Wrap Text
Abridged audited results for the year ended 31 March 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")
Abridged Audited Results
for the year ended 31 March 2013
Key Highlights
- Net Asset Value ("NAV") per share up 29% to R26.64
- Increase in NAV attributable to operational performance of investment portfolio with no change in
valuation multiples
- Proposed bonus share issue (with cash dividend alternative) of 26.64 cents per share
(up 29% on prior year)
- Normalised headline earnings per share up 34% to R5.79 per share (2012: R4.33)
- Preference share dividend of R66 million (440.79 cents per share) for the six months ended
31 March 2013 declared on 28 May 2013
- R274 million cash inflows from investment portfolio
- R1.5 billion capital raised in August 2012 from the issue of perpetual preference shares
- Cash and facilities of R2.7 billion available for new investments
Abridged group statement of comprehensive income
for the year ended 31 March 2013
Audited Audited Audited Audited
31 March 31 March 31 March 31 March
2012 2013 2013 2012
R'm R'm Notes 'm 'm
2 568 2 713 Investment gains 246 251
257 488 Other investment income 46 25
(117) (124) Operating expenses (11) (11)
(62) (59) Finance costs (6) (6)
(5) Indirect taxation
(39) (1) Direct taxation (4)
2 607 3 012 Profit for the year 275 255
48 163 Translation adjustment (143) (7)
2 655 3 175 Comprehensive income for the year 132 248
Salient features
2 059 2 664 Net asset value per share (cents) 225 201
25% 27% Net asset value CAGR # N/A N/A
Normalised headline earnings per
433 579 share (cents) 53 42
Headline earnings per share
545 581 (cents) basic and diluted 2 53 53
Earnings per share (cents)
654 581 basic and diluted 2 53 64
Proposed/paid ordinary dividend
20.59 26.64 per share (cents) 2.12 2.13
Financial statistics
10 534 17 752 Market capitalisation 1 500 1 030
506 510 Ordinary shares in issue (m) 510 506
(5) (5) Treasury shares (m) (5) (5)
501 505 Ordinary shares outstanding (m) 505 501
Weighted average ordinary shares
399 504 in issue (m) basic and diluted 504 399
2 081 3 480 Closing ordinary share price (cents) 294 203
Preference dividend per share
135.63 paid 3 December 2012 (cents) 11.9903
Preference dividend per share
440.79 declared 28 May 2013 (cents) 35.0883
# Compound Annual Growth Rate ("CAGR") is calculated over any three-year period commencing on
1 April 2011 and assuming an opening NAV of the R16.50 Rights Offer price
Headline Earnings for the year divided by ordinary shares outstanding at year-end
Abridged group statement of financial position
as at 31 March 2013
Audited Audited Audited Audited
31 March 31 March 31 March 31 March
2012 2013 2013 2012
R'm R'm 'm 'm
ASSETS
11 251 14 523 Non-current assets 1 226 1 099
9 961 13 114 Investments 1 108 973
1 284 1 399 Loan receivable 117 125
6 10 Property and equipment 1 1
543 618 Current assets 53 53
20 115 Accounts receivable 10 2
523 503 Cash and cash equivalents 43 51
11 794 15 141 Total assets 1 279 1 152
EQUITY AND LIABILITIES
Ordinary shareholders' equity
10 321 13 458 and reserves 1 137 1 008
1 469 Preference shareholders' equity 124
1 410 163 Non-current liabilities 14 138
1 370 141 Borrowings 12 134
40 22 Deferred tax liability 2 4
63 51 Current liabilities 4 6
11 794 15 141 Total equity and liabilities 1 279 1 152
506 510 Ordinary shares in issue (m) 510 506
(5) (5) Treasury shares (m) (5) (5)
501 505 Outstanding shares for NAV calculation (m) 505 501
2 059 2 664 Net asset value per share (cents) 225 201
Abridged group statement of changes in equity
for the year ended 31 March 2013
Audited Audited Audited Audited
31 March 31 March 31 March 31 March
2012 2013 2013 2012
R'm R'm 'm 'm
Attributable to ordinary shareholders
Ordinary shareholders balance at beginning
1 491 10 321 of the year 1 008 157
2 607 3 012 Profit for the year 275 255
48 163 Translation adjustments (143) (7)
(16) (2) Net purchase of treasury shares/rights (2)
(16) Ordinary dividends paid (1)
(20) Earnings attributed to preference shares (2)
Rights Offer and Private Placement issue
6 389 ("Transaction") 624
(198) Transaction costs (19)
Ordinary shareholders balance at end of
10 321 13 458 the year 1 137 1 008
Attributable to preference shareholders
1 500 Preference share issue on 6 August 2012 137
(31) Preference share transaction cost (3)
Translation adjustments (10)
20 Earnings attributed to preference shares 2
(20) Preference dividend paid (2)
Preference shareholders balance at end
1 469 of the year 124
Group statement of cash flows
for the year ended 31 March 2013
Audited Audited Audited Audited
31 March 31 March 31 March 31 March
2012 2013 2013 2012
R'm R'm 'm 'm
Cash flows from operating activities
1 126 126 Investment proceeds 11 110
75 61 Fees received 5 7
4 24 Interest received 2
111 Dividends received 9
(162) (135) Operating expenses paid (10) (15)
(118) (24) Taxation paid (2) (12)
(30) (59) Interest paid (5) (3)
Operating cash flow excluding purchase
895 104 of investments 10 87
(6 450) (386) Purchase of investments (33) (630)
(5 555) (282) Net cash used in operating activities (23) (543)
(8) Acquisition of property and equipment (1)
(8) Net cash used in investing activities (1)
Proceeds from rights offer and private
6 389 placement issue ("Transaction") 624
(187) Transaction costs (18)
1 500 Proceeds from issue of preference shares 127
(31) Preference share transaction cost (3)
(Repayment of)/proceeds from long-term
1 337 (1 231) borrowings (104) 131
(1 200) Loan advanced to Investment Team (117)
(450) Repayment of redeemable preference shares (44)
(16) (2) Net purchase of treasury shares (2)
(16) Ordinary dividend paid (1)
(20) Preference dividend paid (2)
5 873 200 Net cash from financing activities 17 574
Net (decrease)/increase in cash and cash
318 (90) equivalents (7) 31
Effects of exchange rate changes on cash
33 70 and cash equivalents (1) 2
172 523 Cash and cash equivalents at beginning of year 51 18
523 503 Cash and cash equivalents at end of year 43 51
NOTES TO THE ABRIDGED FINANCIAL STATEMENTS
for the year ended 31 March 2013
1. ACCOUNTING POLICIES
1.1 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 except where otherwise indicated.
The abridged 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 2012.
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 (£/GBP) and SA Rand for the respective jurisdictions in
which it operates. The financial statements have been prepared using the following
spot exchange rates:
2013 2012
Closing Average Closing Average
USD/ZAR 9.2358 8.5067 7.6687 7.4507
GBP/ZAR 14.0359 13.4380 12.2900 11.8767
EUR/ZAR 11.8391 10.9589 10.2364 10.2165
USD/EUR 0.7802 0.7770 0.7492 0.7293
GBP/EUR 1.1858 1.2279 1.2006 1.1625
2. HEADLINE EARNINGS RECONCILIATION
Audited Audited Audited Audited
31 March 31 March 31 March 31 March
2012 2013 2013 2012
R'm R'm 'm 'm
The calculation of the basic and diluted
earnings per share and headline earnings per
share is based on the following data:
2 607 3 012 Profit for the year 275 255
Preference dividend paid 3 December 2012
(20) for the period ending 30 September 2012 (2)
Preference dividend declared 28 May 2013
(66) for the six months ending 31 March 2013 (6)
2 607 2 926 Earnings 267 255
(434) Capital item (42)
2 173 2 926 Headline earnings 267 213
3. SUBSEQUENT EVENTS
No events have taken place between 31 March 2013 and the date of the release of this
report, which would have a material impact on either the financial position or operating
results of the Group.
AUDITOR'S OPINION
The external auditors, Deloitte Audit Limited, have issued an unmodified audit opinion on the
Group's financial statements for the 31 March 2013 year end. The audit was conducted in
accordance with International Standards on Auditing. These abridged provisional financial
statements have been derived from the Group financial statements and are consistent in all
material respects with the Group financial statements. A copy of their audit report is available
for inspection at the Company's registered office. Any reference to future financial performance
included in this announcement, has not been reviewed or reported on by the Company's
auditors. The auditor's report does not necessarily cover all of the information contained
in this announcement/financial report. Shareholders are advised that in order to obtain an
understanding of the nature of the auditor's work, they should obtain a copy of that report from
the registered office of the company.
REVIEW OF OPERATIONS
THE BUSINESS OF BRAIT
Brait is an investment holding company whose shares are listed on the Euro MTF Market 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.
The Board of Directors (Board) is pleased to report on the final results for the year ended
31 March 2013.
VALUE DRIVERS
Growth in NAV is the Company's key performance measure and the following additional factors
are the other core value drivers of the business:
- Minimal cost leakage;
- Minimal balance sheet cash drag;
- Significant cash flow within the underlying assets; and
- Predictable and consistent ordinary dividend to NAV yield.
GROWTH IN NAV
Brait targets growth in its NAV per share at a compound rate of at least 15% per annum (CAGR)
over any three-year period commencing 1 April 2011 and assuming an opening NAV of the
ZAR16.50 Rights Offer Price. The two-year CAGR for the period to 31 March 2013 is a pleasing
27%. The Group's NAV per share of ZAR26.64 at 31 March 2013 represents a 29% increase
on the ZAR20.59 NAV at 31 March 2012, which compares favourably to the 15% benchmark
performance measure.
Growth in EBITDA and cash flow generation of investee companies continue to be the drivers of
the Group NAV, with the EV/EBITDA valuation multiples applied remaining unchanged.
The Group's valuation policy is in accordance with the principles of the International Private Equity
and Venture Capital (IPEVC) guidelines and IFRS. At reporting date, the EV/EBITDA valuation
multiples for the significant portfolio investments are Pepkor at 8x; Premier Foods at 6.5x; Iceland
Foods at 6.5x.
The current NAV break-down is as follows:
31 March 31 March 31 March 31 March
2012 2013 2013 2012
R'm R'm % 'm 'm
9 961 13 114 Investments 1 108 973
6 701 9 278 Pepkor 61% 784 655
1 191 1 463 Premier Foods 10% 124 116
998 1 449 Iceland Foods 10% 122 97
584 594 PE fund investments 4% 50 57
487 330 Other investments 2% 28 48
1 284 1 399 Loan receivable 9% 117 125
523 503 Cash and cash equivalents 3% 43 51
6 10 Property and equipment 1 1
20 115 Accounts receivable 1% 10 2
11 794 15 141 Total assets 100% 1 279 1 152
1 473 214 Total liabilities 18 144
1 370 141 Borrowings 12 134
40 22 Deferred tax liability 2 4
63 51 Current liabilities 4 6
1 469 Preference share equity 124
10 321 13 458 Net Asset Value 1 137 1 008
Number of issued shares ('mil
501 505 excluding treasury shares) 505 501
2 059 2 664 Net asset value per share (cents) 225 201
Key highlights of the Group's portfolio are:
- Pepkor's sales for the first six months of its FY2013 are 22% up on the comparative period.
This, together with continued focus on operating efficiencies, has resulted in EBITDA margin
increasing to 12.1% (H1 FY2012: 10.9%). This in turn has translated into a 36% and 46%
increase in EBITDA and Profit after Tax, respectively, for the period. Free cash flow generation
remains strong
- Premier Foods traded in line with expectations for the first six months of its FY2013. The
business managed to largely maintain volumes against an overall market decline for milling
and baking, which resulted in overall market share increases for Premier Foods. The first
non-milling and baking investment was concluded during May 2013 with the acquisition of
confectionary brands Manhattan and Super C, together with the related production facilities.
Furthermore, Brait increased its shareholding in Premier Foods to 79.9% (FY2012: 65.8%)
- Iceland Foods delivered on its cash generation investment thesis in FY2013, increasing
EBITDA to free cash flow conversion to 73% (FY2012: 70%). The resulting de-gearing
facilitated a 50 bps reduction on its debt funding rates. Despite challenging market conditions,
the business managed to increase both its sales and market share. The weakening Rand
further enhanced Brait's carrying value for Iceland Foods.
Minimal cost leakage
Operating expenditure for the year of ZAR124 million (6% increase on FY2012) represents a
favourable ratio of 0.68% (FY2012: 0.79%) to Assets Under Management (AUM) compared to the
target of 0.85% or less.
Minimal balance sheet cash drag
The Group maintains minimal cash holdings on balance sheet to avoid diluting overall target
returns. Cash and cash equivalents at 3.7% of NAV (FY2012: 5.1%) are well within the Group's
benchmark maximum of 25% of NAV. Cash and available facilities of R2.7 billion are in place to
fund new investments.
Significant cash flow within the underlying assets
Brait received investment cash inflows of ZAR274 million during the year comprising:
ZAR128 million maiden dividend income from Pepkor (Pepkor paid a total dividend of ZAR346
million during March 2013); ZAR28 million from the servicing of loan claims by Premier Foods and
Iceland Foods and ZAR118 million from realisations within the PE Fund and Other Investments.
Predictable and consistent bonus share issue or ordinary dividend to NAV yield
The Group's policy is an ordinary bonus share issue or dividend to NAV yield of 1% 2.5% per
annum. It favours a bonus share issue or, alternatively, an ordinary cash dividend. Bonus shares
and dividends are considered annually when the results for each year are published. The extent
of any bonus shares and dividends is determined relative to net operating cash flows which
includes proceeds received on the realisation of loans and investments from time to time and
which are not earmarked for new projects or required for liquidity. For the year under review,
a bonus share issue (with a cash dividend alternative) of 1% of NAV (being FY2012's NAV of
ZAR20.59 cents per share) was paid out in August 2012, with 85% of shareholders electing to
receive bonus shares.
See details below on the proposed bonus share issue or, alternatively, ordinary dividend for the
2013 year.
GROUP FUNDING POSITION
A funding highlight for the Group was the successful placing of ZAR1.5 billion in perpetual
preference shares on 6 August 2012, with over ZAR2 billion's of applications having been
received. The net proceeds raised were applied against the Group's drawn borrowings. A further
ZAR500 million remains to be placed in the future under the existing ZAR2 billion preference
share programme.
With effect from 1 May 2013, the interest rate margin on the Group's term debt has reduced from
340-400bps to 270bps (above the 3 month JIBAR rate) with the commitment fee for undrawn
facilities reduced from 125bps to 70bps. This has been facilitated by strong NAV growth, a
healthier balance sheet resulting from the replacement of debt with preference share funding and
the receipt of investment cash inflows from the underlying portfolio companies.
The Board believes that the Group is adequately funded with ZAR2.7 billion available to fund
new investment opportunities. Importantly the majority of this funding is in the form of low cost
facilities instead of cash, thereby providing maximum returns for shareholders.
The Group continues to explore new sources of funding through raising cheaper and more
permanent forms of capital to achieve a more efficient capital structure.
PREFERENCE DIVIDEND DECLARED
The Board declared, on 28 May 2013, a preference dividend of ZAR4.4079/EUR0.350883
per share for the six months ended 31 March 2013. The issued cumulative, non-participating
preference share capital at the date of this declaration is 15 000 000 preference shares of
ZAR100 each. A separate announcement setting out the salient dates was released to the
market on Wednesday, 29 May 2013.
PROPOSED BONUS SHARE ISSUE OR, ALTERNATIVELY, CASH DIVIDEND
The Board has proposed a bonus share issue of new, fully paid, ordinary Brait shares with a
par value of EUR0.22 each ("New Shares") in proportion to shareholders' shareholding in Brait,
payable to shareholders recorded in the register on the Friday, 2 August 2013 (the "Bonus Share
Issue"). Shareholders will be entitled, in respect of all or part of their shareholding as of the record
date (Friday, 2 August 2013), to elect to receive a cash dividend of 26.64 ZAR cents/2.12 EUR
cents per ordinary share (the "Cash Dividend Alternative") held in lieu of all or part of the New
Share to which they would have been entitled, which will be paid only to those shareholders
whose election forms to receive the Cash Dividend Alternative, in respect of all or part of
their shareholding are received by the transfer secretaries on or before 12:00 p.m. on Friday,
2 August 2013. The Bonus Share Issue and Cash Dividend Alternative are, however, subject to
shareholder approval at the Company's AGM on 17 July 2013. If all shareholders receive New Shares,
an approximate aggregate number of 3 850 863 New Shares, are expected to be issued. If all
shareholders elect to receive the Cash Dividend Alternative, this would amount to an aggregate
of R135 896 593 for the financial year ended 31 March 2013.
Shareholders not electing to receive the Cash Dividend Alternative in respect of all or part of their
shareholding will, without any action on their part, be issued with New Shares in accordance with
their shareholding pursuant to the Bonus Share Issue.
The number of New Shares to which shareholders will be entitled pursuant to the Bonus Share
Issue will be determined by such shareholder's shareholding in Brait as of the 2 August 2013 in
relation to the ratio that 26.64 ZAR cents per share bears to R35.29, being the 60-day volume
weighted average price ("VWAP") of ordinary Brait shares on the Luxembourg Stock Exchange
("LuxSE") and the Johannesburg Securities Exchange ("JSE") during the trading period ending on
Friday, 31 May 2013.
A circular and an election form will be sent to all shareholders on Monday, 24 June 2013
containing full details of the Bonus Share Issue and Cash Dividend Alternative.
The rationale for the Bonus Share Issue is to afford shareholders the opportunity to increase their
shareholding in Brait and retain the Company's flexibility on cash holdings.
The Bonus Share Issue and the Cash Dividend Alternative may have tax implications for
shareholders.
The receipt of New Shares by South African resident shareholders should not be classified as
a dividend or a foreign dividend for South African tax purposes and hence dividends tax should
not be levied on the New Shares. For those South African resident shareholders electing the
Cash Dividend Alternative in lieu of the New Shares, such amount will be regarded as a foreign
dividend, but may be subject to South African dividends tax at the rate of 15%, unless an
exemption as set out in the South African income tax legislation applies.
If dividends tax does apply, the net dividend will be 22.644 ZAR cents per share.
Shareholders are therefore encouraged to consult with their professional advisors should they be
in any doubt as to the appropriate action to take.
The issued ordinary share capital at the date of this announcement is 510 122 347 ordinary
shares of EUR0.22 each.
The salient dates are as follows:
EVENT 2013
Circular and form of election posted to shareholders on: Monday, 24 June
AGM approving the Bonus Share Issue/Cash Dividend Alternative on: Wednesday, 17 July
Last day to trade in order to be eligible for the Bonus Share Issue or, Friday, 26 July
alternatively, the Cash Dividend Alternative on:
Ordinary shares trade "ex" the Bonus Share Issue/Cash Dividend Monday, 29 July
Alternative on:
Last day for election forms to receive the Cash Dividend Alternative Friday, 2 August
instead of the Bonus Share Issue to reach the Transfer Secretaries by
12:00 p.m. on:
Record date in respect of the Bonus Share Issue/Cash Dividend Friday, 2 August
Alternative on:
Share certificates and dividend cheques posted, CSDP/participant/ Monday, 5 August
broker accounts credited/updated and New Shares listed on the LuxSE
and JSE on:
Share certificates may not be dematerialised or rematerialised, nor may transfers between
the Luxembourg and South African registers take place between Friday, 26 July 2013 and
Friday, 2 August 2013, both days inclusive.
Please note that the New Shares to be issued in terms of the Bonus Share Issue may not be
traded until Monday, 5 August 2013.
GROUP OUTLOOK
The defensive nature of Brait's portfolio underpinned by strong cash generation, significant
investment by portfolio companies and growing geographic diversity ensures that the business is
well positioned with a strong balance sheet in a challenging macro environment.
CHANGE IN THE BOARD OF DIRECTORS
Shareholders are advised that, following the resignation of R Schembri on 19 April 2013 as
previously advised, Dr LL Porter has been appointed to the Board as an independent,
non-executive director with effect from 28 May 2013. Dr Porter is an experienced non-executive
director and the Board looks forward to his contribution.
For and on behalf of the Board
Phillip Jabulani Moleketi
Non-Executive Chairman
5 June 2013
Directors (all non-executive)
PJ Moleketi (Chairman)*, AC Ball*, CD Keogh##, RJ Koch##, Dr LL Porter##, CS Seabrooke*,
HRW Troskie**, SJP Weber#, Dr CH Wiese*,
# Luxembourgish ## British ** Dutch * South African
The Company is primarily listed on the Euro MTF market of the LuxSE and secondarily listed on
the JSE.
Brait SE
Registration No: SE1
SPONSOR
RAND MERCHANT BANK (a division of FirstRand Bank Limited)
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