Brait SE HY 2013 financial results presentation (South Africa)

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Brait SE HY 2013 financial results presentation (South Africa)

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Brait SE HY 2013 financial results presentation (South Africa)

  1. 1. 2014 UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2013 Brait SE (Registered in Malta as a European Company) (Registration No. SE1) Share code: BAT ISIN: LU0011857645 Share code: BATP ISIN: MT0000680208 (“Brait”, the “Company” or “Group”)
  2. 2. Contents Section 1: Interim results presentation for the six months ended 30 September 2013 3 Section 2: Appendices 61 Section 3: Unaudited interim results announcement 98 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. Unaudited results for the six months ended 30 September 2013
  3. 3. INTERIM RESULTS PRESENTATION For the six months ended 30 September 2013
  4. 4. Contents • Highlights for the six month period to 30 September 2013 • Unaudited NAV at 30 September 2013 • Portfolio performance review • Pepkor • Premier Group • Iceland Foods • Rest of investment portfolio • Unaudited results: six months to 30 September 2013 • Conclusion • Q&A 4 4 Unaudited results for the six months ended 30 September 2013
  5. 5. Highlights for the six month period to 30 September 2013 5 5 Unaudited results for the six months ended 30 September 2013
  6. 6. Highlights for the six month period to 30 September 2013 • NAV per share: - 9.5% increase to R29.17 for the six month period - 26.8% increase on comparative September 2012 NAV per share of R23.01 - CAGR for the 2.5 year period since 1 April 2011’s R16.50 Rights Offer Price: ~ ~ - 25.6% on reported NAV per share 26.4% including bonus shares issued / cash dividend paid Uplift attributable to operational performance of investments – solid profit growth and cash flow generation • R90 million cash inflows from investment portfolio • Perpetual preference share capital: - R500 million raised in June 2013 from tap issue - R88.6 million preference dividend (443.21 cents per share) for the six months ended 30 September 2013 declared on 24 October 2013 • R2.7 billion available cash and facilities for new investments 6 6 Unaudited results for the six months ended 30 September 2013
  7. 7. Highlights for the six month period to 30 September 2013 Performance against targets Performance metric 1 NAV CAGR > 15% per year over any 3 year period 2 Dividend: 1% - 2.5% of NAV starting latest FY13 (bonus shares or cash election) Position at 30 September 2013 • 25.6% CAGR since 31 March 2011 FY13: 1% of R26.64 NAV paid Aug-13 (29% up on FY12) • 91% of shareholders elected bonus shares 3 Operating costs: < 0.85% to Brait AUM • 0.66% to Brait AUM • 0.34% net after fee income 4 Minimal cash drag: < 25% of NAV • 3.9% of NAV (3.4% of total assets) 5 Primarily unlisted investments • Unlisted investments 99.9% of total assets Demonstrate cash flow within underlying 6 investments Historic 3 year average cash flow post capex as % of EBITDA Pepkor 69% Premier Group 25% Iceland Foods 89% Brait received R90m cash inflows from portfolio 7 7 Unaudited results for the six months ended 30 September 2013
  8. 8. Unaudited NAV at 30 September 2013 8 8 Unaudited results for the six months ended 30 September 2013
  9. 9. Unaudited NAV at 30 September 2013 Amounts in R'm Unaudited 30 Sept 2013 Unaudited 30 Sept 2012 Audited 31 March 2013 Investments Pepkor Premier Group Iceland Foods Other investments 14,806 10,154 1,885 1,808 959 87% 59% 11% 11% 6% 11,250 7,731 1,253 1,245 1,021 86% 59% 10% 9% 8% 13,114 9,278 1,463 1,449 924 87% 61% 10% 10% 6% 1,460 583 9 106 9% 3% 1% 1,344 561 11 10 10% 4% - 1,399 503 10 115 9% 3% 1% 16,964 100% 13,176 100% 15,141 100% Loan receivable Cash and equivalents Property and equipment Accounts receivable Total assets (83) (25) (54) (34) (48) (141) (22) (51) (162) (82) (214) Preference share equity (1,964) (1,470) (1,469) NAV attributable to ordinary shareholders 14,838 11,624 13,458 # of issued ordinary shares ('m) excl treasury 508.6 505.2 505.2 NAV per share (cents) 29.17 23.01 26.64 Borrowings Deferred tax liability Accounts payable and provisions Total liabilities 9 9 Unaudited results for the six months ended 30 September 2013
  10. 10. Unaudited NAV at 30 September 2013 Rolling CAGR: reported NAV NAV per share (R) 40% 40.00 30% 23.4% 22.4% 24.8% 24.3% 24.8% 25.9% 27.1% 26.3% 25.6% 20% 30.00 20.00 15% 10% 10.00 0% Sep-11 Reported NAV per share Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 R18.33 R19.21 R20.59 R21.66 R23.01 R24.70 R26.64 R27.86 R29.17 Reported NAV per share Performance benchmark: NAV CAGR >15% per year over any 3 year period Actual rolling 3 year CAGR The percentages quoted reflect the rolling Compound Annual Growth Rate (CAGR) since 1 April 2011 assuming an opening NAV of the R16.50 Rights Offer Price. 10 10 Unaudited results for the six months ended 30 September 2013
  11. 11. Unaudited NAV at 30 September 2013 Rolling CAGR: reported NAV and ordinary share dividend NAV per share (R) 40% 30% 40.00 23.4% 22.4% 24.8% 24.3% 25.6% 27.6% 26.5% 26.4% 26.7% 30.00 20% 20.00 15% 10% 10.00 0% Sep-11 Reported NAV per share Ordinary dividend Return per share Dec-11 Mar-12 Jun-12 R18.33 R19.21 R20.59 R21.66 - - - - R18.33 R19.21 R20.59 R21.66 Sep-12 R23.01 Dec-12 Mar-13 Jun-13 R24.70 R26.64 R27.86 R0.21 R0.21 R0.21 R0.21 R23.22 R24.91 R26.85 R28.07 (1) Sep-13 R29.17 (2) R0.47 R29.64 Reported NAV per share Performance benchmark: NAV CAGR >15% per year over any 3 year period Reported NAV and ordinary dividend CAGR (1) R0.2059 is the FY 2012 dividend of 1% of Mar-2012 NAV of R20.59 (2) R0.4723 is the aggregate of FY 2012 dividend and FY 2013 dividend (1% of Mar-2013 NAV of R26.64) 11 11 Unaudited results for the six months ended 30 September 2013
  12. 12. Assets and % weighting to 30 Sept 2013 R'm 18 000 16,964 16,107 3 15,141 16 000 3 9 14,106 3 9 13,176 4 9 6 12,348 4 10 4 10 14 000 11,794 12 000 10 000 10,310 9,789 10,512 6 000 4 11 8 12 15 16 13 8 000 10,964 16 12 12 10 11 7 11 11 10 11 11 10 10 14 11 12 10 8 10 9 9 10 10 8 60 4 000 2 000 10 9 9 12 10 9 7 7 61 60 59 59 51 50 55 52 57 57 Mar-11 (1) Jun-11 R16.50 R17.80 Pepkor (1) NAV Sep-11 Dec-11 R18.33 R19.21 Premier Group Foods Mar-12 R20.59 Iceland Foods Jun-12 R21.66 Sep-12 Dec-12 Mar-13 Jun-13 R23.01 R24.70 R26.64 R27.86 Other investments (2) Loan receivable Sep-13 R29.17 Cash per share investments includes property and equipment and accounts receivable balances (2) Other 12 12 Unaudited results for the six months ended 30 September 2013
  13. 13. Portfolio performance review 13 13 Unaudited results for the six months ended 30 September 2013
  14. 14. Brait valuation multiples EV/EBITDA multiples to 30 September 2013 % Discount Brait valuation multiple Peer group average multiple Multiple Discount Pepkor Pepkor peer group Mr Price Truworths The Foschini Group Brait’s valuation of Pepkor is based on an 8.0x EV/EBITDA multiple Premier Group peer group Tiger Brands 16.0 x 60% 14.0 x 12.0 x 10.0 x 35% 39% 42% 45% 48% 34% 32% 34% 15% 8.0 x 6.0 x 0% Mar-12 Jun-12 Sep-12 12-Dec Mar-13 Jun-13 Sep-13 Premier Group 60% 13.0 x 11.0 x Pioneer Foods 9.0 x Brait’s valuation of Premier Group is based on a 6.5x EV/EBITDA multiple 30% 46% 50% 52% 30% 7.0 x 36% 34% 45% 44% 35% 15% 0% 5.0 x Mar-12 Jun-12 Sep-12 12-Dec Mar-13 Jun-13 Sep-13 Iceland Foods Iceland Foods peer group 8.0 x 15% 14% Tesco 14% 10% Sainsbury 7.0 x Brait’s valuation of Iceland Foods is based on a 6.5x EV/EBITDA multiple 5% 6% WM Morrison 2% 6.0 x Mar-12 Jun-12 4% 4% Sep-12 12-Dec 2% Mar-13 Jun-13 0% Sep-13 14 14 Unaudited results for the six months ended 30 September 2013
  15. 15. Pepkor 15 15 Unaudited results for the six months ended 30 September 2013
  16. 16. Pepkor Business overview • Founded in 1965 and headquartered in Cape Town, Pepkor is a leading South African based retailer selling mainly clothing, footwear, house wares, personal accessories, cellular products and financial services • Retail interests focused on the cash retail value market and exposure to high-growth LSM 1-6 categories, operating in 14 countries across 3 continents: Region Retailer 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 • Employs approximately 33,000 people • Core businesses: Pep and Ackermans • Extensive store network operating over 3,400 retail outlets representing 11 main retail brands • Other retail support businesses: clothing factory (RSA); sourcing office (China); cellular wholesale distributor (RSA); an unsecured loan origination business and group services (Credit, IT, Property, Treasury, Logistics and QA) 16 16 Unaudited results for the six months ended 30 September 2013
  17. 17. Pepkor Retail environment Pepkor’s perspective Geography South Africa South Africa Product offering aimed at lower LSM’s (c.80% of Pep customers LSM 1-6) Lower growth rates Consumer under pressure – impact of unsecured lending Value offering – customers trade down Pressure on growth in government wage bill Sizeable footprint allows for increased scale Pepkor’s non-RSA footprint expanding Pressure on growth in government grants Defensive nature of product offering Rand weakness Largely hedged Rest of Africa Rest of Africa Exciting opportunity but challenging environment Higher growth prospects. Only achieve enhanced margins once critical mass achieved Each country presents its own set of hurdles to overcome Demonstrated the ability to work in Africa – currently operating in 10 countries Need a sizeable presence in each country to get a proper read Nigeria still early days but trading well in challenging environment Currency volatility Easier to cross geographies as a cash rather than credit retailer Eastern Europe Pepco Exciting expansion opportunity off established base in Poland Aggressive roll out of stores in Poland continues Language and currency changes Entry into Slovakia has gone well – expansion into Czech Republic in progress Currency volatility Polish Zloty has strengthened against ZAR by c.14% FY 2013 v FY 2012 Pepkor South East Asia Australia Challenging retail environment Strong Australian led management team to effect transformation Favourably located relative to other South East Asian emerging markets Margin improvement will have a substantial positive impact on overall group margin Currency volatility Australian dollar has strengthened against ZAR by c.13% FY 2013 v FY 2012 17 17 Unaudited results for the six months ended 30 September 2013
  18. 18. Pepkor FY June 2013 results at a glance (R’m) Sales 2013 33,592 EBITDA (1) 3,757 % Margin 11.2% EBIT (1) 3,051 % Margin EBT (1) % Margin Tax charge (2) 9.1% 2,780 8.3% 909 Effective % of EBT 32.7% PAT (1) 1,871 % Margin 5.6% Growth 27% 25% 27% 31% 47% 24% 2012 26,406 3,005 11.4% 2,410 9.1% 2,130 8.1% 618 29.0% 1,512 5.7% Commentary • Competitive pricing; improvement in stock availability; cash retailer; wide access to low income mass market • Expanding footprint (3) FY 2013: Retail space up 15% (1,608,000m2) Retail outlets up 8% (3,418 stores) • Continued focus on operating efficiencies • SA and Eastern Europe operating margin expansion • Function of higher profitability • Increased depreciation charge in line with capex • Function of increased profitability and reduced net interest charge: FY 2013: R271 million (FY 2012: R280 million) • Mix of earnings across geographies and respective tax rates • FY 2013 effective 33% rate a function of the write-off of certain deferred tax assets • Result of above (1) FY 2013 excludes R43m extraordinary items (2012: excludes R227m deal related costs) charge for 2012 excludes R66m STC charge on dividends paid to shareholders pre Brait acquisition Includes acquisition of Harris Scarfe (R2.4bn sales for 10 months included in FY 2013) (2) Tax (3) 18 18 Unaudited results for the six months ended 30 September 2013
  19. 19. Pepkor FY June 2013 results at a glance (R’m) 2013 Growth Cash from operations 3,754 % EBITDA 99.9% 13% Capex 1,330 63% 817 Operating cash flow post capex 2,424 64.5% (3%) 2,503 % EBITDA 2012 Commentary 3,320 • Net effect of increased profitability and cash sales (>90% of total) offset by strategic investment in inventory 110.5% 83.3% • 275 stores opened in FY 2013 vs 110 in FY 2012 • Function of above Tax paid 897 (5%) 945 • Mix of earnings across geographies Interest paid 319 (7%) 343 • Reduced net interest charge 1,208 (1%) 1,215 Operating cash flow post capex, tax and interest paid % EBITDA Group investments made: - equity - loan books 32.2% • Aggregate of above 40.4% 1,669 99% 837 • Aggregate of below 628 114% 293 • Acquisition of Harris Scarfe and Flash 1,041 91% 544 • Funding provided to Capfin and Tenacity 19 19 Unaudited results for the six months ended 30 September 2013
  20. 20. Pepkor Pep (includes BLNS countries) Sales R14.4 bn sales; YOY up 15.8% # of stores 1,578 (101 opened in year) More competitive pricing (97% of product priced =< competition) and improved stock availability Ackermans (includes BLNS countries) Sales R5.3 (1) bn sales; YOY up 11.0% # of stores 394 (1) (18 opened in year, 7 closed) Increase in credit sales (Ackermans card) contribution from 9.6% to 15% of sales Pep Africa Sales R1.3 bn; YOY up 31.7% # of stores Highlights 152 (25 opened in year) (2) Dedicated Africa team leading expansion plan FY 2013 Pepco (Poland) (52 weeks trading vs 53 weeks in PY) Sales R2.1 bn; YOY up 56.2% (3) # of stores 451 stores (92 opened in year, of which 14 opened in Slovakia from February) Aggressive store roll out program and improved stock availability Pepkor South East Asia (4) Sales R7.2bn; YOY up 62.2% # of stores 276 stores (17 opened; acquired 49 Harris Scarfe and 5 The Store) following Harris Scarfe acquisition (10 months sales of R2.4bn included) New executive team in place to lead region through its transformation. Harris Scarfe integration complete Macro conditions remain challenging (1) Amounts per “Analysis” slide reflect aggregate of Ackermans, Shoe City and JayJays Africa stores quoted excluding Zimbabwe which is undergoing a restructure and consolidation process Pepco sales YOY includes c.14% currency (Zloty) gain (4) Pepkor South East Asia sales YOY includes c.13% currency (AUD) gain (5) Total for stores opened discussed above is 253. Including Dunns (15 opened) and John Craig (7 opened) gives 275 openings for year (2) Pep (3) 20 Unaudited results for the six months ended 30 September 2013 20
  21. 21. Pepkor Unsecured loan book Update • Pepkor’s existing unsecured loan business (Capfin) ceased the granting of new loans in September 2013 Book c.R1bn in process of being collected • Southern View Finance (“SVF”) has acquired the right to use the Pepkor footprint to originate unsecured loans for its own account Average loan term 3 months; average loan size c. R3,000 In return Pepkor will receive an origination fee • Brait will own c. 37% of SVF • Brait will report SVF as a separate platform investment in its March 2014 results 21 21 Unaudited results for the six months ended 30 September 2013
  22. 22. Pepkor Growth statistics Sales and EBITDA growth Footprint growth EBITDA Sales 4,000 35,000 Retail space ('000m2) No. of stores 1,700 3,500 3,500 4,000 1,600 30,000 3,000 3,000 1,500 25,000 2,500 2,500 1,400 20,000 2,000 2,000 15,000 1,500 1,300 1,500 10,000 1,000 1,200 1,000 5,000 500 1,100 500 0 2009 2010 2011 2012 - 2013 1,000 2009 R’bn EBITDA Sales 2009 (1) 1,286 18,867 2010 2011 2012 2,547 3,005 3,757 20,212 22,562 26,406 33,592 2011 2012 2009 2010 2011 2012 2013 2,763 2,846 3,046 3,156 3,418 Retail space 1,260 1,294 1,356 1,397 1,608 5 year CAGR 5 year CAGR EBITDA 15.8% # of stores 5.3% Sales (1) 2013 # of stores 2013 2,502 (1) 2010 15.2% Retail space 6.0% EBITDA in 2010 and 2009 normalised for foreign exchange hedging contracts over the 24-month trading period was R2,037m and R1,754m respectively 22 22 Unaudited results for the six months ended 30 September 2013
  23. 23. Pepkor Analysis No. of stores Sales R’m Jun 2012 Pepkor Group Jun 2013 Increase 26,406 (1) 33,592 27% # 14 376 15 000 Jun 2012 Pepkor Group Jun 2013 Increase 3,156 (1) 3,418 8% 2 000 12 414 1 500 1 578 1 477 10 000 7 171 5 059 5 000 1 000 5 573 539 529 4 422 2 148 1 375 995 359 500 205 1 310 Jun 2012 Jun 2012 Jun 2013 (2) Pep (3) Ackermans South East Asia Pepco Pep Africa Pep (2) Ackermans 246 Jun 2012 Pepkor Group Jun 2013 Increase 1,397 (1) Jun 2013 (3) South East Asia Pepco Pep Africa Pep footprint Retail space ‘000m2 1,608 15% No. of stores Jun 2012 800 No. of stores Jun 2013 1,308 1,403 Pep (RSA) Change # % 95 7.3% 3.6% 632 602 Pep (BLNS) 339 339 171 115 81 101 6.8% 127 152 25 19.7% Power Sales (4) 84 6 1,578 153 94 (59) (38.6%) Total Pep Africa 146 175 1,477 Pep Africa 313 169 Total “Pep” 600 200 276 0 - 400 451 280 280 246 (34) (12.1%) 1,757 1,824 67 3.8% Jun 2012 Jun 2013 (2) Pep (1) (2) (3) Ackermans Total (3) South East Asia Pepco Pep Africa Pepkor Group totals include Dunns and John Craig As shown in previous Brait results presentations, Ackermans is presented including Shoe City and JayJays (4) Power Sales (operates in Zimbabwe) is in the process of restructuring South East Asia FY2013 increase largely attributable to Harris Scarfe acquisition 23 Unaudited results for the six months ended 30 September 2013 23
  24. 24. Pepkor Pepkor’s ‘Rest of Africa’ footprint (excluding Zimbabwe) Pep Africa (1) June 2012 June 2013 127 stores Zambia Mozambique 17% 152 stores Angola 13% 21% 31% • 22% Nigeria 22% 25% 25 stores opened in year (20% increase); of which Nigeria 15 and Angola 8 On track with 3 year store growth target to exceed 15% CAGR on June 2011’s 118 stores 272 stores 259 stores BLNS countries • 11% 2% 35% Malawi Commentary # of stores # of stores Pep BLNS Pep Ackermans BLNS Ackermans Shoe City BN Shoe City 6 Shoe City 6 JayJays N JayJays 2 JayJays 2 Dunns BLNS Total footprint 169 175 Pep Dunns (2) Total of 38 stores opened during FY2013 (9.8% increase) 54 424 stores 386 stores Zambia 7% 13 stores opened in year (5% increase) all in Namibia 35 Dunns 50 • • Ackermans 32 7% 12% 11% Mozambique Malawi 8% 8% Angola 26% 25% 8% 7% Nigeria 5% 6% Botswana Lesotho 4% 1% 10% 9% Namibia 25% 22% Swaziland (1) Entered (2) Total Africa in 1995 ‘Rest of Africa’ footprint shown excludes Power Sales (Zimbabwe - founded there in 1978) which is undergoing a restructure and store consolidation process (94 stores FY 2013) 24 Unaudited results for the six months ended 30 September 2013 24
  25. 25. Pepkor Operations based on geography June 2012 June 2013 7% 3,156 11% Commentary 8% 3,418 13% 9% 73% 7% • Group increased by 262 stores (8%); which is split RSA/non-RSA 51%/49% • Eastern Europe fastest growing region with 92 stores added • No. of stores Group increased by R7.2 bn (27%); which is split RSA/non-RSA: 45%/55% • Australia increase primarily due to Harris Scarfe (HS) acquisition 72% R26.4 bn 16% R33.6 bn 21% 5% Turnover 7% 4% 75% 4% 68% 3% R3.0 bn 6% 2% Group increased by R753m (25%); which is split RSA/non-RSA: 74%/26% 5% R3.8 bn 7% 11.2% 11.4% 13.5% 14.1% 11.7% • 7.0% 6.5% 2.4% 2.4% RSA and BLNS Eastern Europe • • 12.3% Rest of Africa 61% up R173m 70% up Rest of Africa 86% 21% up R265m Australia 89% R3,228m Eastern Europe EBITDA % margin RSA & BLNS 2% EBITDA R92m 42% up RSA and Eastern Europe good margin expansion Rest of Africa investment for the future Australia opportunity for margin improvement Australia 25 25 Unaudited results for the six months ended 30 September 2013
  26. 26. Pepkor Brait’s valuation Unaudited 30-Sep-13 30-Sep-12 R'm R'm Audited 31-Mar-13 R'm Maintainable EBITDA 4,023 3,154 3,714 EBITDA multiple 8.0 x 8.0 x 8.0 x Enterprise value 32,184 25,230 29,710 Less: net debt (1,996) (1,650) (1,958) Equity value 30,188 23,580 27,752 37% 24% 13% 10,154 7,250 2,904 7,731 5,658 2,073 9,278 6,658 2,620 26.1% 7,887 (2,067) 5,820 2,904 6,154 (2,000) 4,154 2,073 7,244 (1,994) 5,250 2,620 Fair value of investment in Pepkor Direct shareholding in Pepkor Indirect shareholding in Pepkor through SPV (1) (2) Indirect investment through SPV • Shareholding in Pepkor • SPV gearing • NAV of SPV Brait's attributable share of SPV (1) 49.9% (2) The Pepkor dividend received in March 2013 by the SPV (R90 million) reduced the SPV gearing 26 26 Unaudited results for the six months ended 30 September 2013
  27. 27. Pepkor Net debt reconciliation 30-Jun-13 R'm 30-Jun-12 R'm Debt 4,721 3,766 Cash (1,381) (1,310) 3,340 2,456 (1,344) (806) (680) (806) (664) - 1,996 1,650 Totals shown in balance sheet: Net debt Adjustments recognised in Brait’s valuation: Normalisation of working capital Tenacity loan book (1) (2) Net debt per Brait’s valuation (3) (1) (2) (3) The 30th of June for both years fell on the weekend, which meant month-end creditors were settled prior to month-end (on the last business day), rather than the normal post month-end policy. The adjustment is to normalise the closing cash position and maintain a long term working capital profile for the business The Tenacity loan book arises from Ackermans credit sales. The adjustment is to recognise this loan book at a 1x price-to-book value. Tenacity loan book EBITDA has been removed in arriving at maintainable EBITDA considered in Brait’s valuation FY2013 level a result of strong cash generation absorbed by group investments made, investment in inventory and increased capex 27 27 Unaudited results for the six months ended 30 September 2013
  28. 28. Pepkor Attractions to Brait Attractions Demonstrated through Alignment • Strong, aligned shareholder base (Titan, Brait and management) Management team • Deep bench with very experienced exco team Market leader • Pep and Ackermans are two of the most recognised retail brands in South Africa • Pepco retail footprint one of the largest in the region Clear strategy • Pep – discount market positioning and peri-urban focus • Ackermans – value based market positioning • Expansion into Africa and Eastern Europe Well positioned • Distribution platform – opportunity for other product sets • Sizeable footprint and reach – not easy to build / replicate • Operating leverage – ability to expand operating margins and improve sales densities Cash consumer • Well exposed to cash consumer in high growth LSM 1 – 6 categories Cash flow generative • Strong cash flow generation from operations – average over past three years: - pre-capex: 101% of EBITDA - post-capex: 69% of EBITDA - post-capex, interest and tax: 38% of EBITDA 28 28 Unaudited results for the six months ended 30 September 2013
  29. 29. Premier Group 29 29 Unaudited results for the six months ended 30 September 2013
  30. 30. Premier Group Business overview • A leading South African staple foods producer • Produces, distributes and sells wheat, maize, bread products and confectionery • Founded in 1882 in Port Elizabeth • Leading national brands: Snowflake (flour), Iwisa No 1 (maize meal), Blue Ribbon (bread) and Manhattan (sugar confectionery) • Operates 11 bakeries, 4 wheat mills, 1 maize mill, 1 sugar confectionery plant and 15 distribution depots in South Africa, Swaziland and Lesotho • Significant exposure to the informal market which accounts for over 60% of bread sales • In excess of 22,000 deliveries to customers daily with a fleet of 450 bakery trucks exploiting a national footprint in milling distribution • Employs over 6,000 people 30 30 Unaudited results for the six months ended 30 September 2013
  31. 31. Premier Group FY 2013 results at a glance (R’m) 2013 Growth (1) 2012 Commentary • Net revenue (2) 6,272 EBITDA (3) 422 % Margin 6.7% (3) 336 % Margin 9% 46% 5.4% In contrast to a market trend of declining milling and baking volumes, Premier was able to maintain volumes at similar levels to the previous year • Cost control discipline, margin management and operational efficiencies (such as increased bread volumes, whilst reducing fleet size) have contributed to margin expansion Milling margins were under pressure as a result of a reduction in consumer disposable income Investment has lead to operational efficiencies with a resultant improvement in margins – opportunity for further enhancement 5,731 289 5.0% • EBIT Cash from operations (4) 397 % EBITDA 378% 154% 194 n/m 46.0% 83 • • Function of enhanced operational performance and favourable movement in working capital • • In year 2 of a 5 year asset refresh / expansion programme Major projects include new bakery lines at Durban and Cape Town bakery sites, technology upgrades to all bakeries and warehouse extensions at various mills • Aggregate of above 28.7% 203 Cash from operations post capex 210 3.7% 94.1% Capex % EBITDA 60% 80 3 1.0% (1) Following the change in year-end from April to June, the audited results for June 2012 covered a 14 month period. For comparability, pro forma results for the 12 months ended 30 June 2012 have been shown revenue is after discounts, trade spend and rebates (3) Adjusted for non recurring gains and losses (4) Cash from operations post working capital and tax paid, before non-recurring gains and losses and interest paid (2) Net 31 Unaudited results for the six months ended 30 September 2013 31
  32. 32. Premier Group Trading update (R’m) Q1 2014 Growth Q1 2013 Net revenue 1,731 6% 1,627 EBITDA % margin 127 7.3% 44% 88 5.4% EBIT % margin 97 5.6% 94% 50 3.1% • Trading for the first quarter is ahead of expectation. Compared to the prior period, bread volumes are up 4%, whilst margin management has resulted in some volume decline in maize (7%) and wheat (12%) • The planned closure of the Thaba Nchu wheat mill reduced the Group’s overall supply capacity to better balance with demand and improve margin management 32 32 Unaudited results for the six months ended 30 September 2013
  33. 33. Premier Group Formal retail market overview – Nielsen total basket report Bread % % 8 6 4.9 4.9 6 4 4.4 4 2 2 0 3.0 2.7 0 -2 -2 -4 -4 -3.5 -6 12MM Flour 8 6.0 -5.0 -6 -5.5 -3.9 -5.3 -5.9 -8 -8 Volume Volume Value Value 6MM 3MM Maize Cake Mixes % % 4 3.7 3.3 15 10 2 12.8 11.5 8.2 10.2 6.8 5 0.8 1.7 0.1 0 0 -5 -1.2 -2 Volume Value -2.3 -4 Volume Value Source: August 2013 data 33 Unaudited results for the six months ended 30 September 2013 33
  34. 34. Premier Group Manufacturer’s share of formal retail market based on sales values Bread R’m 4,000 R’m 1,200 R3,650 R3,479 3,000 Flour R1,074 R1,042 800 2,000 36% 1,000 36% 31% 31% 20% 20% 37% 38% 400 21% 13% - 25% 20% 24% 11% MAT LY Bread MAT TY Premier Group Tiger Brands MAT LY Pioneer Foods Maize R’m Premier Group Tiger Brands Pioneer Foods Spar Cake Mixes R’m 2,000 300 R1,716 R1,661 Flour MAT TY R226 1,500 R200 200 1,000 500 54% 32% 28% 36% 26% 17% 7% 16% 7% 9% Maize Premier Group Tiger Brands 26% 8% 21% 4% 5% MAT LY 47% 100 0 MAT TY Pioneer Foods Spar MAT LY Ruto Mills Note: % shown in each chart reflects manufacturer’s share of respective market Cake Mixes Premier Group MAT TY Tiger Brands Pioneer Foods Source: Nielsen Total Basket Report August 2013 data 34 Unaudited results for the six months ended 30 September 2013 34
  35. 35. Premier Group Progress on five year strategic plan Premier’s growth platform is based on 3 pillars: 1 Optimising milling and baking operations bread quality winning team leadership 2 Value enhancing FMCG acquisitions 3 Sensible African expansion 35 35 Unaudited results for the six months ended 30 September 2013
  36. 36. Premier Group Pillar 1 – Optimise Milling and Baking operations Progress on people agenda: • • • • • Alignment and understanding of company strategy achieved Scorecards and performance management in place Retention (recognition and rewards) activities instituted Leadership programme and succession planning implemented Attracting the right people Investment in assets: • • • • • • Long term capex plan of R590 million of which over R100 million has been invested to date Minimum targeted return for expansionary capex projects is a 10 year IRR of 25% In FY13 invested in bakeries to create an enabling environment for the business to compete in the market place The goal was to improved consistency of bread quality which facilitated the re-launch of Blue Ribbon to restore pricing power of the brand Average bread returns and production damages have reduced by 20% with scope for further improvement to target ratios Pricing and efficiencies have translated into improved EBITDA 36 36 Unaudited results for the six months ended 30 September 2013
  37. 37. Premier Group Pillar 1 – Optimise Milling and Baking operations Blue Ribbon bread re-launched in August 2013 37 37 Unaudited results for the six months ended 30 September 2013
  38. 38. Premier Group Pillar 2 – Value enhancing FMCG acquisitions • Aim to convert Premier from a focused staple food producer to a FMCG branded business • Acquisitions are focused on higher margin products which are sold through our existing customer base (i.e. the large retail chains, wholesalers in South Africa and informal traders) To date: Status Raises overall EBITDA margin? Acquired “Manhattan”, “Super C” and “Romantics” sugar confectionary brands and manufacturing site in Isando • Completed on 7 May 2013 • Business has been integrated Yes Acquired 5 independent bakeries in the Eastern Cape operating in Port Elizabeth, East London and Mthata that trade as “Star Bakeries” and “Mister Bread” • Regulatory approval received • Completion scheduled for 1 Nov 2013 Yes Acquired 100% of shares in Lil-lets Group Limited which owns a leading international feminine hygiene brand with operations in South Africa and the United Kingdom • Signed the sale agreement which is subject to SA regulatory approval. • Anticipated conclusion prior to 31 Jan 2014 Yes • Through these acquisitions Premier has invested - or has committed to invest - c.R1.5bn at an average purchase price multiple of 6.75x (EV / EBITDA) • Strong pipeline of additional FMCG targets which are at various stages of discussion 38 38 Unaudited results for the six months ended 30 September 2013
  39. 39. Premier Group Pillar 2 – Value enhancing FMCG acquisitions Manhattan’s is currently represented in two of the fastest growing categories in the sweets market % 30 20 10 0 -10 -20 34% -30 16% 12% 12% 7% 7% Packages Growth Marshmallows % 3% 3% 3% 1% 1% 0% Market Share % Value Growth - 12MM TY Gums and Jellies % 80 0% 1% 60 63 60 60 40 39 40 34 31 40 23 19 20 5 15 9 20 15 8 6 0 7 11 8 7 0 MAT LY Manhattan MAT TY Mmmallows Mr Sweet Chart‘s reflect sales value share for the brand MAT LY Other Manhattan Maynards MAT TY Jelly Tots Mr Sweet Other Source: Nielsen Total Basket Report August 2013 data 39 Unaudited results for the six months ended 30 September 2013 39
  40. 40. Premier Group Pillar 3 – Sensible African expansion Update • Since 2012 the team has visited 8 countries to explore investment opportunities in milling and baking, as well as other FMCG opportunities • Currently working on 2 live investment opportunities • Signed a sale and purchase agreement for a small, complementary acquisition in a neighbouring country which is expected to complete in FY14 40 40 Unaudited results for the six months ended 30 September 2013
  41. 41. Premier Group Brait’s valuation Unaudited 30-Sep-13 30-Sep-12 R'm R'm (1) Maintainable EBITDA Audited 31-Mar-13 R'm 454 410 421 6.5 x EBITDA multiple 6.5x 6.5x Enterprise value 2,953 2,665 2,738 Less: net debt (2) (1,353) (1,150) (1,232) 1,600 1,515 1,506 80.0% 65.4% 79.9% 1,885 1,280 594 11 1,253 992 247 14 1,463 1,204 247 12 Equity value Brait’s economic shareholding in Premier Group (3) Fair value of Brait’s investment in Premier Group Equity value Shareholder loan claims (4) Financial derivative asset (5) (1) (2) Maintainable earnings FY13 includes pro forma EBITDA for the Manhattan and Super C brands acquired Net debt includes Brait shareholder loan claims and the fair value of the minority interest in Premier Swaziland Bakeries (3) Increase in economic shareholding due to exercise of option agreements with former shareholders of Premier Group Note that during H1 FY13, new management subscribed for a 5% shareholding (4) Increase in shareholder loan Mar-13 to Sep-13 to fund acquisitive growth Note that Premier Group has serviced monthly interest since July-12 (R32m received to date) Fair value of remaining option agreements held with former Premier Group shareholders. In October 2013, further options were exercised resulting in Brait increasing its shareholding to 84.5%. Exercise of the remaining option agreements over their 2 year vesting period (price referenced to initial acquisition value + interest at an effective fixed rate of 5.5%) will increase Brait’s shareholding to 95% (5) 41 41 Unaudited results for the six months ended 30 September 2013
  42. 42. Premier Group Attractions to Brait Attractions Demonstrated through Alignment • Shareholders are Brait and management Management team • Depth and significant industry experience Market leader • Market leading staple food brands • Includes some of the oldest brands in the country Clear strategy • Target acquisitions in a wide range of food categories in which Premier Group doesn’t currently have an offering • Investing in a number of internal projects with attractive returns Well positioned • Distribution platform – opportunity for other product sets • Sizeable footprint and reach – not easy to build / replicate • Operating leverage – ability to expand margins and improve production efficiencies Cash consumer • Well exposed to cash consumer in high growth LSM 1 – 6 categories Cash flow generative • Strong cash flow characteristics due to nature of the product basket that is focussed on cash sales into the informal market 42 42 Unaudited results for the six months ended 30 September 2013
  43. 43. Iceland Foods 43 43 Unaudited results for the six months ended 30 September 2013
  44. 44. Iceland Foods Business overview • Founded in 1970 by Malcolm Walker, current CEO • UK based national food retailer focused on frozen food 13% share of the UK frozen market 2,500 SKU’s Revenue split fairly equally between frozen, chilled & grocery • Key attractions Quality, value and convenience Market leading innovation on frozen food Sizeable (2/3rd) private label offering driving superior margin Every day low prices Round sum pricing i.e. £1, £2, £3 Home Delivery – spend £25 or more and get free home delivery; average spend £52 • Secondary shopping destination – not a direct competitor to Big 4 but aim to take share of customer wallet • Extensive footprint across the UK 805 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 100 lines to South Africa • Over 24,000 employees • Ranked 1st (2012) & 2nd (2013) in Sunday Times “Best Big Company to Work For” 44 44 Unaudited results for the six months ended 30 September 2013
  45. 45. Iceland Foods Trading update Market Conditions and Competitor Overview • • • • Market remains tough but growth is above inflation Customers are trading down in the products they are buying. Continuing to chase value / price Iceland’s proposition remains strong, offering a constant flow of private label new product development Anticipated increase in advertising spend in run up to Christmas, especially from majors as they try to arrest market share declines • Discounters focused on lowest price e.g. Aldi’s “Swap and Save” campaign Trading update YTD (to 14 September 2013) • Iceland has increased YOY sales and has performed better than the market. Iceland is gaining from the Big 4, but losing to the hard-core discounters (Aldi and Lidl) as well as Waitrose • Sales up 6.2% YOY • LFLs up 0.8% up year to date characterised by increased customer footfall, partly offset by reduced average customer spend and some cannibalisation from the accelerated opening of new stores • 17 new stores were opened in the period (ahead of budget and prior year) which are trading ahead of budget • International growth has been slower than anticipated • EBITDA is in line with last year • Strong free cash flow (after capex) generation leading to a reduction in net debt and corresponding increase in equity value • Further debt repricing exercise in June 2013 50bps margin reduction (100 bps aggregate reduction to date) 45 45 Unaudited results for the six months ended 30 September 2013
  46. 46. Iceland Foods Marketing update and other initiatives Marketing • Marketing initiatives planned for next few months • Autumn TV advertising campaign • “Just haven’t met you yet” – Michael Bublé • Iceland Bingo • Premium quality “Posh grub” range launched to expand customer appeal • New “Deliciously affordable” range supported by press coverage • Continuing “I’m a Celebrity" sponsorship – Iceland’s 8th year • Christmas – TV, Door Drops (focussing on innovation and quality), Bonus Card incentives Other initiatives • Iceland rebrand – recently launched new packaging and improved quality with promising early signs • Innovation ramped up in Frozen to develop new products • Iceland continues to progress outside the UK including Czech Republic, Middle East and South Africa (via Shoprite) • Home Delivery remains successful – up 8.4% YOY to 18% of total sales • Online platform – over 150 participating stores (280 in near term) currently delivering over £250k per week 46 46 Unaudited results for the six months ended 30 September 2013
  47. 47. Iceland Foods Brait’s valuation Unaudited 30-Sep-13 30-Sep-12 £'m £'m Maintainable EBITDA Audited 31-Mar-13 £'m 228 228 226 EBITDA multiple 6.5 x 6.5x 6.5x Enterprise value 1,484 1,482 1,469 Less: net debt (893) (992) (922) Equity value 591 490 547 18.7% 18.7% 18.7% 111.4 110.3 1.1 92.5 91.5 1.0 103.2 102.2 1.0 R16.23 R13.44 R14.04 R1,808 R1,245 R1,449 Brait’s shareholding in Iceland Foods Fair value of Brait’s investment in Iceland Foods (£’m) Equity value (1) Loan claim Closing ZAR / £ exchange rate Carrying value (R'm) Exchange rate impact since acquisition (R’m) (2) R476 26% R137 R215 11% 15% ` (1) (2) Cost of Brait’s investment in Iceland Foods was £81.2m (R971m) Iceland Foods was acquired on 9 March 2012 (exchange rate of R11.96). The amount shown for exchange rate impact since acquisition is included in Brait’s ZAR carrying value and expressed as a % of total 47 47 Unaudited results for the six months ended 30 September 2013
  48. 48. Iceland Foods Attractions to Brait Demonstrated through Attractions • Alignment Strong, experienced management team aligned with Brait through equity ownership (management hold 43%) largest holding by any shareholder is by the founder at 19.9% quality investment partners with significant international retail experience Management team • • Entrepreneurial management style and positive culture permeates throughout the organisation Since their return in 2006, the management team has demonstrated its ability to deliver significant value creation through earnings growth, cash flow conversion and loyalty from customers and employees Market leader • • Market leader in frozen foods that focuses on the cash consumer by providing value for money Quality and innovative private label products at attractive prices, driving superior margin Well positioned • • • Extensive footprint of 805 Iceland Foods stores nationwide Well positioned to perform in current and medium-term economic climate prevailing in the UK The Iceland Foods brand and services such as home delivery considered strong competitive differentiators Cash consumer • Customers are low LSM's Clear strategy • • • Targeted procurement strategy allows Iceland Foods to be relevant to specific brands, leveraging buying power Clear value message through round sum pricing Highly effective streamlined business model • Strong cash flow generation from operations – average over past three years: Pre capex: 102% of EBITDA Post capex: 89% of EBITDA Post capex, tax and interest: 63% of EBITDA • Investment base case achieves Brait's investment target return of 25% IRR assuming low growth Cash flow generative IRR >25% 48 48 Unaudited results for the six months ended 30 September 2013
  49. 49. Rest of investment portfolio 49 49 Unaudited results for the six months ended 30 September 2013
  50. 50. Rest of investment portfolio Unaudited 30 Sept 2013 Carrying value Other investments (1) 959 % of Total Assets 6% Audited 30 Sept 2012 Carrying value % of Total Assets 1,021 8% 31 Mar 2013 Carrying value 924 % of Total Assets 6% Commentary on movements from March 2013 to September 2013: • Proceeds from realisations amounted to R78 million (2) • Increase in carrying value primarily attributable to investment in DGB (1) Other investments includes PE Fund investments (2) R73 million was included in accounts receivable at 31 March 2013 50 50 Unaudited results for the six months ended 30 September 2013
  51. 51. Unaudited results: Six months to 30 September 2013 51 51 Unaudited results for the six months ended 30 September 2013
  52. 52. Summarised comprehensive income statement Results Unaudited Variance % Sept 2012 R’m Audited March 2013 R’m 1,256 (66) 1,190 (5) (1) 1,184 (1) 1,183 275 1,458 (6) 5 (6) (90) (3) (75) (3) 162 11 1,331 (63) 1,268 (50) 1.218 (4) 1,214 105 1,319 3,201 (124) 3,077 (59) (5) 3,013 (1) 3,012 163 3,175 1,183 (89) 1,094 (3) (10) 1,214 1,214 3,012 (66) (20) 2,926 215 216 514 509 506 (10) (11) 1 1 1 240 242 510 505 502 579 581 510 505 504 Sept 2013 R’m Income Operating expenses Profit from operations Finance costs (1) Indirect taxation Profit before taxation Direct taxation Profit for the period Translation adjustments (2) Comprehensive income for the period Profit for the period (3) Preference dividend declared 24 October 2013 Preference dividend paid 24 June 2013 Preference dividend paid 3 December 2012 Headline earnings Normalised headline earnings per share (cents) Headline earnings per share (cents) Ordinary shares in issue (‘m) Ordinary shares outstanding (‘m) Weighted average shares in issue (‘m) (4) (1) The indirect tax relates to VAT not claimed as a result of the proportion of exempt dividends to total income Effect of exchange rate movement on the investment in Iceland Foods is the primary component Preference dividend declared for the six months ended 30 September 2013 (4) Normalised HEPS is headline earnings for the period divided by ordinary shares outstanding at period-end (2) (3) 52 Unaudited results for the six months ended 30 September 2013 52
  53. 53. Analysis of income Results Unaudited Sept 2013 R’m Audited % Sept 2012 R’m March 2013 R’m 1,092 (5) 1,145 2,713 Interest 99 6 93 183 Fees 33 10 30 62 31 (9) 34 73 1 (97) 29 170 1,256 (6) 1,331 3,201 275 162 105 163 1,531 7 1,436 3,364 Investment gains Foreign exchange gains (1) Dividends and other income Total income Translation adjustments (1) Total income for the period Variance (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 in comprehensive income 53 53 Unaudited results for the six months ended 30 September 2013
  54. 54. Analysis of expenses Results Unaudited Sept 2013 Audited Sept 2012 March 2013 R’m R’m R’m Variance % 42 5 40 80 Non-executive directors’ fees 4 33 3 7 Audit and professional fees 6 (14) 7 13 Travel & accommodation 3 50 2 4 Office related costs 6 - 6 12 Depreciation 2 100 1 3 Other costs 3 (25) 4 5 66 5 63 124 Staff costs Total operating expenses 54 54 Unaudited results for the six months ended 30 September 2013
  55. 55. Summarised cash flows Unaudited six months Sept 2013 R’m Investment proceeds 92 Realisation of Other Investments Interest received R’m (1) 78 14 Fees received 41 Operating expenses paid (68) Interest paid (3) Taxation paid (3) Operating cash flow (excluding purchase of investments) Purchase of investments (2) Premier Group 59 (376) (343) Other investments Net cash outflow used in operating activities Acquisition of property and equipment (33) (317) (1) Proceeds from issue of preference shares (net of costs) 495 Repayment of long term borrowings (52) Preference share dividend paid (66) Ordinary share dividend paid (cash election) (12) Net increase in cash and cash equivalents 47 (1) Includes R12m interest received on Premier Group loan funding (2) Loan funding provided to Premier Group for acquisitive growth 55 Unaudited results for the six months ended 30 September 2013 55
  56. 56. Analysis of cash position Results Unaudited Sept 2013 R’m Audited Sept 2012 R’m March 2013 R’m (90) Net increase/(decrease) in cash and cash equivalents 47 4 Effects of exchange rate changes on cash and cash equivalents 33 34 70 Cash and cash equivalents at beginning of period 503 523 523 Cash and cash equivalents at end of period 583 561 503 314 111 101 260 450 394 9 - 8 Comprising: ZAR cash USD cash (1) GBP cash Cash and cash equivalents 583 561 503 2,081 Available from existing undrawn gearing facilities 1,770 1,647 Available from preference share follow-on tap issue - (1) 500 500 2,664 Total cash and available facilities 2,831 2,650 USD amount (‘m) Closing exchange rate ZAR equivalent (‘m) 30 Sept 2013 25.9 R10.03 260 30 Sept 2012 54.1 R8.31 450 31 March 2013 42.6 R9.24 394 Date 56 56 Unaudited results for the six months ended 30 September 2013
  57. 57. Operating costs to AUM Performance metric: < 0.85% Sept 2013 R’m Total assets % of AUM March 2013 R'm 16,964 15,141 3,335 3,202 20,299 18,343 0.85% of AUM target cap on operating costs 173 156 Operating costs 134 % of AUM Total fee-earning AUM Total AUM • First half of year 66 • Second half of year 0.66% 124 63 68 (1) 61 64 Fee income 0.68% 0.32% 62 • First half of year 33 • Second half of year 31 (1) 32 70 0.34% 62 0.34% Net operating costs ratio after fee income 30 0.34% (1) Projected for second half of FY 2014 57 57 Unaudited results for the six months ended 30 September 2013
  58. 58. Conclusion 58 58 Unaudited results for the six months ended 30 September 2013
  59. 59. Conclusion Defensive nature well positioned in a challenging macro environment Increased geographic and currency diversification Investment portfolio Pepkor: • • • • Strong performance in South Africa from Pep and Ackermans Aggressive Eastern Europe expansion performing to plan Africa expansion on track – investment for the future Australia is an opportunity for overall group margin uplift Premier Group: • Core EBITDA significantly improved • On track with strategy to broaden brand portfolio and FMCG offering • c. R1.5bn invested to date at an average blended price multiple of 6.75x (EV/EBITDA) Iceland Foods: • Delivering on cash generation investment thesis Cash and facilities available for investment of R2.7 billion Investment vehicle 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’ 59 59 Unaudited results for the six months ended 30 September 2013
  60. 60. Question and answer session 60 60 Unaudited results for the six months ended 30 September 2013
  61. 61. APPENDICES
  62. 62. Appendices Contents • Brait: – Overview – Investment objectives – Economic objectives – Valuation policy – Treasury management • Investment portfolio: – Scale of investment portfolio – Pepkor – Premier Group – Iceland Foods – Rest of investment portfolio • Administration and contact details 62 62 Unaudited results for the six months ended 30 September 2013
  63. 63. Brait overview Brait is an investment holding company whose shares are listed on the MTF Board of the Luxembourg Stock Exchange and also on the JSE. Brait’s portfolio mostly comprises holdings in privately owned businesses operating in a range of industries Objective Achieve superior long-term capital appreciation through majority or significant minority stakes in investments across a portfolio of primarily unlisted companies, while raising capital in the most efficient manner and providing attractive cash yield through Brait preference share Investment criteria • • • • • • • • • Timeline • Target a portfolio of 5 – 6 large assets • Ability to hold investments for long timeframes (open ended) Transparency Investment size of up to R4 billion Target IRR in excess of 25% Demonstrate growth in earnings and/or strong cash flow generation Aligned and experienced management team Aligned shareholder base Currently, or has opportunity to be, the market leader in chosen segment Clear core strategy that is flexible in order to be sustainable over the long term Intimate understanding of customers / clients Relevant products • Disclosure of valuation metrics and summarised audited financial statements for all significant investments to enable investors to formulate their own valuations • Quarterly NAV reporting • Interim and year-end results presentations, with investee company management present 63 63 Unaudited results for the six months ended 30 September 2013
  64. 64. Brait overview To invest alongside proven investment team and track record • Vastly experienced and highly successful Investment Team • Actively exercise ownership while partnering management of portfolio company • Investment Team fully aligned to shareholders Access to investment opportunities previously not available • Concentrated, large exposures in successful market leading private companies • Single entry point access through Brait to underlying unlisted companies • Benefit of liquidity to shareholders at any time through the public market 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 Access to strong pipeline of current and near term investment opportunities • Proven ability to procure investments that will provide future gains Attractive cash yield through Brait Pref • In addition to capital growth, cash yield can be accessed through the Brait Pref To invest through a capital efficient structure • Minimal “cash drag” • No fee leakage • Prudent use of gearing • Alignment to above market and upper quartile returns 64 64 Unaudited results for the six months ended 30 September 2013
  65. 65. Brait’s investment objectives Rationale Objective Replicate Brait’s private equity return profile through growth in NAV Provide superior return to shareholders Invest in market leading, growth oriented, entrepreneurially managed, privately owned businesses Access to quality investments through single entry point Diversified portfolio of 5 – 6 assets Support platform assets with long term growth prospects Shareholder of reference in businesses with strong, aligned management teams, relevant products, cash generative Responsible long term shareholders help drive value Alignment of interests amongst shareholders, capital providers, investment team and investee management All focused on same goal, team oriented approach Raise efficient capital Enhance shareholder returns and retain flexibility over investment holding period Distribute excess cash to shareholders as dividends Provide superior return to shareholders Balanced disclosure Achieve effective and proactive communication with stakeholders Listed share as the vehicle Liquidity for investors 65 65 Unaudited results for the six months ended 30 September 2013
  66. 66. Brait’s economic objectives Rationale Objective Invest in quality assets with solid growth in earnings Superior NAV growth Demonstrate cash flow generation within underlying assets Solid underpin to profit growth Efficient structure Minimise cost leakages No management fees or capital participation on public capital No cost leakage Minimal cash drag on balance sheet with prudent use of investment company and portfolio gearing Efficient use of capital Access cheapest form of capital Minimise cost of capital Consistent dividend policy Certainty 66 66 Unaudited results for the six months ended 30 September 2013
  67. 67. Brait’s valuation policy Given the nature of its operations, investments are accounted for at fair value through profit and loss (scoped out of IAS 28 and into IAS 39). The Group's reported NAV is thus equivalent to a 'sum-of-the-parts' valuation. For noting • The Group's carrying value for its private equity fund investments does not as yet incorporate any share of capital participation on the Brait IV PE Fund investments • Management fees are recognised in the accounting period in which the services are rendered - no valuation model is applied to this stream in compiling the Group's reported NAV • The Group's valuation policy is consistently applied across its investment portfolio Listed investments • Quoted market prices • 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 • Valuation based on estimate value between knowledgeable, willing parties at arm's length • Valuation principles per International Private Equity and Venture Capital Valuation Guidelines and IFRS Standards Methodologies used - Primary basis is the Maintainable Earnings model - Maintainable earnings derived with reference to historic and forecast EBITDA, adjusted for any non-recurring income/expenditure from the subject company's latest financial statements - The average of comparable quoted companies is taken as the base for the valuation EV/EBITDA multiple - The equity valuation takes consideration of the company’s net debt/cash on hand as per its latest financial results Cross-check bases - Discounted cash flow, NAV and recent transaction prices are used as a validation check 67 67 Unaudited results for the six months ended 30 September 2013
  68. 68. Treasury management 68 Unaudited results for the six months ended 30 September 2013
  69. 69. Treasury management Perpetual preference share capital 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 69 69 Unaudited results for the six months ended 30 September 2013
  70. 70. Treasury management Perpetual preference share capital R1.964 billion net proceeds raised from the R2 billion preference share programme applied as follows: • 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 Preference dividends declared to date: Declaration date Dividend period Dividend per share # of shares in issue Payment date Total dividend R’m 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 R175.0 70 70 Unaudited results for the six months ended 30 September 2013
  71. 71. Treasury management Borrowings Salient terms Purpose General corporate investment purposes Facility R2.5 billion Lender Rand Merchant Bank; Standard Bank; and/or their nominees Advance date 4 July 2011 Term 5 years from Advance date with an option to extend for a further 5 years Repayments • Capital bullet on 5th anniversary • Interest rolled up and repayable on 5th anniversary Interest 3 month JIBAR plus margin of 2.70% with quarterly compounding Commitment Fee 70 bps per annum Security Assets held throughout the Group structure 71 71 Unaudited results for the six months ended 30 September 2013
  72. 72. Investment portfolio 72 72 Unaudited results for the six months ended 30 September 2013
  73. 73. Scale of investment portfolio To provide an indication of scale, the amounts shown below are an aggregation of the Group’s direct investments, assuming we own 100% of each, based on each company’s most recent set of reported results. Investments held through the private equity fund portfolio are excluded. Amounts in R’bn Revenue 30-Sep-13 76.7 EBITDA 7.3 % Margin 9.5% EBT (1) 4.5 5.9% % Margin 1.4 Taxation 30.3% Effective % PAT (1) 3.1 Cash flow from operations (post capex, before interest and tax paid) 5.4 % EBITDA 73.7% # Number of employees (1) 64,000 Iceland Foods’ FYE 2013 results considered above exclude the £72 million goodwill amortisation charge. (The statutory financial statements are prepared under UK GAAP - which in contrast to IFRS permits the amortisation of goodwill - policy is to amortise goodwill over 20 years) 73 73 Unaudited results for the six months ended 30 September 2013
  74. 74. Pepkor 74 74 Unaudited results for the six months ended 30 September 2013
  75. 75. 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: – 44% of all blankets sold – 57% of all school wear, manufactured mainly in its clothing factory in Cape Town – 30% of all baby and kids clothing – 40 million disposable nappies – 8 million pre-paid cell-phone handsets – 160 million airtime vouchers • Its 3 Southern Africa distribution centres and 14 transport hubs together occupy more than 230 000m2 - the size of 38 rugby fields • This year PEP will: – Send over 645 million products to nearly 1,580 stores – Conduct around 260 million customer transactions • There are 60 home-ware stores called PEPhome • Over half of all PEP’s store managers are promoted from within the company • PEP’s flagship CSI project is the PEP Academy: – Fifteen PEP academies operate within existing schools to give 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 75 75 Unaudited results for the six months ended 30 September 2013
  76. 76. Pepkor Summarised financial information Summarised income statement 2013 2012 2011 2010 2009 Revenue 33,592 26,406 22,562 20,212 18,867 % Growth 27.2% 17.0% 11.6% 7.1% 13.8% 6,214 4,916 4,206 4,004 2,660 18.5% 18.6% 18.6% 19.8% 14.1% (Audited June results in R’m) EBITDA(R)(1)(2) % Margin EBITDA(2)(3) 3,757 3,005 2,547 2,502 1,286 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% % Margin (1) (2) (3) EBITDA(R) is EBITDA prior to net building operating lease expenses Excludes extraordinary items 2013 (R43m); 2012 (R227m). Note – EBT is post these items EBITDA in 2010 and 2009 normalised for foreign exchange hedging contracts over the 24-month trading period was R2,037m and R1,754m respectively Summarised cash flows (R’m) Cash flow from operations % EBITDA Capital expenditure Operating cash flow post capex % EBITDA Tax paid Interest paid Operating cash flow post capex, tax and interest % EBITDA Net group investments made - equity Net group investments made – loan books 2013 2012 2011 2010 2009 3,754 99.9% 1,330 2,424 64.5% 897 319 1,208 32.2% 628 1,041 3,320 110.5% 817 2,503 83.3% 945 343 1,215 40.4% 293 544 2,368 93.0% 837 1,531 60.1% 449 54 1,028 40.4% 93 34 2,300 70.3% 739 1,561 62.4% 440 100 1,021 40.8% (19) - 1,717 80.4% 488 1,229 95.6% 472 211 546 42.5% 30 76 76 Unaudited results for the six months ended 30 September 2013
  77. 77. Pepkor Summarised financial information Summarised balance sheet 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 (Audited June results in R’m) Other 913 783 332 201 258 10,684 Total liabilities 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 11 25 24 12 11 Ordinary shareholders equity Minority interest 5,945 3,840 6,222 4,731 3,280 Ratios and trading information 2013 2012 2011 2010 2009 37% 40%(1) 40%(1) 35% 15% 3,418 3,156 3,046 2,846 2,763 ROE Retail outlets Retail space (m2 in 000’s) Revenue per m2 (in R) 1,608 1,397 1,356 1,294 1,260 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. 77 77 Unaudited results for the six months ended 30 September 2013
  78. 78. Pepkor Overview of Pep Group Pep Home Pep Cell SA, BLNS(1) SA SA 1965 Operating countries 2007 2008 Founded Product range Clothing, footwear, house wares, cellular Positioning Bathroom & kitchen textiles, bedding, curtaining, house wares, furniture & appliances, FMCG, cellular Handsets, airtime, starter packs, modems, subscription TV Ave store size (m2) Ave store sales (p.a.) Ave staff per store Store information as at 30 June 2013 2001 (2) SIM cards & Flash devices which distribute airtime and electricity via informal market 24/7 Informal retail sector & Spaza shops Discount market positioning No. of stores SA 1,322 60 196 (See note 3) 456 323 46 n/m R11.4m R6.4m R5.8m n/m 8 6 3 n/m (1) BLNS = Botswana, Lesotho, Namibia, Swaziland (2) FutureCELL founded in 2001 – merged with Flash 1 Feb 2013 (3) Customers for Flash devices are Spaza shops (52,000+) 78 Unaudited results for the six months ended 30 September 2013 78
  79. 79. Pepkor Overview of Pepkor Africa Zambia, Mozambique, Angola, Malawi, Nigeria Zimbabwe Founded Entered Africa in 1995 1978 Product range Clothing, footwear, house wares, cellular Operating countries Positioning Clothing, footwear, house wares Discount market No. of stores 152 94 Ave store size (m2) 407 236 R7.1m R2.4m 8 6 Ave store sales (p.a.) Ave staff per store Store information as at June 2013 79 79 Unaudited results for the six months ended 30 September 2013
  80. 80. Pepkor Ackermans Operating countries Founded Product range Positioning SA, BLNS 1916 Clothing, footwear, house wares, clothing accessories, cellular Value based market No. of stores 394 Ave store size (m2) 762 Ave store sales (p.a.) Ave staff per store R12.7m 11 Store information as at June 2013 80 80 Unaudited results for the six months ended 30 September 2013
  81. 81. Pepkor Operating countries SA, BN SA,N SA SA, BLNS 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 87 58 67 261 Ave store size (m2) 341 158 197 310 R3.8m R4.1m R4.0m R2.4m 6 5 4 4 Founded Ave store sales (p.a.) Ave staff per store Store information as at June 2013 (1) JayJays represents a 50/50 joint venture with Just Group of Australia 81 81 Unaudited results for the six months ended 30 September 2013
  82. 82. Pepkor Overview of Pepkor South East Asia Operating country Australia Australia(1) Australia Australia Australia(2) Founded 1965 1849 2005 2012 2007 Product range Clothing, footwear, house wares, owners of Mango brand Men’s and Children’s Design-led women’s clothing, toys and lifestyle, home and apparel, accessories for giftware homewares and ages newborn to manchester 10 years Storage goods and solutions 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 7 16 5 Ave store size (m2) 873 2,601 86 146 1,021 Ave store sales (p.a.) R23.4m n/a R4.8m R1.0m n/m 11 19 3 2 2 Positioning Ave staff per store Store information as at June 2013 (1) (2) Harris Scarfe acquired during Sept 2012 Store acquired during May 2013 82 Unaudited results for the six months ended 30 September 2013 82
  83. 83. Pepkor Operating country Founded Product range Poland Slovakia(1) 2000 2013 Clothing, footwear and accessories aimed at whole family, house wares (semi-durable focussed on everyday affordable basics), household consumables, cellular airtime Positioning Discount market No. of stores 437 14 Ave store size (m2) 323 343 R7.2m R6.7m 6 6 Ave store sales (p.a.) Ave staff per store Store information as at June 2013 83 83 Unaudited results for the six months ended 30 September 2013
  84. 84. Premier Group 84 84 Unaudited results for the six months ended 30 September 2013
  85. 85. Premier Group Summarised financial information Summarised income statement (Audited results in R’m) (1) June 2012 April 2011 April 2010 April 2009 6,272 9.4% 422 6.7% (86) 336 5.4% (120) 5,731 17.1% 289 5.0% (79) 210 3.7% (136) 4,896 (7.6%) 222 4.5% (87) 135 2.8% (108) 5,298 (5.0%) 572 10.8% (69) 503 9.5% (161) 5,575 12.0% 320 5.7% (66) 254 4.6% (275) EBT(4) 216 74 27 342 (21) PAT 137 80 57 203 (9) 2012 April 2011 April 2010 April 2009 689 900 (142) 266 (1,008) 705 634 866 (141) (15) (669) 675 569 908 (150) 50 (456) 921 581 871 (17) 133 (842) 726 Net revenue (2) % Growth EBITDA (3) % Margin Depreciation and amortisation EBIT (3) % margin Net interest charge Summarised balance sheet (Audited results in R’m) Non-current tangible assets Goodwill and intangible assets Other liabilities Net current assets Net debt (5) Total shareholders’ funds June 2013 June 2013 881 949 (217) 300 (745) 1,168 Summarised cash flow information (R’m) Cash flow from operations before working capital (6) Working capital Cash flow from operations % EBITDA Capital expenditure Operating cash flow post capex and tax % EBITDA Interest paid Operating cash flow post capex, tax and interest % EBITDA June 2013 (1) June (1) June 2012 April 2011 April 2010 April 2009 406 280 289 495 229 (9) 397 94.1% (203) 194 46.0% (124) 70 16.6% (197) 83 28.7% (80) 3 1.0% (136) (133) (46.0%) (77) 212 95.5% (152) 60 27.0% (111) (51) (23.0%) (307) 188 32.9% (50) 138 24.1% (164) (26) (4.5%) 155 384 120% (48) 336 105.0% (282) 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 the 12 months ended 30 June 2012 have been shown revenue is after discounts, trade spend and rebates non recurring gains and losses incurred each year (4) Excludes non-cash positive accounting adjustment of R19m (5) Net debt excludes the subordinated shareholder loans held by Brait (6) Cash flow before non recurring gains and losses, post tax paid 85 (2) Net (3) Excludes 85 Unaudited results for the six months ended 30 September 2013
  86. 86. Premier Group National and regional footprint 86 86 Unaudited results for the six months ended 30 September 2013
  87. 87. Premier Group Brand hierarchy Flagship national brands Other national brands Regional brands 87 87 Unaudited results for the six months ended 30 September 2013
  88. 88. Iceland Foods 88 Unaudited results for the six months ended 30 September 2013
  89. 89. Iceland Foods UK footprint 89 89 Unaudited results for the six months ended 30 September 2013
  90. 90. Iceland Foods Historic performance Iceland Foods’ year-on-year growth remains ahead of the overall market (1) Kantar Worldpanel March 2013 Footprint growth (2) £’m 2 500 2 614 2 000 1 500 2 081 1 635 1 789 163 1 000 2 256 184 2 640 250 233 226 200 2 389 150 188 100 119 500 2007 2009 2010 Revenue(LHS) 6 yr CAGR: 8.3% 2011 2012 302 730 650 664 659 12% 13% 14% 14% 300 250 663 550 2013 150 2007 2008 2009 2010 No. of stores (LHS) 15.8% 15% 350 757 742 200 EBITDA(RHS) 15% 400 790 600 2.9% 6 yr cagr : Home Delivery (as a % of total sales) 20% 10% 298 347 340 320 700 50 2008 353 750 0 94 0 362 800 300 Retail space (000 m2) Revenue / EBITDA growth £’m No. of stores (1) 2011 2012 2013 Footprint (RHS) 3.3% (2) Excludes Cooltrader Private label offering (3) 16% Chilled Frozen 17% Branded Branded 32% 37% 63% 68% 5% Private label Private label 0% 2007 2008 6 yr CAGR : 2009 5.9% 2010 2011 2012 2013 (3) Based on FY 2013 sales 90 Unaudited results for the six months ended 30 September 2013 90
  91. 91. Iceland Foods Summarised financial information Summarised income statement (March year-end – audited results in £’m) Revenue % growth (1) 2013 (2) EBITDA % margin 2,640 1.0% 226 8.5% (4) 112 4.2% 2012 2011 2010 2009 2,614 9.4% 2,389 5.9% 2,256 8.4% 2,081 16.3% (3) 188 7.9% 184 8.2% 163 7.8% (4) 233 8.9% 144 5.5% 130 5.4% 121 5.4% 104 5.0% EBT % margin (5) 44 1.7% 148 5.7% 129 5.4% 110 4.9% 87 4.2% PAT % margin 16 0.6% 96 3.7% 82 3.4% 70 3.1% 55 2.6% EBIT % margin (1) The 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 53 weeks to 31 March 2013 have been shown (2) Revenue FY13 covers 52 weeks (FY12: 53 weeks). FY13 sales increased by 2.0% YOY (excluding Cooltrader – sold Sept 2012) (3) EBITDA FY12 includes property income of £3m (4) EBIT FY13 includes amortisation of goodwill of £72m (FY12: £26m) and deal fees of £8m. Depreciation charge is £34m. (FY12 includes abnormal deal related costs of 29m) (5) EBT FY13 includes a full year interest charge of £65m on debt package and £3m exchange rate movement on EURO denominated senior debt tranche (1) Summarised cash flow (£’m) 2013 2012 2011 2010 2009 234 103.5% Cash flow from operations % EBITDA 236 101.3% 191 101.6% 194 105.4% 171 104.9% (6) Capital expenditure 37 25 25 55 31 197 87.2% 211 90.6% 166 88.3% 139 75.6% 140 85.9% Tax paid 32 46 42 40 27 Interest paid 48 1 1 14 26 117 51.8% 164 70.4% 123 65.4% 85 46.2% 87 53.4% Operating cash flow post capex % EBITDA Operating cash flow post capex, tax and interest % EBITDA (6) The increase in FY13 capex driven by net 33 Iceland Foods outlets opened (FY12: net 15 Iceland stores opened) 91 91 Unaudited results for the six months ended 30 September 2013
  92. 92. Iceland Foods Summarised financial information Summarised balance sheet (1) Shareholders Equity (1) 2009 1,933 819 809 983 161 1,493 194 85 167 409 176 67 175 434 147 53 151 460 135 237 1,538 430 402 646 300 100 1,110 28 278 87 50 15 246 80 59 17 209 91 321 25 435 Trade creditors Current liabilities Debt (1) Other 2010 316 65 1,050 25 Total Liabilities 2011 1,456 Property and equipment Intangibles Current Assets Cash 2012 166 1,421 176 128 Total Assets 2013 1,891 (March year-end – audited results in £’m) 395 389 407 337 Debt includes £41m of deal fees, included in current liabilities in audited accounts Ratios and trading information 2013 (as at March year end) ROE Number of retail outlets Iceland Cooltrader (3) Retail space ('000 m2) Iceland Cooltrader (3) Revenue per m2 (£) (4) (2) 2012 2011 2010 2009 19.5% 24.5% 20.6% 18.7% 17.6% 790 814 796 776 708 790 - 757 57 742 54 730 46 663 45 362 360 353 363 331 362 - 347 13 340 13 353 11 320 11 7,293 7,268 6,774 6,207 6,288 (2) ROE quoted for 2013 is pro-forma to normalise for the £72m goodwill charge. Derived as normalised FY13 PAT of £88m (actual FY13 of £16m + £72m), divided by average shareholders equity of £451m (average of FY13 normalised equity of £507m (£435m + £72m) and FY12 actual of £395m) (3) Cooltrader sold during September 2012 (4) Calculated on total number of retail outlets 92 92 Unaudited results for the six months ended 30 September 2013
  93. 93. Iceland Foods Gearing analysis Sept-13 £’m Sept-12 £’m 736 Term debt facilities 848 195 288 GBP 237 265 EUR 304 295 Interest rate Term (yrs) Currency Term loan A (amortising) Libor(1) + 400(2) bps 6 GBP Term loan B1 (bullet) Libor(1) + 450(2) bps 7 Term loan B2 (bullet) Libor(1) 7 Total term debt + 400(2) bps Vendor loan (bullet) 10 270 Revolving Credit Facility (“RCF”) Libor + 400(2) bps 6 GBP 257 1,006 Total term debt 1,105 25 25 Sept-13 £’m Sept-12 £’m 1,006 1,105 (113) (113) 893 992 (1) Base rate (Libor) swapped to a blended fixed rate of 1.15% across the tranches (2) Rate shown is post the additional 50bps reduction effective from end June 2013 (to date aggregate 100 bps reduction) Reconciliation to net debt quoted in Brait's valuation of Iceland Foods Total term debt (per September 2013 management accounts) Less: available cash (per September 2013 management accounts) Net debt per Brait's valuation of Iceland Foods 93 93 Unaudited results for the six months ended 30 September 2013
  94. 94. Rest of investment portfolio 94 94 Unaudited results for the six months ended 30 September 2013
  95. 95. PE fund investments Brait IV • PE Fund investments represent c.60% of Brait’s R959m Other Investments portfolio • c.75% of PE Fund investments is attributable to the following two investments: Consol - Headquartered in Johannesburg, Consol employs around 1,847 staff Consol is the largest manufacturer of glass packaging products on the African continent and has c.80% market share in South Africa - 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 Primedia - Headquartered in Johannesburg, Primedia employs around 3,000 staff - A leading South African media group, which sells advertising and distributes content across a diversified range of media platforms, including billboards, outdoor, mobile, and internet - Diverse set of businesses including 4 leading commercial radio stations based in Johannesburg and Cape Town, a range of advertising platforms and Ster Kinekor, a movie theatre and distribution business - The group’s reach extends to 3 million radio listeners, 17 million cinema attendances, 20+ million sports fans, 4 million daily commuters, 5 airports and millions of digital users 95 95 Unaudited results for the six months ended 30 September 2013
  96. 96. PE fund investments Brait’s predecessor private equity fund performances Fund Vintage year # of investments Cost R’m Realised proceeds R’m Gross multiple of cost Gross IRR Brait I 1991 22 228 417 1.8x 29% Brait II 1995 12 695 1,528 2.2x 46% Brait III 1999 14 2,301 10,043 4.4x 32% rd for private equity fund performance in the recent $150.6bn New York State Common Retirement Fund’s analysis of private equity funds spanning vintage years 1999 to 2004 Brait III ranked joint 3 Note: New York State Common Retirement Fund is invested in c.246 private equity funds from 1993 to 2012 96 96 Unaudited results for the six months ended 30 September 2013
  97. 97. 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) 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 SA agent for all Bacardi products Largest employer in the Wellington area, employing 370 staff and a number of seasonal workers Extensive distribution network with 16 national depots ensuring good coverage across SA Logistics platform to drive growth into new brands Superior quality and service offering Entrepreneurial management team 97 97 Unaudited results for the six months ended 30 September 2013
  98. 98. Notes 98 Unaudited results for the six months ended 30 September 2013
  99. 99. UNAUDITED INTERIM RESULTS ANNOUNCEMENT
  100. 100. Performance measures Audited year ended 31 March 2013 Unaudited six months ended 30 Sept 30 Sept 2012 2013 2 664 27 579 2 301 25 240 2 917 26 215 581 26.64 242 – 216 – 17 752 510 (5) 14 998 510 (5) 21 958 514 (5) 505 505 509 504 3 480 135.63 440.79 – 502 2 940 – – – 506 4 275 – – 443.21 Note Net asset value per share (cents) Net asset value CAGR (%) # Normalised headline earnings per share (cents) * Earnings/Headline earnings per share (cents) – basic and diluted Ordinary dividends per share paid (cents) Market capitalisation (R’m) Ordinary shares in issue (m) Treasury shares (m) Ordinary shares outstanding (m) Weighted average ordinary shares in issue (m) – basic and diluted Closing ordinary share price (cents) Preference dividend per share paid 3 December 2012 (cents) Preference dividend per share paid 24 June 2013 (cents) Preference dividend per share declared 24 October 2013 (cents) Unaudited Audited six months ended year ended 30 Sept 30 Sept 31 March 2013 2012 2013 215 N/A 17 9 215 N/A 23 225 N/A 53 17 – 23 – 53 2.12 1 603 514 (5) 1 372 510 (5) 1 500 510 (5) 509 505 505 506 312 – – 32.8723 502 269 – – – 504 294 11.9903 35.0883 – # Compound Annual Growth Rate is calculated over any three-year period commencing 1 April 2011 and assuming an opening NAV of the ZAR16.50 Rights Offer Price. * Headline earnings for the period divided by ordinary shares outstanding at the end of the period. 100 Unaudited results for the six months ended 30 September 2013
  101. 101. Condensed group statement of financial position as at 30 September Audited 31 March 2013 R’m Unaudited 30 Sept 30 Sept 2012 2013 R’m R’m Notes 14 523 12 605 16 275 ASSETS Non-current assets 13 114 1 399 10 11 250 1 344 11 14 806 1 460 9 Investments Loan receivable Property and equipment 618 571 689 Current assets 115 503 10 561 106 583 Accounts receivable Cash and cash equivalents 15 141 13 176 16 964 Unaudited 30 Sept 30 Sept 2013 2012 €’m €’m Audited 31 March 2013 €’m 1 200 Total assets 1 226 1 051 125 1 1 108 117 1 55 53 7 44 1 54 10 43 1 251 5 1 177 1 092 107 1 51 3 4 1 232 1 279 EQUITY AND LIABILITIES 14 927 13 094 16 802 Total equity 13 458 1 469 11 624 1 470 14 838 1 964 Ordinary shareholder equity and reserves Preference shareholder equity 1 239 1 224 1 261 1 094 145 1 086 138 1 137 124 163 34 108 141 22 – 34 83 25 Borrowings Deferred tax liability 8 3 14 6 2 – 3 12 2 51 48 54 Current liabilities 42 9 39 9 45 9 Accounts payable and other liabilities Provisions 4 5 4 3 1 4 1 3 1 15 141 13 176 16 964 Total equity and liabilities 1 251 1 232 1 279 510 (5) 510 (5) 514 (5) Ordinary shares in issue (m) Treasury shares (m) 514 (5) 510 (5) 510 (5) 505 2 664 505 2 301 509 2 917 Outstanding shares for net asset value calculation (m) Net asset value per share (cents) 509 215 505 215 505 225 6 7 Non-current liabilities 101 Unaudited results for the six months ended 30 September 2013 8
  102. 102. Condensed group statement of profit and loss for the six months ended 30 September Audited year ended 31 March 2013 R’m 2 713 183 62 170 73 3 201 (80) (7) (13) (4) (12) (3) (5) (124) 3 077 (59) (5) 3 013 (1) 3 012 26.64 581 579 510 505 504 135.63 440.79 – Unaudited six months ended 30 Sept 30 Sept 2012 2013 R’m R’m 1 145 1 092 93 99 30 33 29 1 34 31 1 331 1 256 (40) (42) (3) (4) (7) (6) (2) (3) (6) (6) (1) (2) (4) (3) (63) (66) 1 268 1 190 (50) (5) – (1) 1 218 1 184 (4) (1) 1 214 1 183 – – 242 216 240 215 510 514 505 509 502 506 – – – – – 443.21 Note Investment gains Interest Fees Dividends and other income Foreign exchange gains Total income Staff costs Non-executive directors’ fees Audit fees and professional fees Travel and accommodation Office-related costs Depreciation Other costs Total operating expenses Profit from operations Finance costs Indirect taxation Profit before taxation Direct taxation Profit for the period 9 Ordinary dividends per share (cents) Earnings/Headline earnings per share (cents) – basic and diluted 9 Normalised headline earnings per share (cents) Ordinary shares in issue (m) Ordinary shares outstanding (m) Weighted average shares in issue (m) – basic and diluted Preference dividend per share paid 3 December 2012 (cents) Preference dividend per share paid 24 June 2013 (cents) Preference dividend declared 24 October 2013 (cents) 102 Unaudited results for the six months ended 30 September 2013 Unaudited Audited six months ended year ended 30 Sept 30 Sept 31 March 2013 2012 2013 €’m €’m €’m 85 110 246 8 9 17 3 3 6 – 3 16 2 3 7 98 128 292 (3) (4) (7) – – (1) (1) (1) (1) – – (1) (1) (1) (1) – – – – – – (5) (6) (11) 93 122 281 – (5) (6) – – – 93 117 275 – – – 93 117 275 – – 2.12 17 23 53 17 23 53 514 510 510 509 505 505 506 502 504 – – 11.9903 – – 35.0883 32.8723 – –
  103. 103. Condensed group statement of other comprehensive income for the six months ended 30 September Audited year ended 31 March 2013 R’m Unaudited six months ended 30 Sept 30 Sept 2012 2013 R’m R’m 3 012 1 214 1 183 163 105 275 3 175 1 319 1 458 Notes Profit for the period Other comprehensive income Translation adjustments Audited Unaudited six months ended year ended 30 Sept 30 Sept 31 March 2013 2012 2013 €’m €’m €’m 93 275 (130) (38) (143) (37) Total comprehensive income for the period 117 79 132 Condensed group statement of changes in equity for the six months ended 30 September 10 321 (2) 3 012 163 (20) (16) 10 321 – 1 214 105 – (16) 13 458 – 1 183 275 (66) (12) Ordinary shareholders’ balance at beginning of period Net buyback of treasury shares Profit for the period Translation adjustments Earnings attributed to preference shares Ordinary dividends paid 13 458 11 624 14 838 Ordinary shareholders’ balance at end of period – 1 469 – 20 (20) – 1 470 – – – 1 469 495 – 66 (66) Preference shareholders’ balance at beginning of period Preference share issue net of costs Translation adjustments Earnings attributed to preference shares Preference dividends paid 1 469 1 470 1 964 Preference shareholders’ balance at end of period 103 Unaudited results for the six months ended 30 September 2013 7 1 008 – 117 (38) – (1) 1 008 – 275 (143) (2) (1) 1 094 6 1 137 – 93 (130) (5) (1) 1 086 1 137 124 36 (15) 5 (5) – 138 – – – – 134 (10) 2 (2) 145 138 124
  104. 104. Group statement of cash flow for the the six months ended 30 September Audited year ended 31 March 2013 R’m Unaudited six months ended 30 Sept 30 Sept 2012 2013 R’m R’m 61 24 111 (135) (24) (59) 25 8 28 (59) (11) (13) 41 14 – (68) (3) (3) (22) 126 (386) (22) 51 (71) (19) 78 (376) (282) (42) (317) Unaudited six months ended 30 Sept 30 Sept 2013 2012 €’m €’m Cash flows from operating activities Fees received Interest received Dividends received Operating expenses paid Taxation paid Interest paid Audited year ended 31 March 2013 €’m 3 1 – (6) – – 2 1 3 (6) (1) (1) 5 2 9 (10) (2) (5) Operating cash flow before investments Investment proceeds Purchase of investments (2) 6 (27) (2) 5 (7) (1) 11 (33) Net cash used in operating activities (23) (4) (23) (8) (9) (1) Acquisition of property and equipment – (1) (1) (8) (9) (1) Net cash used in investing activities – (1) (1) 1 469 (1 231) (2) (16) (20) 1 470 (1 399) – (16) – 495 (52) – (12) (66) Preference share issue net of costs Net repayment of long-term borrowings Net purchase of treasury shares Ordinary dividend paid Preference dividend paid 36 (4) – (1) (5) 138 (131) – (2) – 124 (104) – (1) (2) 200 55 365 Net cash from financing activities 26 5 17 (90) 70 523 4 34 523 47 33 503 Net increase/(decrease) in cash and cash equivalents Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of period 3 (2) 43 – 3 51 (7) (1) 51 503 561 583 Cash and cash equivalents at end of period 44 54 43 104 Unaudited results for the six months ended 30 September 2013
  105. 105. Notes to the condensed financial statements for the six months ended 30 September 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. The condensed financial statements are presented in accordance with IAS 34 (Interim Financial Reporting). The accounting policies and methods of computation are consistent with those applied in the annual financial statements for the year ended 31 March 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 and SA Rand for the respective jurisdictions in which it operates. The financial statements have been prepared using the following exchange rates at 30 September 2013: Closing USD/ZAR GBP/ZAR EUR/ZAR USD/EUR GBP/EUR Audited year ended 31 March 2013 R’m Average USD/ZAR 9.7366 GBP/ZAR 15.0327 EUR/ZAR 12.8164 USD/EUR 0.7597 GBP/EUR 1.1729 10.0278 16.2283 13.5628 0.7394 1.1965 Unaudited six months 30 Sept 2012 R’m Unaudited six months 30 Sept 2013 R’m 30 Sept 2013 €’m 2. 1 399 1 344 1 460 (7) 119 (3) 61 (4) 61 (3) (1) – Audited year ended 30 Sept 31 March 2012 2013 €’m €’m 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 – Loan receivable 107 125 117 Profit from operations include: – Non-executive directors’ fees – Interest income – 4 – 6 (1) 8 Statement of changes in equity (amount charged directly to equity) Transaction cost (amount charged directly to equity) – M Partners S.à r.l. – – – 105 Unaudited results for the six months ended 30 September 2013
  106. 106. Notes to the condensed financial statements for the six months ended 30 September (continued) 3. INVESTMENTS Given the nature of the Group’s operations, investments in which the Group has significant influence, but not control (up to 49.9% of voting rights) 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 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 as an average of audited historic and forecasted earnings before interest, tax, depreciation and amortisation (EBITDA) adjusted for any non-recurring income/expenditure from the Company’s annual financial statements. The directors decide on an appropriate group of comparable quoted companies from which to base the current market based EV/EBITDA multiple. Adjustments for points of difference to the investee company being valued are assessed. The resulting valuation multiple is applied to the maintainable EBITDA to calculate the Enterprise Value (EV) for the Investee company. Below are the key valuation metrics for each significant portfolio company. Further valuation information can be obtained from the 30 September 2013 investor presentation on the Group’s website, www.brait.com Audited year ended 31 March 2013 R’m Unaudited six months Unaudited six months 30 Sept 2012 R’m 30 Sept 2013 R’m 9 278 1 463 1 449 924 7 731 1 253 1 245 1 021 10 154 1 885 1 808 959 Pepkor (R’m) Premier Group (R’m) Iceland Foods (GBP’m) Other Investments 13 114 11 250 14 806 Total investments Valuation metrics used @ 30 Sept 2013 EBITDA Multiple Net Debt 4 023 454 228 8.0 6.5 6.5 varied 1 996 1 353 893 30 Sept 2013 €’m Audited year ended 30 Sept 31 March 2012 2013 €’m €’m 749 139 133 71 721 117 116 97 784 124 122 78 1 092 1 051 1 108 Fair Value Hierarchy IFRS 7 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 prices) or indirectly (i.e. derived from prices). Level 3 Inputs for the assets or liability that are not based on observable market data 106 Unaudited results for the six months ended 30 September 2013
  107. 107. Notes to the condensed financial statements for the six months ended 30 September (continued) 3. INVESTMENTS (continued) 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 Loans at Fair Value Level 3 Investment in Securities Level 3 Total R’m R’m R’m R’m 23 594 17 539 10 154 1 291 1 791 397 10 154 1 885 1 808 959 23 1 150 13 633 14 806 Audited year ended 31 March 2013 R’m Loans at Fair Value Level 3 Investment in Securities Level 3 Total €’m €’m €’m €’m Pepkor Premier Group Iceland Foods Other Investments 2 44 1 40 749 95 132 29 749 139 133 71 Total investments 2 85 1 005 1 092 30 September 2013 Unaudited six months 30 Sept 2012 R’m Unaudited six months 30 Sept 2013 R’m 30 Sept 2013 €’m 4. 1 399 Investment in Securities Level 1 1 344 1 460 LOAN RECEIVABLE Loan to the Investment Team is Rand-denominated and bears interest at the Johannesburg Inter-Bank Acceptance Rate (“JIBAR”) plus 3.5%, with the right to roll up interest. The loan is repayable on 4 July 2016 with an option to extend for another five years. The loan is secured by a pledge of 90.9 million Brait SE shares. Based on the 30 September 2013 closing share price of R42.75, the security to loan ratio is 266%. 107 Unaudited results for the six months ended 30 September 2013 107 Audited year ended 30 Sept 31 March 2012 2013 €’m €’m 125 117
  108. 108. Notes to the condensed financial statements for the six months ended 30 September (continued) Audited year ended 31 March 2013 R’m Unaudited six months Unaudited six months 30 Sept 2012 R’m 30 Sept 2013 R’m 325 178 335 226 546 37 503 561 583 101 394 8 111 450 – 314 260 9 30 Sept 2013 €’m 5. CASH AND CASH EQUIVALENTS Balances with banks Short-term treasury instruments 54 43 11 43 – 9 33 1 (1) (1) (1) 510 122 347 3 510 329* 30 September 2013 (12) 28 15 ORDINARY SHARE CAPITAL AND PREMIUM Authorised share capital 1 500 000 000 at par value of €0.22 per share Issued share capital 31 March 2013 Bonus share issue (16) 33 21 24 19 1 – ZAR cash – USD cash – GBP cash 41 3 44 6. (16) Audited year ended 30 Sept 31 March 2012 2013 €’m €’m 513 632 676 Dividend 9% (2012: 15%) of ordinary shareholders elected to receive the cash alternative * The par value of the bonus shares issued are accounted for in Ordinary Share Premium with no adjustment to any other reserves in Equity. The bonus share issue was calculated at the 60-day Volume Weighted Average Price (VWAP) of R35.29 per share to result in the R0.2664 dividend per share translating into 0.75489 shares for every 100 shares held. 108 Unaudited results for the six months ended 30 September 2013

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