Brait : unaudited interim results for the six months ended 30 September 2020

BRAIT SE

(Registered in Malta as a European Company) (Registration No. SE1) Share code: BAT ISIN: LU0011857645

Bond code: WKN: A2SBSU ISIN: XS2088760157

LEI: 549300VB8GBX4UO7WG59

("Brait", the "Company", or the "Group")

CONSOLIDATED UNAUDITED FINANCIAL RESULTS FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER 2020

The Board of Directors ("Board") hereby reports to shareholders on the Group's unaudited interim results for the six months ended 30 September 2020.

GROUP FINANCIAL HIGHLIGHTS

• R2.8 billion cash inflow from the portfolio (FY20: R1.6 billion).
• R5.6 billion de-gearing at Brait level:

• 1. BML RCF drawings reduced from R4.6 billion to R2.7 billion;
  1. Repurchase and redemption of remaining 2020 Bonds using Pound cash from the February 2020 Rights Offer, saving GBP3 million through early settlement offers and tender process.
• NAV per share of R7.71, a 6.8% decline on FY20's R8.27:
• 1. Uplift from the strong operational performance by Premier and realising Iceland Foods at a premium to its carrying

value;

• 1. Offset by the impact of Coronavirus on Virgin Active and New Look.
• R1.9 billion available cash and facilities at reporting date.
• As an investment holding company, Brait's key reporting metric is NAV per share. From an IAS34 interim reporting perspective, Brait's loss per share and headline loss per share is
  -34 cents (FY2019: -2,799 cents).

REVIEW OF THE SIX MONTHS ENDED 30 SEPTEMBER 2020

• Significant amount of time spent with the portfolio company management teams focusing on:
  o short term strategies to mitigate Coronavirus and refreshing medium term strategies to align with Brait (maximising value through the realisation of the portfolio over a 3 to 5-year period);
  o New management incentive schemes agreed and succession plans in place at Virgin Active and Premier; and
  o Recapitalisation of Virgin Active (UK/Europe and Asia Pacific).
• New Look announced on 9 November 2020, the completion of its comprehensive recapitalisation transaction.

• Disposals in line with Brait's new strategy:

1. DGB sale completed 13 May 2020, for R470 million (FY20 carrying value), with first tranche of R370 million received on 1 June 2020; remaining R100 million deferred proceeds to be received in two deferred payments of R50

million each by 31 March 2021 and 31 March 2022 respectively.

• 1. Iceland Foods sale completed 8 June 2020, for GBP115 million, a significant premium to its FY20 carrying value of GBP62.5 million. First tranche of GBP60 million (R1,275 million) proceeds received on 8 June 2020; GBP48.5 million (R1,074 million) received on 15 September 2020, as final early settlement for the two remaining deferred tranches (GBP26.9 million by 30 July 2021; GBP28.1 million by 29 July 2022).
• Governance:
• 1. At the Annual General Meeting held in Malta on 13 August 2020 ("AGM"), Shareholders approved the appointment of the

new Board of non-executive directors as proposed, comprising 5 new members and 3 re-elected members (respective biographies available at www.brait.com).

1. At the Extraordinary General Meeting held in Malta on 30 October 2020, Shareholders approved:
2. • Brait's registered office to be transferred from Malta to Mauritius, where the Company's main investment subsidiary, Brait Mauritius Limited ("BML") is domiciled (the "Redomiciliation"). The Redomiciliation process, expected to complete by 31 March 2021, will not impact the Company's primary or secondary listings, nor the terms and conditions of the GBP150 million 6.5% Convertible Bonds due on 4 December 2024 ("2024 Bonds").
   • A five-year Long Term Incentive Plan ("LTIP") for Brait's contracted advisor, Ethos Private Equity (the "Advisor"), designed to align the interests of the Advisor with those of Shareholders in delivering on Brait's new strategy of realising value from the portfolio over the medium term, whilst minimising

dilution to Shareholders.

1. In line with the Board's focus on reducing costs:
2. • At the AGM, Shareholders approved the new Board's proposed compensation, at a significantly reduced level (c.50%);
   • Estimated annualised savings to Brait's cash costs of c.R508 million since 1 March 2020, which includes the benefit of a c.3% reduction in SA Base Rates and 0.6% margin reduction on the BML RCF following repayments during the current period.

IMPACT OF CORONAVIRUS

The Coronavirus pandemic has materially impacted Virgin Active and New Look. The respective portfolio company management teams have taken appropriate measures to preserve liquidity, removing all but

essential capital expenditure investments and making operating expense reductions where possible, including measures to defer and/or reduce rental expenses. A key concern remains the resurgence of a second Coronavirus wave and the restrictions imposed by governments across Europe. Whilst trading in all territories had improved significantly since the easing of the initial lockdown restrictions, the new government restrictions will impact the UK and European businesses. Virgin Active's health clubs in the UK and Italy, and New Look's stores across the UK and Republic of Ireland have closed due to the second Coronavirus wave. As with the first lockdown, management have reduced all expenditure in the underlying businesses and are benefitting from the government support that has been offered in both the UK and Italy.

The safety of staff and customers across the Group's portfolio of companies is a top priority. Brait's portfolio companies have implemented effective measures to protect the health and safety of staff and customers and have business continuity plans in place to deal with the impacts of Coronavirus.

As announced on 13 May 2020, given the impact of the Coronavirus, Board fees and the advisory fee were voluntarily reduced by 25% for the quarter April - June 2020. In addition, the Advisor has voluntarily agreed to reduce its advisory fee for calendar year 2021 from c.R105 million to R90 million.

PORTFOLIO COMPANY HIGHLIGHTS

Virgin Active (49% of total assets):

• One of the leading international health club operators, Virgin Active's results for the current reporting period have been significantly impacted by the Coronavirus.
• Whilst group trading performance up to February 2020 was in line with budget and up from the prior year, in accordance with respective government directives to stop the spread of Coronavirus, health clubs in all territories were closed by 25 March 2020. During this closure period, Virgin Active implemented a "free membership freeze", whereby memberships were retained without members having to make payment during the freeze period, resulting in no revenue generation for most territories.
• Since early February 2020, management took measures to preserve liquidity across all territories, removing all but essential capital expenditure investments and making operating expense reductions where possible, including measures to defer and/or reduce rental expenses. Broadly, including all mitigants in the form of government support programs and interventions by management, operating cost cash outflows for Virgin Active reduced by two thirds while clubs were closed during this period.
• On 15 June 2020, shareholders contributed GBP20 million of new funding (Brait's share was GBP16 million) by way of shareholder loans to enable the UK, Italy and Asia Pacific territories to navigate appropriately through the exceptional circumstances as

a result of Coronavirus. In addition, Virgin Enterprises Limited agreed to defer and subordinate GBP5 million of royalties incurred during 2020 to beyond the maturity of Virgin Active's UK, Italy and Asia Pacific banking facilities. This aggregate funding of GBP25m million was matched by a further GBP25 million of new bank debt from the UK, Italy and Asia Pacific banking syndicate, with the existing covenant package replaced by a liquidity-based covenant until December 2021.

• Developing and rolling out digital content globally has been a key part of Virgin Active's strategy. This has been accelerated by the Coronavirus pandemic in order to enable Virgin Active to retain contact with its membership base and remain relevant.
• Results in Pound Sterling for the nine months ended 30 September 2020, quoted using actual currency on a pre-IFRS16 basis:
  o Group revenue of GBP224.7 million compared to the prior period of GBP450.8 million;
  o Group EBITDA loss of GBP8.4 million compared to the prior comparative profit of GBP102.4 million;
• Pleasingly, usage levels gradually improved across all territories as member engagement increased pre the second European Coronavirus lockdown. On a group basis, total active members were down 33% since December 2019, due to terminations and members remaining on freeze.
• Territory update:

1. Southern Africa: Clubs in South Africa re-opened on 24 August 2020, with Namibia and Botswana reopened in June 2020. Member engagement has seen usage increase from below 10% to above 57% as at October. A high percentage of members chose to remain on freeze, which is free until the

end of October 2020.

1. Italy: Re-opened in May 2020, with strong member engagement and usage levels exceeding 60%. Revolution (streaming of Virgin Active content to subscribing members) was successfully launched in September 2020, with more than 10,600 members already signed up. Italian clubs closed due to the second wave Coronavirus lockdown on 26 October until

(at least) 24 November 2020.

1. UK: Reopened later than expected, with 36 clubs opened on 26 July and 7 London clubs that have remained closed. Whilst member engagement and usage levels (62%) were pleasing, the region, especially in London, experienced higher than anticipated terminations and members on contract freeze, which has impacted yield and membership levels. The second Coronavirus wave has resulted in the closure of UK clubs from the beginning of November 2020

until the 2nd of December 2020.

• 1. Asia Pacific: The region, with the exception of 3 clubs in Australia, reopened in June 2020. Australia benefitted from strong membership engagement and usage levels in excess of 80%, especially in suburban clubs. In Thailand, strong membership engagement resulted in low terminations / freeze. Despite a significant number of members on freeze, Singapore achieved high usage and membership engagement.
• Valuation of R7,853 million (FY20: R9,355 million):