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Consolidated unaudited financial results for the six-month period ended 30 September 2019
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" or the “Group”)
CONSOLIDATED UNAUDITED FINANCIAL RESULTS FOR THE SIX-MONTH PERIOD ENDED 30 SEPTEMBER 2019
The Board of Directors (“Board”) hereby reports to shareholders on the Group’s unaudited interim
results for the six months ended 30 September 2019 and the proposed recapitalization of the Group,
pursuant to the announcement released on 21 November 2019.
KEY FINANCIAL DATA
- NAV per share at 30 September 2019 of R38.00 (FY2019: R41.80)
- R1.3 billion cash flow to Brait from the portfolio for the current six-month period (FY2019: R815
million)
- Leading international health club operator Virgin Active (54% of Brait’s total assets) produced a
solid set of results for the nine months ended 30 September 2019. On a constant currency
basis, group revenue +4.3% and group EBITDA +6.6%, with adult membership +3.0%:
- South Africa: +4.6% revenue; +5.5% EBITDA; +4% membership growth driven by new
Vitality agreement.
- Italy: +8.1% revenue; +18.7% EBITDA; +5% membership growth and yield growth
driving the mature estate +11% EBITDA growth
- UK: +0.6% revenue; +11.5% EBITDA driven by cost savings
- Asia Pacific: revenue +10.3%; +13% membership growth; EBITDA impacted by opening
of 4 new clubs during the period which is short term dilutive due to startup losses
- Major South African based FMCG manufacturer Premier (28% of Brait’s total assets) retained its
strong national market share across its major categories. For the six months ended 30
September 2019:
- Revenue +7.0% driven by higher commodity prices
- EBITDA -4.4% with continuing challenging market conditions not allowing for full
recovery of cost inflation and cost reduction initiatives not sufficient to make up the
shortfall in marginal contribution
- Milling division was impacted by the highly price competitive maize market, with other
divisions performing in line with expectation
- Mozambican business (CIM) recorded a pleasing improvement in performance
- A frozen led UK based national food retailer, Iceland Foods (9% of Brait’s total assets),
performed in line with internal expectations, for its 24 week period ended 13 September 2019, in
a UK retail market which remains extremely competitive:
- Sales +2.4% ahead of the market, driven by opening of new stores
- EBITDA -7.7% as inflationary cost pressures were unable to be fully offset by sales
growth and targeted efficiencies
- Liquidity remains strong
- New Look (3% of Brait’s total assets), a multi-channel retailer operating in the value segment of
the clothing and footwear market in the UK and Republic of Ireland:
- The carrying value represents Brait’s holding of New Look Senior Secured Notes valued
at their quoted price, with Brait’s equity investment continuing to be valued at nil
- During its 26 week period ended 28 September 2019, New Look has made a number of
operational improvements. Whilst uncertainty prevails in the UK retail market, the
materially deleveraged balance sheet and more flexible capital structure following its
comprehensive balance sheet restructure on 3 May 2019 provides a stable operating
platform for management to deliver on its well defined turnaround measures
- As an investment holding company, Brait’s key reporting metric is NAV per share. From an
IAS34 interim reporting perspective, Brait’s earnings per share and headline earnings per share
is -313 cents (FY2019: -2,219 cents)
PROPOSED RECAPITALISATION OF BRAIT
- Brait today announces to the market a holistic solution to enable the redemption of the
GBP350m Convertible Bond maturing September 2020 and refinancing of the Group’s
borrowing facility, through a proposed aggregate capital raise and refinancing of between
R14.4bn and R14.7bn comprising:
- An equity capital raise of at least R5,250m and up to R5,600m comprising a fully
underwritten rights offer of R5,250m and a specific issue of shares of up to R350m at
the rights offer price;
- A signed credit approved term sheet with its lending banks for the refinance of the
Group’s borrowing facility, revised to R6.3bn with a 3-year tenor; and
- The intended launch (today) of a new c.GBP150m Convertible Bond with a 5-year tenor,
with the proceeds to be raised, together with cash, to concurrently repurchase up to
GBP185m of the existing GBP350m Convertible Bond
(collectively the “Recapitalisation”)
ADOPTION OF NEW STRATEGY
- Brait’s strategy has been that of a strategic, long-term investment holding company seeking to
drive growth and value creation via its portfolio of sizeable, unlisted businesses in the broad
consumer sector, targeting growth in net asset value and the realisation of its assets at the
appropriate time
- The Board has resolved to adopt a new strategy focused on maximising value through the
realisation of its existing assets in its portfolio over the next five years and returning capital to
shareholders
- The Recapitalisation will materially reduce and extend the maturities of Brait’s debt, providing
sufficient flexibility to manage Brait’s portfolio of investments and execute the new strategy in an
optimal manner
- Post the Recapitalisation, a new board is intended to be constituted and proposed to
shareholders for approval at the AGM to be held in July 2020
- Brait will also re-evaluate the costs and efficiencies of the overall Group structure
INTRODUCTION OF NEW STRATEGIC PARTNER AND ADVISOR
- The equity capital raise will see the introduction of Ethos as a new strategic equity partner to
Brait through its R1,350m participation in the rights offer and specific share issue
- A new advisory agreement, at a significantly reduced cost, will be entered into with Ethos
Private Equity. The advisory team going forward will comprise a combination of Ethos
executives and certain members from Brait’s existing corporate advisors
- John Gnodde, the CEO of Brait’s current corporate advisor, in agreement with the Board, has
decided to step aside at the conclusion of the Recapitalisation at the end of February 2020
OUTLOOK
The Recapitalisation materially reduces and extends the maturities of Brait’s debt, allowing time for
the Board, together with the new advisor, to drive the new strategy, at a reduced cost, focused on
maximising value through the realisation of assets in the portfolio over the next five years and returning
capital to shareholders.
In addition to the Long Form Results Announcement published on the website of the Luxembourg
Stock Exchange today, the following announcements have today been released by the Group on
SENS and the website of the Luxembourg Stock Exchange:
- Announcement relating to the proposed Recapitalisation of Brait, the introduction of a new
strategic equity partner and advisor, the adoption of a new strategy and withdrawal of the
cautionary announcement
- New Convertible Bond Offering and Concurrent Repurchase of up to GBP185 million
Outstanding Bonds
Brait’s interim results presentation booklet is available at www.brait.com
The information contained within this announcement is inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014 and the South African Financial Markets Act, 2012. Upon
the publication of this announcement this inside information is now considered to be in the public
domain. The person responsible for this announcement on behalf of Brait is PJ Moleketi, Non-Executive
Chairman of the Board.
This short form announcement is published under the responsibility of the Board of Brait SE and is a
summary of the information in the full announcement available on the Stock Exchange News Service
(“SENS”) at: https://senspdf.jse.co.za/documents/2019/JSE/ISSE/BAT/BSESept19.pdf and on the
Company’s website http://brait.investoreports.com/investor-relations/results-and-reports/.
This announcement does not contain full details and should not be used as a basis for any investment
decision in relation to the Company’s shares. The full announcement is available for inspection, at no
charge, at the Company’s registered office (56, rue Charles Martel, L-2134, Luxembourg) and the office
of the sponsor during standard office hours.
San Gwann, Malta
27 November 2019
Brait's primary listing is on the Euro MTF market of the Luxembourg Stock Exchange and its
secondary listing is on the exchange operated by the JSE Limited.
Sponsor:
Rand Merchant Bank (A division of FirstRand Bank Limited)
Important Notice and Disclaimer
The release, publication or distribution of this announcement in jurisdictions other than South Africa
may be restricted by law and therefore persons into whose possession this announcement comes
should inform themselves about, and observe, any applicable restrictions or requirements. Any failure
to comply with such restrictions may constitute a violation of the securities laws of any such jurisdiction.
To the fullest extent permitted by applicable law, Brait disclaims any responsibility or liability for the
violation of such requirements by any person.
This announcement is for information purposes only and is not intended to and does not constitute, or
form part of, any offer or invitation to purchase, subscribe for or otherwise acquire or dispose of, or any
solicitation to purchase or subscribe for or otherwise acquire or dispose of, any securities in any
jurisdiction. Persons needing advice should consult an independent financial adviser. The information
contained in this announcement is not for release, publication or distribution to persons in any
jurisdiction where to do so might constitute a violation of local securities laws or regulations. The
information in this announcement does not purport to be full or complete and is subject to change
without notice.
Neither this announcement nor the Rights Offer constitutes an ‘‘offer to the public’’ in South Africa in
terms of the South African Companies Act No. 71 of 2008, as amended.
The securities referred to herein have not been and will not be registered under the U.S. Securities Act
of 1933, as amended (the "Securities Act"), or under the securities legislation of any state or other
jurisdiction of the United States or under the applicable securities laws of Australia, Canada or Japan.
The securities referred to herein may not be offered or sold in the United States except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the Securities Act
and in compliance with any applicable securities laws of any state or other jurisdiction of the United
States. There has been and will be no public offering of the securities referred to herein in the United
States.
Date: 27-11-2019 08:30:00
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