date at an average entry EV / EBITDA multiple of 6.5x: • Launched new products under Snowflake (baking powder, custard powder) and Iwisa (corn flour) 3 Pursue a sensible African expansion programme • Visited a number of countries to evaluate investment opportunities primarily in East and West Africa • Bolstered management team with relevant African operational experience Manhattan and Super C May-2013 Entry into sugar confectionery Star Bakeries Nov-2013 Bakeries in Eastern Cape giving Premier a national SA bread footprint Lil-lets Nov-2013 Leading brand in feminine hygiene with operations in the UK and SA Ngwane Mills Apr-2014 Wheat and maize milling assets in Swaziland to complement Premier Swaziland operations
  27. 27. 27  Audited results for the year ended 31 March 2014 Premier Group 27 Lil-lets acquisition Business overview • Lil-lets holds leading positions in both the UK and SA feminine hygiene markets: o In SA:  ~26% of the total sanitary protection market and ~74% of the tampon market  2nd largest player in liners market and 3rd in sanitary pads o In the UK:  ~74% of the non-applicator tampon market, 3rd largest player in the overall feminine hygiene market • Operates an outsourced supply model with country head offices in the UK and SA • Generates revenues of ~R550 million, split 56% SA and 44% UK • Higher margin business than staple foods • Lil-lets SA distributes into Botswana, Namibia, Zambia and Zimbabwe and plans to open new markets in East Africa. Lil-lets UK investigating expanding into new markets in Europe and Middle East • Premier aims to sell its Lil-lets “Essentials” product range (pads and liners aimed at lower LSM groups) through its wholesale and informal channels • Synergies between Lil-lets SA and Premier on distribution and sharing back-office services R1,024 R1,102 26% 26% 11% 10%12% 9%9% 9% 36% 37% - 500 1,000 1,500 MAT LY MAT TY R’m Sanitary Protection (SA formal market) Market Lil-lets Kimberley Clark Johnson & Johnson Nampak Procter & Gamble Source: Nielsen SANPRO Report March 2014 data
  28. 28. 28  Audited results for the year ended 31 March 2014 Premier Group 28 Star Bakeries and Ngwane Mills acquisition Ngwane Mills • Effective from April 2014, Premier acquired Ngwane Mills, the largest wheat and maize miller in Swaziland, established in 1991: ‒ Ngwane Mills is a leading supplier to bakeries in Swaziland ‒ Market leading consumer brands with a market shares of ~50% in maize and ~70% in flour • Since February 2012, Premier has been invested in Premier Swazi Bakery (“PSB”), created through the acquisition of Mister Bread and Swaziland United Bakeries: ‒ PSB is the leading bakery in Swaziland with ~60% market share of the retail bread market ‒ The Ngwane Mills acquisitions secures PSB’s flour supply in Swaziland, thus operating an integrated milling and baking operation as Premier does in South Africa • Ngwane Mills’ milling operations are expected to generate revenues of R250 million as part of an integrated PSB • Premier increased its shareholding in the enlarged PSB from 65% to 77% as a consequence of the funding arrangements Star Bakeries • In November 2013, Premier acquired Star Bakeries, a group of five independent bakeries (Port Elizabeth, Queenstown, East London, King Williams Town and Mthata) • Supplies bread throughout the Eastern Cape and southern coast region of KwaZulu Natal under the “Star” and “Mister Bread” brands • Bread sales are to formal retailers, as well as through the informal channel (70% of the group’s sales mix are cash sales) • Premier’s national bread competitors are active in the Eastern Cape • The acquisition gives Premier a national SA bread footprint (previously unrepresented in the Eastern Cape – the third most populous province in SA). Star Bakeries sell ~80 million loaves a year • Realised cost saving on inputs using Premier’s economies of scale • Opportunity to introduce Blue Ribbon brand in the province • Potential to lower distribution costs by investing in bakery fleet
  29. 29. 29  Audited results for the year ended 31 March 2014 Premier Group 29 Brait’s audited valuation 31-Mar-14 31-Mar-13 R'm R'm Maintainable EBITDA 497 421 EBITDA multiple 6.5 x 6.5 x Enterprise value 3,227 2,738 Less: net debt considered in valuation (1,226) (1,232) Net debt (2,793) (1,232) Adjustment for acquisitions and capex (1) 1,567 - Equity value 2,001 1,506 Brait’s economic shareholding in Premier Group (2) 84.6% 79.9% Fair value of Brait’s investment in Premier Group 3,053 1,463 Equity value 1,692 1,204 Shareholder loans (3) 1,334 247 Financial derivative asset (4) 27 12 Notes (1) The adjustment is to recognise the November 2013 acquisitions of Lil-lets and Star Bakeries at their cost of R1.3bn; as well as adjustment for recent capex spent on the new Cape Town bakery which is still work in progress and therefore has not yet been brought into use or generated EBITDA (2) Increase in economic interest due to the exercise of options under agreements with former Premier Group shareholders (3) Increase in shareholder loans to fund the acquisition of Lil-lets and Star Bakeries. R330m of Brait’s funding is a scheduled loan repayment and accordingly shown rather in accounts receivable. Note that Premier Group has serviced R52m interest during Brait’s FY 2014 (R72m received since July 2012) (4) Fair value of remaining option agreements held with former Premier Group shareholders. Exercise of the remaining options over the next 2 years enables Brait to acquire a further 8% economic interest at a price referenced to initial acquisition value + interest at an effective fixed rate of 5.5% p.a.
  30. 30. 30  Audited results for the year ended 31 March 2014 Premier Group 30 • Shareholders are Brait and management Attractions to Brait Alignment Cash flow generative • Strong cash flow characteristics due to nature of the product basket that is focussed on cash sales into the informal market 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 and FMCG categories in which Premier Group doesn’t currently have an offering • Investing in a number of internal projects with attractive returns • Distribution platform – opportunity for other product sets • Sizeable footprint and reach – not easy to build / replicate • Operating leverage – ability to expand margins and improve production efficiencies Well positioned • Well exposed to cash consumer in higher growth LSM 1 – 6 categoriesCash consumer Demonstrated throughAttractions Management team • Depth and significant industry experience across all categories
  31. 31. 31  Audited results for the year ended 31 March 2014 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 − 2,900 SKU’s − Revenue split fairly equally between frozen, chilled & grocery • Key attractions − Quality, value and convenience − Market leading innovation on frozen food − Sizeable (c.2/3rd) private label offering driving superior margins − Every day low prices − Round sum pricing i.e. £1, £2, £3 − Home Delivery – spend £25 or more and get free home delivery; average spend over £50 • Secondary shopping destination – not a direct competitor to Big 4, but aim to take share of customer wallet • Extensive footprint across the UK − 833 stores primarily located in convenient high street locations − 4 state of the art distribution centres − Exports branded frozen food and groceries mainly to Europe − Exporting over 50 lines to South Africa − Online service available in 280 stores with roll-out to 600 stores to be completed by July 2014 • Over 24,000 employees • Ranked 1st (2014,2012) & 2nd (2013) in Sunday Times “Best Big Company to Work For”; Malcolm Walker runner-up (2014) in “Best Leader” category 31
  32. 32. 32  Audited results for the year ended 31 March 2014 Iceland Foods 32 FY March 2014 results at a glance (£’m) 2014 Unaudited % Change (1) 2013 Pro forma Commentary Sales 2,713 3% 2,640 • FY14 LFL sales flat (FY13: LFL sales up 1.1%) • Increase in LFL customer transactions offset by a decline in average customer spend • YoY sales growth driven by new stores (net 43 opened), including annualisation EBITDA % Margin 202 7.5% (11%) 226 8.5% • Impacted by: investment in online and International; margin pressure EBIT % Margin 71 2.6% (37%) 112 4.2% • Depreciation charge of £39m (FY13: £34m) • Amortisation charge of £92m (goodwill £75m; restructure costs £9m; deal fees £8m) (FY13 amortisation charge of £80m (goodwill £72m; deal fees £8m)) EBT % Margin 22 0.8% (50%) 44 1.7% • Net interest charge £55m (FY13: £65m) less £6m exchange rate movement gain (FY13: £3m loss) on EURO denominated senior debt tranche • Decreased net interest charge due to lower rates and reduced quantum Tax charge Effective % of EBT 27 123% (4%) 28 63.6% • Effective tax rate impacted by amortisation charge PAT % Margin (5) (0.2%) (131%) 16 0.6% • Result of above (1) The FY2013 audited accounts are Group accounts which include operating results from the acquisition date 9 March 2012 to 31 March 2013. For comparability, pro-forma results for the 52 weeks to 31 March 2013 have been shown
  33. 33. 33  Audited results for the year ended 31 March 2014 Iceland Foods 33 FY March 2014 results at a glance (£’m) 2014 Growth 2013 Commentary Cash from operations % EBITDA 199 98.5% (15%) 234 103.5% • Strong cash flow generation continues Capex 49 32% 37 • Increase in capex driven by 46 new stores opened in FY2014 (FY2013: 36 opened) Operating cash flow post capex % EBITDA 150 74.3% (24%) 197 87.2% • Function of above Tax paid 27 (16%) 32 • Reduction in taxable profits Interest paid 33 (31%) 48 • Reduced net interest paid due to debt repayments, favourable interest rates (debt repricing in Feb 2013) and timing of interest payments Operating cash flow post capex, tax and interest paid % EBITDA 90 44.6% (23%) 117 51.8% • Aggregate of above Note: • A total of £60m of debt was repaid during FY14 • A total of £142.5m has been repaid since the MBO in March 2012
  34. 34. 34  Audited results for the year ended 31 March 2014 Iceland Foods 34 EBITDA reconciliation £‘m £‘m FY 2013 EBITDA 226.3 Trading 4.8 Additional sales 11.6 Margin investment (5.0) Additional marketing costs (1.8) 231.1 Investment (14.6) International expansion (7.6) Delivered sales / online platform (7.0) Costs / overheads (1) (14.5) FY 2014 EBITDA 202.0 FY March 2014 results at a glance (1) includes £4m increase in utility costs (mainly taxes)
  35. 35. 35  Audited results for the year ended 31 March 2014 Iceland Foods The market 35 28.7 17.3 16.6 11.0 6.1 5.1 4.7 3.5 2.1 Tesco Asda Sainsbury's Morrisons The Co-Operative Waitrose Aldi Lidl Iceland Retailer market share (%) Source: Kantar Worldpanel : Till Roll Share of Grocers 12we 27 Apr 2014 Losing share Gaining share
  36. 36. 36  Audited results for the year ended 31 March 2014 Iceland Foods The market 36 20.9 6.3 3.6 2.0 1.9 0.3 0.1 -2.4 -3.6 Aldi Lidl Waitrose Iceland Asda Total Grocers Sainsbury's The Co-Operative Tesco Morrisons % change Retailer sales growth year-on-year (% change) Source: Kantar Worldpanel : Till Roll 12we 27 Apr 2014 Gaining shareLosing share 36.1
  37. 37. 37  Audited results for the year ended 31 March 2014 Iceland Foods The market 37 -1% 0% 1% 2% 3% 4% 5% 27-May-12 24-Jun-12 22-Jul-12 19-Aug-12 16-Sep-12 14-Oct-12 11-Nov-12 09-Dec-12 06-Jan-13 03-Feb-13 03-Mar-13 31-Mar-13 28-Apr-13 26-May-13 23-Jun-13 21-Jul-13 18-Aug-13 15-Sep-13 13-Oct-13 10-Nov-13 08-Dec-13 05-Jan-14 02-Feb-14 02-Mar-14 30-Mar-14 27-Apr-14 %change Market Growth Inflation Food market growth and inflation Both market growth and inflation continue to decrease Total RST 12WE 27-Apr-2014 (KWP P3)
  38. 38. 38  Audited results for the year ended 31 March 2014 Iceland Foods The market 38 ‘Asda growth slows as retail terrain transforms….seismic changes sending shock waves through the food retailer sector are permanent after the grocers sales edged down over Christmas….’ Source Retail Week, 21 Feb 2014 ‘Britain’s grocery market is growing at its slowest pace since 2005, with only discounters as well as Waitrose and Sainsbury’s defying the downturn and growing market share’ Source City A.M., 12 Feb 2014 ‘The rise of the hard discounters was well documented last year, and their growth is likely to continue in 2014…becoming increasingly acceptable places to shop for middle-class consumers’ Source Investors Chronicle, 30 Jan 2014 ‘We believe a 5.2% UK operating margin (for Tesco) is not sustainable long term in the face of declining LFL sales and intensifying price competition. High operational gearing means that sales shortfalls are resulting in an even bigger profit shortfall, putting the operating margin under pressure’ Source HSBC, 13 Jan 2014 ‘A supermarket price war on an unprecedented scale…with the prospect of permanent cuts in the cost of many basic foods.’ Source Daily Mail, Mar 2014 ‘Fears of a price war between supermarkets and discounters wiped £2bn off the combined value of Tesco, Sainsbury and Morrisons shares’ Source BBC, Mar 2014 LFL’s declining and margins expected to come under pressure
  39. 39. 39  Audited results for the year ended 31 March 2014 Iceland Foods The market 39 Poor LFL performance from UK major food retailers ASDA: (0.1)% LfL 12 wks to 3 Jan Tesco: (1.3)% UK LfL* 12 mths to 22 Feb ‘There’s little doubt that the UK retail market is undergoing significant and permanent change’ Sainsbury: (3.1%) LfL* 10 wks to 15 Mar ‘These results were driven primarily by a weaker grocery market, and also reflect the impact of a tougher comparative’ Morrisons: (7.1)% LfL* 13 wks to 4 May ‘Difficult market conditions were intensified for Morrisons by the accelerating importance of the online and convenience channels’ ‘Sainsbury blamed a fall in food prices, the later timing of Easter and unseasonable weather for the decline in sales.’ * Excluding fuel
  40. 40. 40  Audited results for the year ended 31 March 2014 Iceland Foods The market 40 UK food retailers: broker consensus EBITDA % margin 7.4% 6.7% 5.9% 7.3% 6.5% 5.8% 0% 1% 2% 3% 4% 5% 6% 7% 8% Tesco Morrisons Sainsburys FY14 FY15 Average: 6.6% margin
  41. 41. 41  Audited results for the year ended 31 March 2014 Iceland Foods The market 41 LOSING CUSTOMERS to GAINING CUSTOMERS from Iceland customer switching • Aldi • Lidl • Farm Foods • Tesco • Asda • Morrisons • The Co-op
  42. 42. 42  Audited results for the year ended 31 March 2014 Iceland Foods Strategy overview 42 UK More stores • Target 40 store openings for FY15 • Expect to open 25 new stores per year thereafter • Potential for more than 1,000 stores in the UK • Investigating viability of larger store format Vertical integration • Acquired Loxtons Food in FY 2013 (renamed Iceland Manufacturing Ltd) o 40% of Iceland’s Ready Meals Business o Over £1m sales per week o Protects the integrity of food offering o Accelerate product innovation Range extension & product innovation • Investment in fresh produce • “Lighter Eating” range introduced Online rollout • Launched May 2013 (initial 25 stores trialled, currently 280) • Available to customers within a c.5 mile radius of store offering the service • Able to order for next day and up to 6 days in advance • Free delivery - minimum order of £35 • Products picked in-store (outside of normal trading hours) • FY15 plan: average of 205k delivered sales transactions a week (24k online)
  43. 43. 43  Audited results for the year ended 31 March 2014 Iceland Foods Strategy overview 43 International Retail • 3 retail stores in Czech (negotiations for 4th store in progress) • Acquired 6 ex-franchise stores in Republic of Ireland (7th store opening next month) Franchise • International (Spain) • Sandpiper (Channel Islands) • Shoprite (Isle Of Man) • 2nd store opened in Iceland (the country) in late March, with a 3rd store due in April Wholesale • Middle East office now open (Dubai) • Products on sale in UAE (via Landmark) • Developing ranges for local market • Office open in SA • Iceland products now on sale in SA, Ghana, Africa, Angola, Nigeria, Namibia, Malawi • Shipments to Mozambique and Madagascar imminent Prague store
  44. 44. 44  Audited results for the year ended 31 March 2014 Iceland Foods 44 Performance trends 6.1%5 year CAGR : 5.4% 4.4%5 year CAGR: (1) Excludes Cooltrader (2) Based on FY 2014 sales 66% 34% Frozen 60% 40% Chilled 14% 14% 15% 16% 17% 18% 0% 5% 10% 15% 20% 2009 2010 2011 2012 2013 2014 Home Delivery (as a % of total sales) 4.7%5 year CAGR : 3.8% Private label offering (2) 2,081 2,256 2,389 2,614 2,640 2,713 163 184 188 233 226 202 0 50 100 150 200 250 0 500 1,000 1,500 2,000 2,500 3,000 2009 2010 2011 2012 2013 2014 £‘m£‘m Revenue / EBITDA growth Revenue(LHS) EBITDA(RHS) 663 730 742 757 790 833 320 353 340 347 362 385 150 200 250 300 350 400 550 600 650 700 750 800 850 2009 2010 2011 2012 2013 2014 Retailspace(000m2) No. of stores Footprint growth (1) No. of stores (LHS) Footprint (RHS) Branded Private label Branded Private label
  45. 45. 45  Audited results for the year ended 31 March 2014 Iceland Foods 31-Mar-14 31-Mar-13 £’m £’m Maintainable EBITDA 202 226 EBITDA multiple 6.5x 6.5x Enterprise value 1,313 1,469 Less: net debt (1) (858) (922) Equity value 456 547 Brait’s shareholding in Iceland Foods 18.7% 18.7% Fair value of Brait’s investment in Iceland Foods 86.2 103.2 Equity value 85.1 102.2 Loan claim 1.1 1.0 Closing ZAR / £ exchange rate R17.55 R14.04 Brait’s carrying value in ZAR R1,513m R1,449m Brait’s carrying value translated into ZAR using acquisition exchange rate of R11.96 (2) R1,031m R1,234m Carrying value attributable to exchange rate movement R482m R215m Notes (1) Brait’s valuation considered cash of £145m in the calculation of net debt of £858m, being the best estimate available at date of finalising the valuation. Iceland’s March 2014 balance sheet reflects actual cash of £152m, which results in a net debt position of £851m at year-end (2) R11.96 represents the exchange rate on 9 March 2012 when Brait’s investment in Iceland Foods was acquired for £81.2 million (R971 million) Brait’s audited valuation 45
  46. 46. 46  Audited results for the year ended 31 March 2014 Iceland Foods 46 Gearing analysis Reconciliation to net debt quoted in Brait's valuation of Iceland Foods Mar-14 £’m Mar-13 £’m Total term debt 1,003 1,050 Less: available cash (3) (145) (128) Net debt per Brait's valuation of Iceland Foods 858 922 (3) Available cash of £145m based on an estimate available at date of finalising Brait’s valuation Term debt facilities Interest rate Term (yrs) Currency Mar-14 £’m Mar-13 £’m Total term debt 726 786 Term loan A (amortising) Libor (1) + 400 (2) bps 6 GBP 185 245 Term loan B1 (bullet) Libor (1) + 450 (2) bps 7 GBP 237 237 Term loan B2 (bullet) Libor (1) + 400 (2) bps 7 EUR 304 304 Vendor loan (bullet) 10 277 264 Total term debt 1,003 1,050 Revolving Credit Facility (“RCF”) Libor + 400 (2) bps 6 GBP 25 25 (1) Base rate (Libor) swapped to a blended fixed rate of 1.15% across the tranches (2) Rate shown is post the aggregate 100bps reduction since inception
  47. 47. 47  Audited results for the year ended 31 March 2014 Iceland Foods Attractions to Brait Alignment Cash flow generative • Strong cash flow generation from operations – average over past three years: − Pre capex: 101% of EBITDA − Post capex: 84% of EBITDA − Post capex, tax and interest: 56% of EBITDA 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 margins IRR >25% • Investment base case achieves Brait's investment target return of 25% IRR, assuming low growth Well positioned • Extensive footprint of 833 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 • Customers are low LSM equivalentCash consumer • 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 Clear strategy Demonstrated throughAttractions 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 • Strong, experienced management team aligned with Brait through equity ownership (management hold 43%) − largest shareholder is founder at 19.9% − quality investment partners with significant international retail experience 47
  48. 48. 48  Audited results for the year ended 31 March 2014 Other investments The ‘Other investments’ portfolio on Brait’s balance sheet comprises: • Brait’s effective c.10% interest in Brait IV; carrying value largely attributable to: o Consol - largest manufacturer of glass packaging products on the African continent o Primedia - leading South African media group o Buildmax - one of the largest opencast mining contractors in the South African coal mining industry o Nature’s Garden – integrated South African food producer and perishable logistics provider • Proprietary investments; carrying value mostly relating to: o DGB - leading South African producer and exporter of local wine and importer of spirit brands o Southern View Finance (SVF) - international financial services business, looking to offer affordable and appropriate access to financial services products aimed at the mass market o Other assets include: investment in Mezzanine Funds; Chamber Lane Properties FY 2014 FY 2013 Carrying value R’m % of Total assets Carrying value R’m % of Total assets Other investments: 1,500 8% 924 6% Notes 1 FY 2014 realisations within “Other investments” amounted to R101m, relating to: • R61m from SVF’s repayment of shareholder loans; R40m from the realisation of Brait Capital Management (hedge fund) and distributions received from the Mezzanine Fund investment • Note that R73m of the R191m realised during FY 2013 was received during April 2013. This resulted in a total cash inflow of R174m for FY 2014, which is included in the R219m shown as “Investment proceeds – realisations” in Brait’s summarised cash flow slide 2 FY 2013 realisations within “Other investments” amounted to R191m, relating to AEP (fund of private equity funds); KSB Pumps, Medu Holdings, Molash and Brait Solutions (Fund of hedge funds) 48 Audited carrying values
  49. 49. 49  Audited results for the year ended 31 March 2014 Other assets Notes FY2014 R’m % of Total assets FY2013 R’m % of Total assets Loan receivable 1 523 3% 1,399 9% Cash and equivalents 339 2% 503 3% Property and equipment 8 - 10 - Accounts receivable 2 342 2% 115 1% Total 1,212 7% 2,027 13% Notes 1 Loan receivable The reduction in balance results from a R1 billion loan refinance concluded on 31 March 2014. Brait applied the proceeds received to pay down borrowings, which arose during the third quarter of FY14 as a result of increased investment to fund (i) Premier Group’s acquisitions (Star Bakeries and Lil-lets) and (ii) the investment in Southern View Finance 2 Accounts receivable FY2014 includes a R330 million scheduled loan repayment from Premier Group, to be received by Brait in the short term and is accordingly shown in accounts receivable as opposed to the carrying value for Premier Group 49
  50. 50. 50  Audited results for the year ended 31 March 2014 Audited results: FYE 31 March 2014 March 2014 March 2013 R’m R’m Investment gains 2,348 2,713 Interest 227 183 Fees 94 62 Foreign exchange gains (1) 48 73 Dividends and other income 83 170 Income 2,800 3,201 Operating expenses (144) (124) Profit from operations 2,656 3,077 Finance costs (57) (59) Indirect taxation (2) (1) (5) Profit before taxation 2,598 3,013 Direct taxation 14 (1) Profit for the year 2,612 3,012 Translation adjustments (3) 349 163 Comprehensive income for the year 2,961 3,175 Summarised comprehensive income statement 50 (1) Foreign exchange gains largely relate to the effect of exchange rate movement on USD and GBP cash balances held. This excludes the effects of exchange rate movement arising from the investment in Iceland Foods which are recognised as translation adjustments (2) The indirect tax relates to VAT not claimed as a result of the proportion of exempt dividends to income (3) Effect of exchange rate movement on the investment in Iceland Foods is the primary component
  51. 51. 51  Audited results for the year ended 31 March 2014 Operating expenses to AUM Performance metric: < 0.85% March 2014 March 2013 R’m % of AUM R'm % of AUM Total assets 18,423 15,141 Brait IV invested capital under management 3,471 3,202 Total AUM 21,894 18,343 0.85% of AUM target cap on operating expenses 186 156 Operating expenses 144 0.66% 124 0.68% Fee income (1) 72 0.33% 62 0.34% Net operating expenses to AUM ratio after fee income 72 0.33% 62 0.34% 0.85% 0.79% 0.68% 0.66% 0.52% 0.34% 0.33% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% March-12 March-13 March-14 % of AUM Performance benchmark <0.85% Operating expenses Operating expenses net of fee income (1) Fee income considered in this metric comprises management and director fees only 51
  52. 52. 52  Audited results for the year ended 31 March 2014 Summarised cash flows Investment proceeds 354 Realisations 219 Dividends - Pepkor (1) 83 Interest received – Premier Group 52 Fees received 99 Interest received - bank 5 Operating expenses paid (152) Interest paid (19) Taxation paid (11) Operating cash flow (excluding purchase of investments) 276 Purchase of investments (1,805) Premier Group (2) 1,470 Southern View Finance 251 Other investments 84 Net cash outflow used in operating activities (1,529) Acquisition of property and equipment (2) Proceeds from issue of preference shares (net of costs) 495 Loan received from Fleet (3) 1,000 Net purchase of treasury shares (5) Net repayment of long term borrowings (4) Ordinary dividend paid (cash election) (12) Preference dividend paid (155) Net decrease in cash and cash equivalents (212) Audited March 2014 results (R’m) (1) R83m received on Brait’s 24% direct shareholding in Pepkor. Brait’s indirect share of R45m was received by way of distribution from the Pepkor SPV and is included in Realisations (2) Represents loan funding provided to Premier Group for the acquisition of Lil-lets and Star Bakeries in Nov-13, as well as the cost for the increased Premier Group shareholding acquired through the exercise of option agreements with former shareholders (3) Fleet represents the Investment Team’s SPV 52
  53. 53. 53  Audited results for the year ended 31 March 2014 Analysis of cash position March 2014 R’m March 2013 R’m Net decrease in cash and cash equivalents (212) (90) Effects of exchange rate changes on cash and cash equivalents 48 70 Cash and cash equivalents at beginning of year 503 523 Cash and cash equivalents at end of year 339 503 Comprising: ZAR cash 168 101 USD cash (1) 160 394 GBP cash 11 8 Cash and cash equivalents 339 503 Available from existing undrawn gearing facilities 2,311 1,647 Available from preference share follow-on tap issue - 500 Total cash and available facilities 2,650 2,650 (1) Audited results Date USD amount (‘m) Closing exchange rate ZAR equivalent (‘m) 31 March 2014 15.2 R10.53 160 31 March 2013 42.6 R9.24 394 53
  54. 54. 54  Audited results for the year ended 31 March 2014 Conclusion Investment portfolio Investment vehicle Ungeared balance sheet with cash and facilities available for investment of R2.7 billion Major investments carried at substantial discount to listed peer multiples Heightened awareness and focus on challenging macro environment Remain opportunistic but cautious on deal flow that ‘moves the dial’ Defensive nature of portfolio continues to be borne out and enhanced through the generation of strong cash flow and growing geographic spread Pepkor: • South Africa is the strong underpin with its significant footprint and product offering aimed at lower LSM’s • Eastern Europe is the high growth region aggressively rolling out stores in the region • Africa represents an exciting opportunity given the Pep format, logistical expertise and offering • Australia is a challenging environment but making good progress on three year plan Premier Group: • Delivering on its strategy of operational efficiencies and consistent quality, enhancing margins on its core staples business • Year ahead will see the integration of its recent acquisitions enhance further profit growth Iceland Foods: • Continues to generate strong cash flows and management is alert to and proactive in dealing with challenging UK environment 54
  55. 55. APPENDICES
  56. 56. 56  Audited results for the year ended 31 March 2014 Brait overview 56 Portfolio overview Free float 37%85% 19%37% 18%35% 52% Target # 5 Target # 6 Investment criteria Shareholding - majority; or - significant minority Investment team 47% Family office 52%
  57. 57. 57  Audited results for the year ended 31 March 2014 Brait overview 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 across 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 the Brait preference share Investment criteria Timeline • Investment size of up to R5 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 • Target a portfolio of 5 – 6 large assets • Ability to hold investments for long timeframes (open ended) Transparency • 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 57
  58. 58. 58  Audited results for the year ended 31 March 2014 Brait overview Access to strong pipeline of current and near term investment opportunities • Proven ability to procure investments that will provide future gains 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 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 Brait’s model allows shareholders Entry at a negotiated fair market value of market leading investments • Prudent valuations allow entry into unlisted investments held at discount to comparable listed peers Attractive cash yield through Brait Pref • In addition to capital growth, cash yield can be accessed through the Brait Pref 58
  59. 59. 59  Audited results for the year ended 31 March 2014 Brait overview Brait’s investment objectives Provide superior return to shareholders Support platform assets with long term growth prospects Responsible long term shareholders help drive value Liquidity for investors All focused on same goal, team oriented approach Enhance shareholder returns and retain flexibility over investment holding period Provide superior return to shareholders Achieve effective and proactive communication with stakeholders Rationale Replicate Brait’s private equity return profile through growth in NAV Invest in market leading, growth oriented, entrepreneurially managed, privately owned businesses Diversified portfolio of 5 – 6 assets Shareholder of reference in businesses with strong, aligned management teams, relevant products, cash generative Alignment of interests amongst shareholders, capital providers, investment team and investee management Raise efficient capital Distribute excess cash to shareholders as dividends Balanced disclosure Listed share as the vehicle Objective Access to quality investments through single entry point 59
  60. 60. 60  Audited results for the year ended 31 March 2014 Brait overview Solid underpin to profit growth Superior NAV growth Minimise cost leakages No cost leakage Efficient use of capital Minimise cost of capital Certainty Rationale Invest in quality assets with solid growth in earnings Demonstrate cash flow generation within underlying assets Efficient structure No management fees or capital participation on public capital Minimal cash drag on balance sheet with prudent use of investment company and portfolio gearing Access cheapest form of capital Consistent dividend policy Objective Brait’s investment objectives 60
  61. 61. 61  Audited results for the year ended 31 March 2014 Brait overview 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. Listed investments: • Quoted market prices • Where the listed share is either thinly traded and / or the market is inactive, the valuation applied to determine carrying value is based on the applicable unlisted investment valuation methodology set out below Unlisted investments: Primary basis used is the Maintainable Earnings model: • Maintainable earnings are derived with reference to the mix of prior year audited and latest available current year forecast EBITDA per the portfolio company, adjusted for any non-recurring income/expenditure. As the year progresses, so the weighting is increased towards the portfolio company’s forecast • The average multiple of the comparable quoted companies, derived as at date of valuation, is adjusted for points of difference to the portfolio company being valued • The equity valuation takes consideration of the company’s net debt/cash on hand as per its latest available financial results Where appropriate, alternative methodologies such as the Price-to-Book valuation model are applied Cross-check: Discounted cash flow, NAV and recent transaction prices are used as a validation check Brait’s valuation policy 61
  62. 62. 62  Audited results for the year ended 31 March 2014 Brait overview Salient terms Instrument Cumulative, non-participating, perpetual preference shares issued at R100 per share Programme size R2 billion • 1st issuance of R1.5 billion on 6 August 2012 (applications received in excess of R2 billion) • 2nd tap issue of R0.5 billion via private placement on 25 June 2013 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 differential 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 Perpetual preference share capital 62
  63. 63. 63  Audited results for the year ended 31 March 2014 Brait overview Perpetual preference share capital Declaration date Dividend period Dividend per share (1) # of shares in issue Payment date Total dividend R’m 27-May-2014 1-Oct-2013 to 31-Mar-2014 R4.4934 20,000,000 23-Jun-2014 R89.9 24-Oct-2013 1-Apr-2013 to 30-Sep-2013 R4.4321 20,000,000 2-Dec-2013 R88.6 28-May-2013 1-Oct-2012 to 31-Mar-2013 R4.4079 15,000,000 24-Jun-2013 R66.1 31-Oct-2012 6-Aug-2012 to 30-Sep-2013 R1.3563 15,000,000 3-Dec-2012 R20.3 R264.9 Preference dividends declared to date: • R1.469 billion net proceeds raised from first issuance 6-Aug-2012 settled borrowings drawn at that date • R495 million net proceeds raised from tap issue 25-Jun-2013 settled borrowings drawn at that date, with residual R340m advanced as a shareholder loan to Premier Group for acquisition funding R1.964 billion net proceeds raised from Brait’s preference share programme applied as follows: (1) Excludes effect of any dividend withholding taxes 63
  64. 64. 64  Audited results for the year ended 31 March 2014 Pepkor Summarised income statement 2013 2012 2011 2010 2009 (Audited June results in R’m) Revenue 33,592 26,406 22,562 20,212 18,867 % Growth 27.2% 17.0% 11.6% 7.1% 13.8% EBITDA(R)(1)(2) 6,214 4,916 4,206 4,004 2,660 % Margin 18.5% 18.6% 18.6% 19.8% 14.1% EBITDA(2)(3) 3,757 3,005 2,547 2,502 1,286 % Margin 11.2% 11.4% 11.3% 12.4% 6.8% EBIT(2) 3,051 2,410 2,088 2,051 855 % Margin 9.1% 9.1% 9.3% 10.1% 4.5% EBT 2,737 1,903 2,092 1,992 694 % Margin 8.1% 7.2% 9.3% 9.9% 3.7% PAT 1,828 1,219 1,529 1,389 474 % Margin 5.4% 4.6% 6.8% 6.9% 2.5% (1) EBITDA(R) is EBITDA prior to net building operating lease expenses (2) Excludes extraordinary items 2013 (R43m); 2012 (R227m). Note – EBT is post these 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 financial information Summarised cash flows (R’m) 2013 2012 2011 2010 2009 Cash flow from operations 3,754 3,320 2,368 2,300 1,717 % EBITDA 99.9% 110.5% 93.0% 70.3% 80.4% Capital expenditure 1,330 817 837 739 488 Operating cash flow post capex 2,424 2,503 1,531 1,561 1,229 % EBITDA 64.5% 83.3% 60.1% 62.4% 95.6% Tax paid 897 945 449 440 472 Interest paid 319 343 54 100 211 Operating cash flow post capex, tax and interest 1,208 1,215 1,028 1,021 546 % EBITDA 32.2% 40.4% 40.4% 40.8% 42.5% Net group investments made - equity 628 293 93 (19) 30 Net group investments made – loan books 1,041 544 34 - - 64
  65. 65. 65  Audited results for the year ended 31 March 2014 Pepkor Summarised financial information Summarised balance sheet (Audited June results in R’m) 2013 2012 2011 2010 2009 Total assets 16,640 11,805 11,456 9,003 8,928 Fixed assets 3,675 2,679 2,331 1,887 1,609 Intangibles 1,875 1,379 1,405 1,361 1,402 Current assets 8,796 5,654 4,922 4,195 4,275 Cash 1,381 1,310 2,466 1,359 1,384 Other 913 783 332 201 258 Total liabilities 10,684 7,940 5,210 4,260 5,637 Debt 4,721 3,766 511 362 1,414 Current liabilities 5,245 3,544 4,126 3,379 3,695 Other 718 630 573 519 528 Equity 5,956 3,865 6,246 4,743 3,291 Minority interest 11 25 24 12 11 Ordinary shareholders equity 5,945 3,840 6,222 4,731 3,280 Ratios and trading information 5 year CAGR 2013 2012 2011 2010 2009 ROE 37% 40%(1) 40%(1) 35% 15% Retail outlets 5.3% 3,418 3,156 3,046 2,846 2,763 Retail space (m2 in 000’s) 6.0% 1,608 1,397 1,356 1,294 1,260 Revenue per m2 (in R) 8.7% 20,891 18,899 16,639 15,620 14,974 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 65
  66. 66. 66  Audited results for the year ended 31 March 2014 Pepkor Group overview (1) Power Sales, (in Zimbabwe), is in the process of a restructure / store consolidation - number of stores decreased from 153 to 94 during FY13 Stores Ave size Space Stores Ave size Space Stores Ave size Space Stores Ave size Space # (m2) ('000m2) # (m2) ('000m2) # (m2) ('000m2) # (m2) ('000m2) Pep 1,578 400 631 Pepco 451 323 146 Pep Africa 152 407 62 Best & Less 197 873 172 Ackermans 394 762 300 Power Sales 94 236 22 Harris Scarfe 51 2,601 133 Dunns 261 310 81 the Kidstore 16 146 2 Shoe City 87 350 30 Mozi 7 86 1 John Craig 67 200 13 Store 5 1,021 5 JayJays 58 160 9 Total FY13 2,445 436 1,065 Total FY13 451 323 146 Total FY13 246 323 84 Total FY13 276 1,133 313 FY12 Growth FY13 FY12 Growth FY13 FY12 Growth FY13 FY12 Growth FY13 R'mil % R'mil R'mil % R'mil R'mil % R'mil R'mil % R'mil Turnover 19,763 16.2% 22,962 Turnover 1,402 53.3% 2,149 Turnover 993 32.0% 1,310 Turnover 4,248 68.8% 7,172 EBITDA 2,674 20.7% 3,228 EBITDA 164 61.0% 265 EBITDA 65 41.8% 92 EBITDA 102 69.8% 173 Margin 13.5% 3.9% 14.1% Margin 11.7% 5.0% 12.3% Margin 6.5% 7.5% 7.0% Margin 2.4% 0.6% 2.4% # of stores 2,312 5.8% 2,445 # of stores 359 25.6% 451 # of stores (Total) 280 -12.1% 246 # of stores 205 34.6% 276 # of stores FY12 Growth FY13 FY12 Growth FY13 SA 2,053 5.8% 2,173 Pep Africa stores 127 19.7% 152 BLNS 259 5.0% 272 BLNS stores 259 5.0% 272 Total 2,312 5.8% 2,445 Total 386 9.8% 424 Power Sales 153 (1) 94 Total stores in Africa 539 (1) 518 Significant footprint Pep and Ackermans outperforming High growth region #1 non food discount retailer in Poland Exciting opportunity Offering well suited; cautious growth Focus on margin improvement SA, BLNS Eastern Europe Rest of Africa Australia Brands Brands Brands Brands 66 Total stores in Africa, excluding SA:Number of stores split : SA / BLNS:
  67. 67. 67  Audited results for the year ended 31 March 2014 Pepkor Pep: Interesting facts • Biggest single brand retailer in Africa • Double digit growth for the past 14 years (sales and operating profit) • Sales in South Africa account every year for more than: – 38% of all blankets sold – 55% of all school wear, manufactured mainly in its clothing factory in Cape Town – 23% of all baby and kids clothing – 35 million disposable nappies, Pep sells 4 disposable nappies every trading second – 6 million pre-paid cell-phone handsets – 160 million airtime vouchers • Its three Southern Africa distribution centres and 13 transport hubs together occupy more than 250 000m2 - the size of 46 football fields • This year PEP will: – Send over 600 million products to over 1,600 stores – Conduct around 250 million customer transactions • There are 75 stand-alone homeware 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: – Seventeen PEP academies operate within existing schools to give around 1800 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 67
  68. 68. 68  Audited results for the year ended 31 March 2014 Pep Home Pep Cell Operating countries SA, BLNS SA SA SA Founded 1965 2007 2008 2001 (2) Product range Clothing, footwear, house wares, cellular Bathroom & kitchen textiles, bedding, curtaining, house wares, furniture & appliances, FMCG, cellular Handsets, airtime, starter packs, modems, subscription TV SIM cards & Flash devices which amongst others distribute airtime and electricity and accept DSTV payments via informal market 24/7 Positioning Discount market positioning Informal retail sector & spaza shops No. of stores 1,350 75 216 Flash devices in +52,000 spaza shops Ave store size (m2) 455 308 45 n/m Ave staff per store 10 4 3 n/m Pepkor Overview of Pep Group Store information as at Dec 2013 68
  69. 69. 69  Audited results for the year ended 31 March 2014 Pepkor Overview of Pepkor Africa Operating countries Zambia, Mozambique, Angola, Malawi, Nigeria Zimbabwe Founded Entered Africa in 1995 1978 Product range Clothing, footwear, house wares, cellular Clothing, footwear, house wares Positioning Discount market No. of stores 159 85 Ave store size (m2) 406 247 Ave staff per store 10 7 Store information as at Dec 2013 69
  70. 70. 70  Audited results for the year ended 31 March 2014 Pepkor Store information as at Dec 2013 Ackermans Operating countries SA, BLNS Founded 1916 Product range Clothing, footwear, house wares, clothing accessories, cellular Positioning Value based market No. of stores 414 Ave store size (m2) 751 Ave staff per store 12 70
  71. 71. 71  Audited results for the year ended 31 March 2014 Pepkor Operating countries SA, BN SA,N SA SA, BLNS Founded 1987 2006(1) 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 89 60 77 261 Ave store size (m2) 334 154 193 307 Ave staff per store 6 5 6 4 Store information as at Dec 2013 (1) JayJays represents a 50/50 joint venture with Just Group of Australia 71
  72. 72. 72  Audited results for the year ended 31 March 2014 Pepkor Operating country Australia Australia Australia Australia (1) Australia (2) Founded 1965 1849 2005 2012 2007 Product range Clothing, footwear, house wares, owners of Mango brand Men’s and women’s apparel, homewares and manchester Design-led lifestyle, home and giftware Children’s clothing, toys and accessories for ages newborn to 10 years Storage goods and solutions Positioning Value based Department store offering national & own brands Specialty design-led gift, lifestyle and homeware brand Middle market brand. Trend driven and value conscious Middle market No. of stores 197 51 10 15 6 Ave store size (m2) 872 2,554 84 142 968 Ave staff per store 10 20 4 4 3 Store information as at Dec 2013 Overview of Pepkor South East Asia (1) Kidstore to be wound down commencing April and completed by Oct 2014 (2) Acquired May 2013 72
  73. 73. 73  Audited results for the year ended 31 March 2014 Pepkor Operating country Poland Slovakia Czech Republic Founded 2000 2013 2013 Product range 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 479 23 6 Ave store size (m2) 324 354 346 Ave staff per store 8 6 7 Store information as at Dec 2013 73
  74. 74. 74  Audited results for the year ended 31 March 2014 Premier Group Summarised income statement (Audited results in R’m) June 2013 (1) June 2012 April 2011 April 2010 April 2009 Net revenue (2) % Growth 6,272 9.4% 5,731 17.1% 4,896 (7.6%) 5,298 (5.0%) 5,575 12.0% EBITDA (3) % Margin 422 6.7% 289 5.0% 222 4.5% 572 10.8% 320 5.7% Depreciation and amortisation (86) (79) (87) (69) (66) EBIT (3) % margin 336 5.4% 210 3.7% 135 2.8% 503 9.5% 254 4.6% Net interest charge (120) (136) (108) (161) (275) EBT 216 74 27 342 (21) PAT 137 80 57 203 (9) Summarised financial information Summarised balance sheet (Audited results in R’m) June 2013 (1) June 2012 April 2011 April 2010 April 2009 Non-current tangible assets 881 689 634 569 581 Goodwill and intangible assets 949 900 866 908 871 Other liabilities (217) (142) (141) (150) (17) Net current assets 300 266 (15) 50 133 Net debt (4) (745) (1,008) (669) (456) (842) Total shareholders’ funds 1,168 705 675 921 726 Summarised cash flow information (R’m) June 2013 (1) June 2012 April 2011 April 2010 April 2009 Cash flow from operations before working capital (5) 406 280 289 495 229 Working capital (9) (197) (77) (307) 155 Cash flow from operations % EBITDA 397 94.1% 83 28.7% 212 95.5% 188 32.9% 384 120% Capital expenditure (203) (80) (152) (50) (48) Operating cash flow post capex and tax % EBITDA 194 46.0% 3 1.0% 60 27.0% 138 24.1% 336 105.0% Interest paid (124) (136) (111) (164) (282) Operating cash flow post capex, tax and interest % EBITDA 70 16.6% (133) (46.0%) (51) (23.0%) (26) (4.5%) 54 16.9% (1) Following change in year-end to June, audited results for FY2012 covered a 14 month period. For comparability, pro forma results for 12 months to 30 June 2012 shown (2) Net revenue is after discounts, trade spend and rebates (3) Excludes non recurring gains and losses incurred each year (4) Net debt excludes the subordinated shareholder loans held by Brait (5) Cash flow before non recurring gains and losses, post tax paid 7474
  75. 75. 75  Audited results for the year ended 31 March 2014 Premier Group 75 National and regional footprint
  76. 76. 76  Audited results for the year ended 31 March 2014 Flagship national brands Other national brands Regional brands Premier Group 76 Brand hierarchy
  77. 77. 77  Audited results for the year ended 31 March 2014 Iceland Foods 77 Summarised financial information Summarised income statement (March year-end – results in £’m) 2014 Unaudited (1) 2013 Pro forma 2012 Audited 2011 Audited 2010 Audited Revenue % growth 2,713 2.8% 2,640 1.0% 2,614 9.4% 2,389 5.9% 2,256 8.4% EBITDA % margin 202 7.5% 226 8.5% 233 8.9% 188 7.9% 184 8.2% EBIT % margin (2) 71 2.6% (2) 112 4.2% 144 5.5% 130 5.4% 121 5.4% EBT % margin 22 0.8% 44 1.7% 148 5.7% 129 5.4% 110 4.9% PAT % margin (5) (0.2%) 16 0.6% 96 3.7% 82 3.4% 70 3.1% (1) The audited FY13 financial statements are Group accounts which include operating results from the acquisition date 9 March 2012 to 31 March 2013. For comparability, pro forma results for the 52 weeks to 31 March 2013 have been shown (2) EBIT FY14 includes amortisation charge of £92m (goodwill £75m, restructure costs £9m, deal fees £8m). FY13 amortisation charge was £80m (goodwill £72m, deal fees £8m). FY14 depreciation charge is £39m (FY13 : £34m ) Summarised cash flow (£’m) 2014 2013 2012 2011 2010 Cash flow from operations % EBITDA 199 98.5% 234 103.5% 236 101.3% 191 101.6% 194 105.4% Capital expenditure (3) 49 37 25 25 55 Operating cash flow post capex % EBITDA 150 74.3% 197 87.2% 211 90.6% 166 88.3% 139 75.6% Tax paid 27 32 46 42 40 Interest paid 33 48 1 1 14 Operating cash flow post capex, tax and interest % EBITDA 90 44.6% 117 51.8% 164 70.4% 123 65.4% 85 46.2% (3) The increase in FY14 capex driven by a gross 46 Iceland Foods outlets opened (FY13: gross 36 Iceland stores opened)
  78. 78. 78  Audited results for the year ended 31 March 2014 Summarised balance sheet (March year-end – results in £’m) 2014 Unaudited 2013 Audited 2012 Audited 2011 Audited 2010 Audited Total Assets 1,869 1,891 1,933 819 809 Property and equipment Intangibles Current Assets Cash 174 1,346 197 152 166 1,421 176 128 161 1,493 194 85 167 409 176 67 175 434 147 53 Total Liabilities 1,439 1,456 1,538 430 402 Trade creditors Current liabilities Debt Other 345 74 1,003 17 316 65 1,050 25 300 100 1,110 28 278 87 50 15 246 80 59 17 Shareholders Equity 430 435 395 389 407 Iceland Foods 78 Summarised financial information Ratios and trading information (as at March year end) 2014 2013 2012 2011 2010 ROE (2) 13.8% 19.5% 24.5% 20.6% 18.7% Number of retail outlets 833 790 814 796 776 Iceland Cooltrader (3) 833 - 790 - 757 57 742 54 730 46 Retail space ('000 m2) 385 362 360 353 363 Iceland Cooltrader (3) 385 - 362 - 347 13 340 13 353 11 Revenue per m2 (£) (4) 7,047 7,293 7,268 6,774 6,207 (2) ROE quoted for 2014 is pro-forma to normalise for the £75m goodwill charge. Derived as normalised FY14 PAT of £70m (actual FY14 loss of £5m + £75m), divided by average shareholders equity of £506m (average of FY14 normalised equity of £505m (equity adjusted for goodwill amortisation) and FY13 normalised equity of £507m)) (3) Cooltrader sold during September 2012 (4) Calculated on total number of retail outlets
  79. 79. 79  Audited results for the year ended 31 March 2014 Iceland Foods UK footprint 79
  80. 80. 80  Audited results for the year ended 31 March 2014 Other investments SVF overview 80 Southern View Finance Limited (1) (SVF) is an international financial services business, looking to offer affordable and appropriate access to financial services products aimed at the mass market: Low cost financial services products will include: • small and affordable loans • mobile banking • money transfers and • micro insurance products Partnering with and leveraging established retail and other networks: • SVF holds the right to originate unsecured loans across the extensive Pepkor footprint ‒ Initial focus is South Africa and specifically the Pep store platform, offering loans in return for an origination fee per loan application to Pepkor ‒ Applicants are required to hold an ID document, a bank account and a mobile phone, with collections via debit order • Intention to expand into other jurisdictions Key characteristics: • High monthly cash yield characteristics given the short term nature of loans advanced • Exposed to cash consumer in higher growth LSM 1 - 6 categories • Low cost operating model with centralised capital and credit capabilities combined with proven call centre expertise and innovative software and mobile technology solutions • Target growth through geographic expansion rather than market share, maintaining discipline in offering short term, small size loans • Funding via a mix of shareholder capital and bank financing (1) SVF is listed on the Bermuda and JSE Alternative stock exchanges
  81. 81. 81  Audited results for the year ended 31 March 2014 Other investments SVF overview 81 Financial metrics - SVF (as at 31 December 2013) Loan book size (gross) Loan book size (net) R894m R750m Active customers 213,023 Actual bad debt provision % (6 month average) < = 19% Business metrics – SVF Average loan amount R3,000 Loan term 6 months Target cash yield % (monthly) > 20% Targeted write-offs (of all capital, interest and fees) < 12% Targeted Bad Debt Provision < = 19% Volume of new loan applications >100 000 per month (1) SVF is due to next report to the market on its financial performance (for the period ending 31 March 2014) by 30 June 2014
  82. 82. 82  Audited results for the year ended 31 March 2014 Other investments 82 # Step Timing (T+) Process 1 ID scanned and information collected - • Applicant scans ID at an authorised retail partner and information (including mobile telephone number) is collected 2 Data sent for scoring and credit decision + 2 minutes • SVF uses this information together with credit bureau data to calculate a credit score • Based on this score, an approve or decline decision is reached 3 Customer communication + 15 minutes • SVF communicates this credit decision via SMS to the customer’s mobile phone; either: o declining the application; or o confirming a loan can be made subject to certain confirmatory information 4 Additional customer information and loan offer + 30 minutes • The call centre contacts the applicant and obtains additional information relating to bank, employment and other details • Applicant is informed of SVF’s loan terms and conditions (all NCA compliant) • Applicant then either accepts or declines the terms 5 SVF approves or declines loan request + 45 minutes • Accepted applications are forwarded for final review • Loan is declined or accepted 6 Loan disbursement + 60 minutes • Applicant is informed of final loan decision • If successful, bank is instructed to disburse the approved loan amount to the customer SVF overview Loan application process:
  83. 83. 83  Audited results for the year ended 31 March 2014 Other investments Predecessor funds (fully realized) Investments Gross returns Fund Vintage Pioneering feats # Cost R’m Proceeds R’m Multiple of cost IRR Brait I 1991 1st closed-end 3rd party funded private equity (PE) fund raised in RSA 22 228 417 1.8x 29% Brait II 1995 1st PE fund in RSA to have raised international capital (mainly N. America) 12 695 1,528 2.2x 46% Brait III 1999 $409m capital raised was the largest at the time on African continent 14 2,301 10,043 4.4x 32% Total: Realised funds 48 3,224 11,988 3.7x n/m Brait III: • The New York State Common Retirement Fund ranked Brait III joint 3rd out of 246 PE funds (vintage years 1999 to 2004) • 80% of Brait III value creation sourced from EBITDA growth Active fund Investments Fund Vintage Pioneering feat # Cost to date (R’m) Brait IV 2006 $880m capital raised was the largest at the time on African continent 7 4,309 Brait’s heritage in private equity • Brait has an effective c.10% look-through interest in Brait IV; with the carrying value, largely attributable to Consol and Primedia, included within the ‘other investments’ classification 83
  84. 84. 84  Audited results for the year ended 31 March 2014 Other investments Brait IV Headquartered in Johannesburg, Consol employs around 1,847 staff Consol is the largest manufacturer of glass packaging products on the African continent Operates 4 manufacturing sites, which comprise 11 furnaces and 29 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 Headquartered in Johannesburg, Primedia employs around 3,000 staff Primedia is a leading media group with significant reach across the entire South African consumer spectrum With 46 brands on offer across a range of media and entertainment platforms, Primedia’s interests include broadcasting, advertising, marketing, promotions, entertainment and digital media in both the traditional and non-traditional media sectors The group’s reach extends to over three million radio listeners, 15 million cinemagoers, four million daily commuters and more than five million digitally connected South Africans through 69 platforms The group’s strategy is to ensure exclusive rights to advertising media or products wherever possible, reaching critical mass, and providing composite media solutions which cover diverse audiences - - - - - - - - - - 84
  85. 85. 85  Audited results for the year ended 31 March 2014 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) − Largest employer in the Wellington area, employing 370 staff and a number of seasonal workers − State 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 − Extensive distribution network with 16 national depots ensuring good coverage across SA − Logistics platform to drive growth into new brands − Entrepreneurial management team − SA agent for all Bacardi products 85
  86. 86. 86  Audited results for the year ended 31 March 2014 Notes
  87. 87. AUDITED RESULTS ANNOUNCEMENT
  88. 88. 88  Audited results for the year ended 31 March 2014 Salient features for the year ended 31 March Audited Audited Audited Audited 31 March 31 March 31 March 31 March 2013 2014 2014 2013 R’m R’m Note €’m €’m 2 664 3 195 Net asset value (NAV) per share (cents) 220 225 27% 25% NAV CAGR # N/A N/A 0.68% 0.66% Operating cost: Assets Under Management (AUM)* 0.66% 0.68% 0.34% 0.33% Operating cost after fee income: AUM* 0.33% 0.34% 274 354 Cash inflow from investment portfolio 24 23 26.64 31.95 Proposed/Paid ordinary dividends per share (cents) 2.24 2.12 135.63 443.21 Interim preference dividend per share paid (cents) 32.8723 11.9903 440.79 449.34 Final preference dividend per share declared/paid (cents) 31.5439 35.0883 17 752 27 330 Market capitalisation 1 835 1 500 510 514 Ordinary shares in issue (m) 514 510 (5) (5) Treasury shares (m) (5) (5) 505 509 Ordinary shares outstanding (m) 509 505 504 507 Weighted average ordinary shares in issue (m) – basic and diluted 507 504 3 480 5 321 Closing ordinary share price (cents) 357 294 Summary group statement of comprehensive income for the year ended 31 March 2 713 2 348 Investment gains 173 246 488 452 Other investment income 34 46 (124) (144) Operating expenses (11) (11) (59) (57) Finance costs (5) (6) (5) (1) Indirect taxation – – (1) 14 Direct taxation 1 – 3 012 2 612 Profit for the year 192 275 163 349 Translation adjustment (197) (143) 3 175 2 961 Comprehensive income for the year (5) 132 581 480 Earnings/Headline earnings per share (cents) – Basic and Diluted 9 35 53 # Compound Annual Growth Rate “CAGR” is calculated over any three-year period commencing on 1 April 2011 and assuming an opening NAV of R16.50 * Assets under management represent the aggregate of the Group’s total assets and Brait IV invested capital under management
  89. 89. 89  Audited results for the year ended 31 March 2014 Summary group statement of financial position as at 31 March Audited Audited Audited Audited 31 March 31 March 31 March 31 March 2013 2014 2014 2013 R’m R’m Notes €’m €’m ASSETS 14 523 17 742 Non-current assets 1 224 1 226 13 114 17 211 Investments 3 1 187 1 108 1 399 523 Loan receivable 4 36 117 10 8 Property and equipment 1 1 618 681 Current assets 46 53 115 342 Accounts receivable 23 10 503 339 Cash and cash equivalents 5 23 43 15 141 18 423 Total assets 1 270 1 279 EQUITY AND LIABILITIES 14 927 18 211 Equity and reserves 1 255 1 261 13 458 16 247 Ordinary shareholders’ equity and reserves 6 1 120 1 137 1 469 1 964 Preference shareholders’ equity 7 135 124 163 165 Non-current liabilities 11 14 141 164 Borrowings 8 11 12 22 1 Deferred tax liability – 2 51 47 Current liabilities 4 4 15 141 18 423 Total equity and liabilities 1 270 1 279 510 514 Ordinary shares in issue (m) 514 510 (5) (5) Treasury shares (m) (5) (5) 505 509 Outstanding shares for NAV calculation (m) 509 505 2 664 3 195 Net asset value per share (cents) 220 225
  90. 90. 90  Audited results for the year ended 31 March 2014 Audited Audited Audited Audited 31 March 31 March 31 March 31 March 2013 2014 2014 2013 R’m R’m Note €’m €’m Attributable to ordinary shareholders 10 321 13 458 Ordinary shareholders’ balance at beginning of the year 1 137 1 008 3 012 2 612 Profit for the year 192 275 163 349 Translation adjustments (197) (143) (2) (5) Net purchase of treasury shares – – (16) (12) Ordinary dividends paid (cash election) (1) (1) (20) (155) Earnings attributed to preference shares (11) (2) 13 458 16 247 Ordinary shareholders’ balance at end of the year 1 120 1 137 Attributable to preference shareholders – 1 469 Preference shareholders’ balance at beginning of the year 124 – 1 469 495 Preference share issue net of cost 7 36 134 – – Translation adjustments (25) (10) 20 155 Earnings attributed to preference shares 11 2 (20) (155) Preference dividend paid (11) (2) 1 469 1 964 Preference shareholders’ balance at end of the year 135 124 Summary group statement of changes in equity as at 31 March
  91. 91. 91  Audited results for the year ended 31 March 2014 Group statement of cash flows as at 31 March Audited Audited Audited Audited 31 March 31 March 31 March 31 March 2013 2014 2014 2013 R’m R’m Note €’m €’m 126 219 Investment proceeds 15 11 61 99 Fees received 7 5 24 57 Interest received 4 2 111 83 Dividends received 6 9 (135) (152) Operating expenses paid (10) (10) (24) (11) Taxation paid (1) (2) (59) (19) Interest paid (1) (5) 104 276 Operating cash flow excluding purchase of investments 20 10 (386) (1 805) Purchase of investments (124) (33) (282) (1 529) Net cash used in operating activities (104) (23) (8) (2) Acquisition of property and equipment – (1) (8) (2) Net cash used in investing activities – (1) 1 500 500 Proceeds from issue of preference shares 34 127 (31) (5) Preference share transaction cost – (3) – 1 000 Loan received from Fleet 4 69 – (1 231) (4) Net repayment of long-term borrowings – (104) (2) (5) Net purchase of treasury shares – – (16) (12) Ordinary dividend paid (cash election) (1) (1) (20) (155) Preference dividend paid (11) (2) 200 1 319 Net cash from financing activities 91 17 (90) (212) Net decrease in cash and cash equivalents (13) (7) 70 48 Effects of exchange rate changes on cash and cash equivalents (7) (1) 523 503 Cash and cash equivalents at beginning of year 43 51 503 339 Cash and cash equivalents at end of year 23 43
  92. 92. 92  Audited results for the year ended 31 March 2014 Notes to the summary financial statements for the year ended 31 March 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 summary financial statements are prepared 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 2013. 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: 2014 2013 Closing Average Closing Average USD/ZAR 10.5325 10.1178   9.2358   8.5067 GBP/ZAR 17.5500 16.1108 14.0359 13.4380 EUR/ZAR 14.5028 13.5779 11.8391 10.9589 USD/EUR 0.7262 0.7451   0.7802   0.7770 GBP/EUR 1.2101 1.1866   1.1858   1.2279 Audited Audited Audited Audited 31 March 31 March 31 March 31 March 2013 2014 2014 2013 R’m R’m €’m €’m 2. Related Parties Trading period During the period, Group companies entered into the following transactions with related parties who are not members of the Group: Related party balances and transactions Statement of financial position balances 1 399 523 –  Loan receivable 36 117 Profit from operations include: (7) (8) –  Non-executive directors’ fees (1) (1) 119 124 –  Interest income on loan receivable 9 11 Statement of changes in equity (amount charged directly to equity) (3) – Transaction cost (amount charged directly to equity) – M Partners S.à r.l. – –
  93. 93. 93  Audited results for the year ended 31 March 2014 Notes to the summary financial statements for the year ended 31 March (continued) 3. Investments Given the nature of the Group’s operations, investments in which the Group has significant influence, but not control are accounted for at fair value through profit and loss (scoped out of IAS 28 and into IAS 39). Changes in fair value are recognised in profit or loss in the period of change. The Group applies a number of methodologies to determine and assess the reasonableness of the fair value, which may include the following: • Earnings multiple • Recent transaction prices • Net asset value • Price to book multiple Listed investments are held at recent quoted transaction prices. Where the listed investment is either thinly traded and/or the market is inactive, the valuation applied to determine carrying value is based on the applicable unlisted investment valuation methodology set out below. The primary valuation model utilised for valuing unlisted investee companies is the maintainable earnings multiple model: Maintainable earnings are derived with reference to the mix of prior year audited and latest available current year forecast EBITDA per the portfolio company, adjusted for any non-recurring income/expenditure. As the year progresses, so the weighting is increased towards the portfolio company’s forecast. The directors decide on an appropriate group of comparable quoted companies from which to base the EV/EBITDA multiple. The average multiple of the comparable quoted companies, derived as at the date of valuation, is adjusted for points of difference to the portfolio company being valued. The equity valuation takes consideration of the portfolio company’s net debt/cash on hand as per its latest available financial results. Further valuation information can be obtained from the 31 March 2014 investor presentation on the Group’s website, www.brait.com. Audited Audited Audited Audited 31 March 2013 31 March 2014 31 March 2014 31 March 2013 R’m R’m €’m €’m 9 278 11 145 Pepkor 768 784 1 463 3 053 Premier Group 211 124 1 449 1 513 Iceland Foods 104 122 924 1 500 Other Investments 104 78 13 114 17 211 Total investments 1 187 1 108 13 114 17 211 1 187 1 108 12 297 15 566 Investment in equity securities 1 074 1 040 817 1 645 Investment in loans 113 68
  94. 94. 94  Audited results for the year ended 31 March 2014 Notes to the summary financial statements for the year ended 31 March (continued) 3. Investments (continued) Fair Value Hierarchy IFRS 13 provides a hierarchy that classifies inputs used to determine fair value. Investments measured and reported at fair value are classified and disclosed in one of the following categories: Level 1 Unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as quoted prices) or indirectly (i.e. derived from quoted prices). Level 3 Inputs for the assets or liability that are not based on observable market data There are no financial assets that are categorised as Level 2 and no transfers between levels in the current or prior year. Investment in Securities Level 1 Investment in Securities Level 3 Total Investment in Securities Level 1 Investment in Securities Level 3 Total R’m R’m R’m 31 March 2014 €’m €’m €’m – 11 145 11 145 Pepkor – 768 768 – 1 719 1 719 Premier Group – 119 119 – 1 493 1 493 Iceland Foods – 103 103 22 1 187 1 209 Other Investments 2 82 84 22 15 544 15 566 Total investment in securities 2 1 072 1 074

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