Brait SE : NAV update for Q1 FY2017

Brait SE

(Registered in Malta as a European Company) (Registration No.SE1)

Share code: BAT ISIN: LU0011857645

Bond Code: WKN: A1Z6XC ISIN: XS1292954812

("Brait", "the Company")

NET ASSET VALUE ("NAV") UPDATE FOR THE FIRST QUARTER ENDED 30 JUNE 2016 (Q1 FY2017)

Shareholders of the Company are advised that:

• NAV per share decreased by 3.2% to ZAR131.94 for the quarter ended 30 June 2016 (31 March 2016: ZAR136.27 per share).

• NAV per share of ZAR131.94 reflects an increase of 64.2% for the twelve months ended 30 June 2016 (30 June 2015: ZAR80.34 per share) and a three-year CAGR to 30 June 2016 of 67.9%.

• Inclusive of the ordinary share dividends paid to date, the three-year CAGR to 30 June 2016 is 68.2%.

• The impact of the UK referendum vote to leave the European Union resulted in the Pound weakening 7.5% against the Rand from ZAR21.21 at 31 March 2016 to ZAR19.62 at 30 June 2016. Applying an unchanged exchange rate of ZAR21.21 to translate the Company's GBP denominated assets and liabilities, Brait's reported NAV per share at 30 June 2016 would be ZAR139.93; an increase of 2.7% for the quarter.

Brait's valuation policy is to reference the EV/EBITDA valuation multiple on an historical basis for each of its investments to their peer group's trailing three year average multiple, taking into consideration the peer average spot multiple at reporting date.

The EV/EBITDA historical valuation multiples used at 30 June 2016 are:

Valuation multiple used	Peer average:
	3 year trailing	spot
New Look	13.3x	15.1x	12.6x
Virgin Active	11.4x	13.7x	13.9x
Premier	13.1x	13.1x	13.1x
Iceland Foods	8.8x	10.0x	9.8x

The discounts to peer average multiples at 30 June 2016 are:

Valuation multiple used	Discount to peer average:
	3 year trailing	spot
New Look	13.3x	12%	(6%)
Virgin Active	11.4x	17%	18%
Premier	13.1x	-	-
Iceland Foods	8.8x	12%	10%

The 24 June 2016 announcement of the UK referendum result to leave the European Union adversely impacted share prices of companies with UK exposures. This resulted in the average spot multiple for New Look's peer group declining from 13.3x, which was the valuation multiple Brait applied at 31 March 2016, to 12.6x at 30 June 2016. However, share prices recovered soon thereafter, with the average spot multiple for New Look's peer group closing at 13.5x on 29 July 2016. Accordingly, Brait's valuation multiple for New Look at 30 June 2016 is unchanged at 13.3x.

Brait NAV Analysis: Investments	30-Jun-16 R'm 70,994	31-Mar-16 R'm 73,036	30-Jun-15 R'm 42,920
New Look	31,279	34,869	14,963
Virgin Active	17,783	17,579	-
Premier	12,854	11,637	8,788
Iceland Foods	7,087	7,181	1,374
Other investments	1,991	1,770	2,397
Steinhoff	-	-	15,398
Loan receivable	-	-	588
Cash and cash equivalents	4,076	4,354	14,297
Accounts receivable	6	245	152
Total assets	75,076	77,635	57,957
Convertible bond	(6,161)	(6,621)	-
Borrowings	(1,977)	(1,100)	(14,916)
Accounts payable	(80)	(42)	(64)
Total liabilities	(8,218)	(7,763)	(14,980)
Preference share equity	-	-	(1,964)

Net asset	value	66,858	69,872	41,013
Number of	issued	shares	('mil)

excluding treasury shares 506.72 512.75 510.50

Net asset value per share (ZAR) 131.94 136.27 80.34

Key highlights for Brait's investment portfolio:

New Look:

• The UK clothing and apparel sector has experienced a challenging quarter as a result of unfavourable market conditions, lower consumer confidence and consequent increase in promotional sales. New Look's results for this quarter were further influenced by an out-performance in the prior year comparative first quarter period.

• Revenue (in GBP) for the 13 weeks ended 25 June 2016 declined by 4.2% on the comparative period, with New Look Brand like- for-like sales down 6.6% and UK like-for-like sales down 7.0%. New Look's UK womenswear market share* remains number two overall and number one for under the age of 35.

• Own website sales growth was +9.0% on the comparative period, driven by a further increase in online traffic. Third Party

  E-commerce sales increased by 28.7%, driven by the increasing volume of business with key partnerships.

• China continues to deliver positive like-for-like sales, with conversion to sales improving as brand awareness increases and product ranges are further refined for the local market. Domestic sourcing now accounts for more than 65% of the product offering. New Look opened 9 new stores in China during the quarter, taking the total in operation to 94 with a strong pipeline of new openings to come.

• Menswear continues to do well with sales growth of 21% on the comparative period and an increasing Mens UK market share*, driven by an improved product offering and standalone stores. Two standalone Menswear stores were opened in the quarter, taking the total in operation to 8, with a strong pipeline of growth for the remainder of FY2017.

• The group's total estate closed the current quarter at 852 stores (26 March 2016: 838), with a total of 467 stores in the Concept format.

• New Look's flexible supply chain enables tight inventory management and good cash generation, with capex plans actively reviewed to facilitate flexibility around planned investment levels and hedges in place at pre-referendum GBP/USD exchange rates for expected FY2017 inventory related US Dollar payments.

• New Look, in which Brait has an effective 79.9% economic interest post dilution for the performance based sweet equity granted to the New Look management team, is valued at 30 June 2016 using an EV/EBITDA multiple of 13.3x (31 March 2016: 13.3x) which represents a discount of 12% to the peer group's three year trailing average of 15.1x. The weakening of the Pound against the Rand by 7.5% for the quarter has impacted New Look's ZAR carrying value. Applying the closing GBP/ZAR exchange rate of ZAR19.62, the resulting ZAR31.3 billion carrying value represents 42% of Brait's total assets. The

New Look FY2017 Q1 debt investor presentation is available at

www.brait.com.

(* Kantar WorldPanel data for the 24 weeks ending 5 June 2016 by value)

Virgin Active:

• Virgin Active has continued to trade well for the five month period ended 31 May 2016. Measured in constant currency, revenue increased 6% and EBITDA 14% over the prior comparative period, with growth achieved across all territories.

• Total clubs increased by 18 over the last twelve months, with three clubs opened in South Africa during the current year's five month period. The group is on plan to achieve its target of 16 club openings for FY2016.

• Adult membership has increased by 2% on continuing operations over the comparative period.

• The sale of 35 non-core UK clubs to Nuffield Health, which Virgin Active announced on 14 June 2016, was completed on 31 July 2016. This transaction results in a stronger, more cash generative UK estate focussed on prime sites in London, the South East and other major metropolitan areas.

• Virgin Active is well diversified geographically with over 60% of its earnings sourced outside the UK.

• The Asia Pacific region remains a key strategic growth area and early signs from the rollout are looking encouraging, resulting in an acceleration of new club openings in Singapore and Thailand scheduled over the next 12 months.

• Virgin Active, in which Brait has an effective 70.4% economic interest post dilution for the performance based sweet equity granted to the Virgin Active management team, is valued at the reporting date using an EV/EBITDA multiple of 11.4x (31 March 2016: 11.0x), which represents a discount of 17% to its peer group's three year trailing average multiple of 13.7x.

  Applying the closing GBP/ZAR exchange rate of ZAR19.62, Virgin Active's carrying value is ZAR17.8 billion, which represents 24% of Brait's total assets.

  Premier:

• Premier's strong trading continues through the 11 months ended 31 May 2016, and sees the business well placed to exceed its five-year target 10% EBITDA margin, having delivered solid double digit EBITDA growth over this period. Premier's EBITDA margin at the time of Brait's acquisition in July 2011 was 4.5% on an EBITDA run-rate of ZAR225 million.

• All three divisions have delivered results ahead of plan in the current year to date.

• The Baking division has benefitted from its focus on quality and the ZAR370 million investment over the past two years to upgrade facilities and increase capacity in the Western Cape and Kwa-Zulu Natal operations. In a competitive environment,