Brait : audited results for the year ended 31 March 2017 – Market Announcement

Brait SE

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

Share code: BAT ISIN: LU0011857645

Bond code: WKN: A1Z6XC ISIN: XS1292954812 LEI: 549300VB8GBX4UO7WG59

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

AUDITED RESULTS ANNOUNCEMENT

for the year ended

31 March 2017

Key highlights

• Brait's audited NAV per share at 31 March 2017 is ZAR78.15

• This represents a decrease of 5.2% compared to 31 December 2016's NAV per share of ZAR82.45

• The decrease of 42.6% compared to 31 March 2016's NAV per share of R136.27, includes the adverse impact of the 20.5% strengthening of the Rand against the Pound Sterling over the year, from ZAR 21.21 to ZAR16.87 at 31 March 2017

• The three year CAGR for reported NAV per share to 31 March 2017 is 34.7% per annum (benchmark of 15% per annum); including ordinary share dividends it is 35.7%

• Expressed in Pound Sterling, on the basis that Brait is most invested in this currency, Brait's NAV per share at 31 March 2017 is GBP4.63 compared to GBP6.43 at 31 March 2016, a decrease of 27.9%. The three year Pound Sterling CAGR to 31 March 2017 is 36.5%, including ordinary share

  dividends it is 37.2%

• Brait proposes an ordinary share bonus issue, or alternatively, cash dividend of ZAR0.7815 per ordinary share Performance against targets

Performance metric Position at 31 March 2017

1	NAV CAGR > 15% per year over any 3 year period	34.7% CAGR since 31 March 2014 (1) 35.7% CAGR including bonus shares issued/dividends paid
2	Dividend: 1% - 2.5% of closing NAV - bonus shares or cash dividend alternative(3)	- FY2017: 1% of R78.15 NAV proposed - FY2016: 1% of R136.27 NAV

3	Operating costs:	- 0.64% of average AUM (2) (FY2016: 0.62%) - 0.54% net after fee income (2) (FY2016: 0.52%)
4	Minimal cash drag:	- 8.3% of NAV (FY2016: 6.2%)
5	Primary unlisted investments	- 100% of investment portfolio
6	Demonstrate cash flow within underlying investments	- Strong EBITDA cash flow conversion across portfolio

1. The six year CAGR for NAV per share from 1 April 2011 to 31 March 2017 is 29.6% (30.4% including dividends)

2. Percentages quoted are based on operating expenses of R401 million and fee income of R62 million for the year ended 31 March 2017. (FY2016: Operating expense

   R435 million; fee income R69 million). Brait's average AUM for the year 31 March 2017 is R63 billion (FY2016: R71 billion), representing the Group's average total assets of R59 billion (FY2016: R67 billion) and average Brait IV invested capital under management of R4 billion (FY2016: R4 billion)

3. The FY2017 bonus award and cash dividend alternative are subject to shareholder approval at the upcoming Annual General Meeting. Shareholders electing the cash

dividend alternative will this year have the choice to reinvest the cash dividend (net of any dividend withholding taxes that may apply) as a subscription for new shares. Full details in this regard will be included in a circular and market announcement on or about 30 June 2017

Summary consolidated statement of financial position as at

Audited 31 March 2016 R'm 73 036	Audited 31 March 2017 R'm 44 408	ASSETS Non-current assets	Notes	Audited 31 March 2017 EUR'm 3 100	Audited 31 March 2016 EUR'm 4 352
73 036	44 408	Investments	2	3 100	4 352
4 599	3 289	Current assets	230	275
245	5	Accounts receivable	-	15
4 354	3 284	Cash and cash equivalents	3	230	260
77 635 69 872	47 697 39 580	Total assets EQUITY AND LIABILITIES Ordinary shareholders equity and reserves	4	3 330 2 763	4 627 4 164
7 721	8 065	Non-current liabilities	563	460
6 621	5 396	Convertible Bonds	5	377	395
1 100	2 669	Borrowings	6	186	65
42	52	Current liabilities	4	3
42	52	Accounts payables and other liabilities	4	3
77 635	47 697	Total equity and liabilities	3 330	4 627
521	521	Ordinary shares in issue (m)	521	521
(8)	(15)	Treasury shares (m)	(15)	(8)
513	506	Outstanding shares for NAV calculation (m)	506	513
13 627	7 815	Net asset value per share (cents)	546	812

Summary consolidated statement of comprehensive income for the year ended

Audited 31 March 2016 R'm	Audited 31 March 2017 R'm	Notes	Audited 31 March 2017 EUR'm	Audited 31 March 2016 EUR'm
21 990	(15 085)	Investment (losses)/gains	(978)	1 445
372	244	Interest income	16	24
34	409	Dividend income	27	2
69	62	Fee income	4	5
1 122	(319)	Foreign exchange (losses)/gains	(21)	74
(435)	(401)	Operating expenses	(26)	(29)
-	(76)	Other expenses	(5)	-
(971)	(659)	Finance costs	(43)	(63)
(24)	(29)	Taxation	(2)	(2)
22 157 8 064	(15 854) (12 879)	(Loss)/profit for the year Other comprehensive income Translation adjustments	(1 028) (266)	1 456 (338)
30 221	(28 733)	Comprehensive (loss)/income for the year	(1 294)	1 118
4 294	(3 119)	(Loss)/earnings per share (cents) - basic	7	(202)	283
4 141	(2 809)	(Loss)/earnings per share (cents) - diluted	7	(182)	272

Summary consolidated statement of changes in equity for the year ended

Audited 31 March 2016 R'm	Audited 31 March 2017 R'm	Note	Audited 31 March 2017 EUR'm	Audited 31 March 2016 EUR'm
39 369	69 872	Ordinary shareholders' balance at beginning of year	4 164	3 023
22 157	(15 854)	(Loss)/profit for the year	(1 028)	1 456
8 064	(12 879)	Translation adjustments	(266)	(338)
(36)	-	Preference share issue cost allocated to Retained Earnings on redemption	-	(2)
(270)	(930)	Net purchase of treasury shares	(65)	(16)
864	-	Convertible bond equity reserve	-	57
(254)	-	Earnings attributed to preference shares	-	(15)
(22)	(629)	Ordinary dividend paid (cash election)	4	(42)	(1)
69 872	39 580	Ordinary shareholders' balance at end of year	2 763	4 164

Summary consolidated statement of cash flows for the year ended 31 March 2017

Audited	Audited	Audited	Audited
31 March	31 March	31 March	31 March
2016	2017	2017	2016
R'm	R'm	Note	EUR'm	EUR'm
Cash flows from operating activities:
17 438	300	Investment proceeds received	21	1 131
69	56	Fees received	4	5
315	65	Interest received	4	21
-	266	Dividends received	18	-
(444)	(401)	Operating expenses paid	(26)	(29)
-	(59)	Other expenses paid	(4)	-
(16)	(35)	Taxation paid	(2)	(1)
17 362	192	Operating cash flow before investments	15	1 127
(32 199)	(190)	Purchase of investments	(12)	(2 222)
(14 837)	2	Net cash used from/(used in) operating activities	3	(1 095)
1 100	1 491	Net drawdown of Borrowings	85	204
7 245	-	Proceeds from issue of Convertible Bonds	-	481
(944)	(391)	Finance costs paid	(24)	(62)
(487)	(710)	Net purchase of treasury shares	(42)	(32)
(22)	(629)	Ordinary dividend paid (cash election)	(42)	(1)
(2 000)	-	Redemption of Preference shares	-	(109)
(254)	-	Preference dividend paid	-	(15)
612	-	Proceeds from Loan Receivable	-	40
5 250	(239)	Net cash (used in)/from financing activities	(23)	506
(9 587)	(237)	Net decrease in cash and cash equivalents	(20)	(589)
252	(833)	Effects of exchange rate changes on cash and cash equivalents	(10)	(202)
13 689	4 354	Cash and cash equivalents at beginning of year	260	1 051
4 354	3 284	Cash and cash equivalents at end of year	3	230	260

Notes to the audited summary consolidated financial statements for the year ended 31 March 2017

1. ACCOUNTING POLICIES

   1.1 Basis for preparation

   The Consolidated and Company financial statements (Financial Statements) are prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, on the going concern principle, using the historical cost basis, except where otherwise indicated. The summarised financial statements are presented in accordance with the framework concepts, measurement and recognition requirements of IFRS. The accounting policies and methods of computation are consistent with those applied in the consolidated financial statements for the year ended 31 March 2016. The Group has only one operating segment being that of an investment holding company.

   All segment information can be obtained through inspection of the consolidated financial statements.

   The Group's financial statements are prepared using both the Euro (EUR) and SA Rand (R/ZAR) as its presentation currencies.

   The Group's subsidiaries have one of three functional currencies: Pond Sterling (GBP), SA Rand or US Dollar (USD/US$). The holding company, Brait SE, and

   its main consolidated subsidiaries use GBP as their functional currency. The financial statements have been prepared using the following exchange rates:

   2017	2016
   Closing	Average	Closing	Average
   USD/ZAR	13.4247	14.0513	14.7678	13.7836
   GBP/ZAR	16.8674	18.4171	21.2052	20.7245
   EUR/ZAR	14.3232	15.4319	16.7810	15.2210
   USD/EUR	0.9373	0.9105	0.8800	0.9055
   GBP/EUR	1.1776	1.1934	1.2636	1.3616

2. INVESTMENTS

   The Group designates the majority of its financial asset investments as at FVTPL as the Group is managed on a fair value basis, with any resultant gain or loss recognised in investment gains. Fair Value is determined in accordance with IFRS 13.

   Statement of financial position items carried at fair value include investments in equity instruments and shareholder funding instruments. 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; or

   • Price to book multiple

Listed investments are held at recently quoted transaction prices. Where the listed investment is either thinly traded and/or the market is inactive, the valuation applied to determine the carrying value is based on the applicable unlisted investment methodology set out below.

The primary valuation model utilised for valuing unlisted portfolio investments is the maintainable earnings multiple model.

Maintainable earnings are derived with reference to the mix of prior year audited and latest available current year forecast EBITDA per the portfolio company, adjusted for any non-recurring income/expenditure. As the year progresses, so the weighting is increased towards the portfolio

company's forecast.

The Directors decide on an appropriate group of comparable quoted companies from which to base the EV/EBITDA multiple. The three year trailing average multiple of the comparable quoted companies, is adjusted for points of difference, where required, to the portfolio company being valued.

The peer average spot multiple at reporting date is also considered. The equity valuation takes consideration of the portfolio Company's net debt/ cash on hand as per its latest available financial results. Further valuation information can be obtained from the 31 March 2017 investor presentation on the Group's website, www.brait.com.

2016 R'm	2017 R'm	2017 EUR'm	2016 EUR'm
73 036	44 408	The Group's portfolio of investments	3 100	4 352
17 579	15 516	Virgin Active	1 083	1 048
11 637	12 395	Premier	865	693
7 181	7 367	Iceland Foods	514	428
34 869	7 066	New Look	493	2 078
1 770	2 064	Other investments	145	105
Valuation metrics at March 2017	Valuation metrics at March 2016

Maintainable	3rd Party	Maintainable	3rd Party
EBITDA	Multiple	Net Debt	EBITDA	Multiple	Net Debt
Virgin Active (GBP'm)	140	11.4x	411	135	11.0x	408
Premier (R'm)	1 140	13.2x	1 850	1 125	12.7x	1 946
Iceland Foods (GBP'm)	160	9.0x	675	151	8.8x	731
New Look (GBP'm)	155	10.3x	1 136	227	13.3x	1 083
Other investments	varied	varied

Fair Value Hierarchy

IFRS 13 Fair Value Measurement provides a hierarchy that classifies inputs employed to determine fair value. Investment 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 asset or liability that are not based on observable market data.

There are no financial assets that are categorised as Level 2 in the current or prior year. All Level 3 investments have been valued using a maintainable earnings multiple model.

Investment	Investment	Investment designated as	Investment	Investment
Level 1	Level 3	Total	Fair Value through profit & loss	Level 1	Level 3	Total
R'm	R'm	R'm	2017	EUR'm	EUR'm	EUR'm
-	15 516	15 516	Virgin Active	-	1 083	1 083
-	9 541	9 541	Premier	-	666	666
-	7 367	7 367	Iceland Foods	-	514	514
-	7 066	7 066	New Look	-	493	493
1	1 784	1 785	Other	-	125	125
1	41 274	41 275	Investments at fair value	-	2 881	2 881
2 854	Premier shareholder funding	199
279	Other investments shareholder funding	20
3 133	Investments at amortised cost	219
44 408	Total investments	3 100

2016 2017 2017 2016

R'm	R'm	3.	CASH AND CASH EQUIVALENTS	EUR'm	EUR'm
4 354	3 284	Balances with banks	230	260
172	196	- ZAR cash	14	10
69	77	- USD cash	5	5
4 113	3 011	- GBP cash	211	245
69 872	39 580	4.	ORDINARY SHAREHOLDERS' EQUITY AND RESERVES Ordinary share capital and premium Authorised share capital 1 500 000 000 at par value of EUR0.22 per share.	2 763	4 164
Issued share capital

31 March 2016 520 624 835

(22)	(629)	Dividend 91% of ordinary shareholders elected to receive the cash alternative	(42)	(1)
* 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 option was converted at 60 day Volume Weighted Average Price (VWAP) of R157.73 per share to result in the R1.3627 dividend per share translating into 0.86394 shares for every 100 shares held.
2016 R'm	2017 R'm	2017 EUR'm	2016 EUR'm
6 621	5 396	5.	CONVERTIBLE BONDS On 18 September 2015 Brait received GBP350 million from the issuance of its	377	395
five year unsubordinated, unsecured convertible bonds (Bonds). The Bonds carry a fixed coupon of 2.75% per annum payable semi-annually in arrears. The initial conversion price of GBP7.9214 per ordinary share represented a 30% premium to the VWAP of Brait's ordinary shares between launch and pricing on 11 September 2015. This initial conversion price was adjusted on 10 August 2016 to GBP7.8400 per ordinary share as a result of Brait's bonus share issue and cash dividend alternative in accordance with the Bonds terms and conditions. Using the adjusted conversion price, the Bonds will convert into 44,642,857 ordinary shares (8.6% of Brait's current issued share capital) on exercise of bondholders conversion rights. In the event that the bondholders have not exercised their conversion rights, the Bonds are settled at par value in cash on maturity on 18 September 2020. Brait has a soft call to early settle the Bonds at their par value after 9 October 2018 if the value of the ordinary shares underlying the Bonds is equal to or exceeds GBP130,000 for more than 20 of the 30 consecutive trading days up to 9 October 2018.
The Bonds listed on the Open Market (Freiverkehr) segment of the Frankfurt Stock Exchange on 15 October 2015.
1 100	2 669	6.	BORROWINGS The loan from the FirstRand Bank Limited (trading through its Rand Merchant	186	65
Bank division) and The Standard Bank of South Africa Limited is Rand denominated, bears interest at JIBAR plus 3.0% repayable quarterly, with a right to rollup. The ZAR8.5 billion facility expires in December 2020 and is secured by Group assets.
2016 R'm	2017 R'm	2017 EUR'm	2016 EUR'm
22 157	(15 854)	7.	HEADLINE EARNINGS RECONCILIATION (Loss)/profit for the year	(1 028)	1 456
(98)	-	Preference dividend paid December	-	(5)
(60)	-	Preference dividend paid June	-	(3)
21 999	(15 854)	(Loss)/earnings and headline (loss)/earnings	(1 028)	1 448
512	508	Weighted average ordinary shares in issue (m) - basic	508	512
4 294	(3 119)	(Loss)/earnings and headline (loss)/earnings per share (cents) - basic	(202)	283
21 999 189	(15 854) 318	(Loss)/earnings and headline (loss)/earnings (Loss)/earnings adjustment for Bond interest saved if Bonds converted to shares	(1 028) 21	1 448 12
22 188	15 536	Diluted (loss)/earnings and headline (loss)/earnings	(1 007)	1 460
536	553	Weighted average ordinary shares in issue (m) - diluted (1)	553	536
4 141	(2 809)	(Loss)/earnings and headline (loss)/earnings per share (cents) - diluted (1)All ordinary shares underlying the Bonds are treated as dilutive and weighted from issue of the Bonds on 11 September 2015	(182)	272
2016 R'm	2017 R'm	2017 EUR'm	2016 EUR'm
8.	RELATED PARTY BALANCES

Bonus share issue 387 339* 31 March 2017 521 012 174