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BRAIT SE - Unaudited results announcement for the period ended 30 September 2018

Release Date: 12/11/2018 14:00
Code(s): BAT     PDF:  
Wrap Text
Unaudited results announcement for the period ended 30 September 2018

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")

UNAUDITED RESULTS ANNOUNCEMENT
for the period ended 30 September 2018

Summary consolidated statement of financial position as at 30 September

  Restated        Unaudited                                                                          Unaudited             Restated
year ended        six months                                                                         six months          year ended
  31 March     30 Sept      30 Sept                                                               30 Sept         30 Sept        31 March
      2018        2017         2018                                                                  2018            2017            2018
       R'm         R'm          R'm                                                      Notes      EUR'm           EUR'm           EUR'm
                                       ASSETS
    36 497      40 023       37 710    Non-current assets                                           2 297           2 499           2 501
    36 497      40 023       37 710    Investments                                           3      2 297           2 499           2 501
     2 932       3 290        2 342    Current assets                                                 143             205             201
        25           3          273    Accounts receivable                                   4         17               -               2
     2 907       3 287        2 069    Cash and cash equivalents                             5        126             205             199

    39 429      43 313       40 052    Total assets                                                 2 440           2 704           2 702
                                       EQUITY AND LIABILITIES
    28 384      33 851       28 064    Ordinary shareholders equity and reserves                    1 710           2 114           1 945
    10 813       9 200       11 969    Non-current liabilities                                        729             574             741
     5 443       5 883        6 124    Convertible Bonds                                     6        373             367             373
     4 719       3 317        5 160    Borrowings                                            7        314             207             323
       651           -          685    Financial guarantee liability                         8         42               -              45
       232         262           19    Current liabilities                                              1              16              16
       232         262           19    Accounts payable and other liabilities                           1              16              16

    39 429      43 313       40 052    Total equity and liabilities                                 2 440           2 704           2 702
     525.6       525.6        525.6    Ordinary shares in issue (m)                                 525.6           525.6           525.6
    (17.5)      (17.5)       (17.5)    Treasury shares (m)                                  10     (17.5)          (17.5)          (17.5)
     508.1       508.1        508.1    Outstanding shares for NAV calculation (m)                   508.1           508.1           508.1
     5 586       6 662        5 523    Net asset value per share (cents)                              336             416             383

Summary consolidated statement of comprehensive income for the six months ended 30 September

  Restated          Unaudited                                                                           Unaudited                Restated
year ended          six months                                                                          Six months             year ended
  31 March     30 Sept      30 Sept                                                               30 Sept         30 Sept        31 March
      2018        2017         2018                                                                  2018            2017            2018
       R'm         R'm          R'm                                                     Notes       EUR'm           EUR'm           EUR'm

   (9 192)     (7 957)      (3 590)    Investment losses                                            (228)           (530)           (605)
       287         125          197    Interest income                                                 13               8              19
       149          71           78    Dividend income                                                  5               5              10
        35          15            7    Fee income                                                       -               1               2
     (219)         211          508    Foreign exchange gains/(losses)                                 32              14            (14)
     (281)       (135)        (138)    Operating expenses                                             (9)             (9)            (18)
     (651)           -         (34)    Other expenses                                       8         (2)               -            (45)
     (710)       (317)        (408)    Finance costs                                                 (26)            (21)            (47)
      (28)           7         (14)    Taxation                                                       (1)               -             (2)
  (10 610)     (7 980)      (3 394)    Loss for the period                                          (216)           (532)           (700)
                                       Other comprehensive income/(loss)
     (297)       2 540        3 074    Translation adjustments                                       (19)            (98)            (99)
  (10 907)     (5 440)        (320)    Comprehensive loss for the period                            (235)           (630)           (799)
   (2 092)     (1 577)        (668)    Loss and headline loss per share (cents) - basic     9        (43)           (105)           (138)

Summary consolidated statement of changes in equity for the six months ended 30 September

  Restated           Unaudited                                                                            Unaudited              Restated
year ended          six months                                                                           six months            year ended
  31 March     30 Sept     30 Sept                                                                30 Sept         30 Sept        31 March
      2018        2017        2018                                                                   2018            2017            2018
       R'm         R'm         R'm                                                                  EUR'm           EUR'm           EUR'm

                                       Ordinary shareholders' balance at beginning
    37 802      39 580      27 125     of period                                                    1 859           2 763           2 639
     1 778           -       1 259     Restatement impact                                              86               -             124
                                       Restated ordinary shareholders' balance at
    39 580      39 580      28 384     beginning of period                                          1 945           2 763           2 763
  (10 610)     (7 980)     (3 394)     Loss for the period                                          (216)           (532)           (700)
     (297)       2 540       3 074     Translation adjustments                                       (19)            (98)            (99)
     (168)       (168)           -     Net purchase of treasury shares                                  -            (11)            (11)
       169         169           -     Cash dividend reinvestment                                       -              11              11
     (290)       (290)           -     Cash dividend paid                                               -            (19)            (19)
                                       Ordinary shareholders' balance at end of
    28 384      33 851      28 064     period                                                       1 710           2 114           1 945

Summary consolidated statement of cash flows for the six months ended 30 September

  Restated        Unaudited                                                                           Unaudited                  Restated
year ended        six months                                                                         six months                year ended
  31 March     30 Sept     30 Sept                                                                30 Sept         30 Sept        31 March
      2018        2017        2018                                                                   2018            2017            2018
       R'm         R'm         R'm                                                       Note       EUR'm           EUR'm           EUR'm
                                       Cash flows from operating activities
       123          28         375     Investment proceeds received                                    24               2               8
        20          13          17     Fees received                                                    1               1               1
       446          24         177     Interest received                                               11               2              29
     (293)       (140)       (140)     Operating expenses paid                                        (9)             (9)            (19)
      (10)        (10)           -     Other expenses paid                                              -             (1)             (1)
      (37)           -         (2)     Taxation paid                                                    -               -             (2)
       249        (85)         427     Operating cash flow before investments                          27             (5)              16
   (1 734)       (226)     (1 631)     Purchase of investments                                      (104)            (15)           (110)
   (1 485)       (311)     (1 204)     Net cash used from operating activities                       (77)            (20)            (94)
     1 971         500         200     Drawdown of borrowings                                          13              33             120
     1 438           -           -     Drawdown of third party borrowings                               -               -              90
   (1 461)           -           -     Refinance of third party borrowings                              -               -            (86)
     (293)           -           -     Interest paid                                                    -               -            (20)
      (42)        (27)         (9)     Facility fees paid                                             (1)             (2)             (3)
     (166)        (82)        (94)     Convertible bond coupon paid                                   (6)             (5)            (11)
     (168)       (168)           -     Net purchase of treasury shares                                  -            (11)            (11)
     (290)       (290)           -     Cash dividend paid                                               -            (19)            (19)
       169         169           -     Cash dividend reinvestment                                       -              11              11
     1 158         102          97     Net cash from financing activities                               6               7              71
     (327)       (209)     (1 107)     Net decrease in cash and cash equivalents                     (71)            (13)            (23)
                                       Effects of exchange rate changes on cash and
      (50)         212         269     cash equivalents                                               (2)            (12)             (8)
     3 284       3 284       2 907     Cash and cash equivalents at beginning of period               199             230             230
     2 907       3 287       2 069     Cash and cash equivalents at end of period           5         126             205             199

Notes to the summary consolidated financial statements for the six months ended 30 September

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 summarised
     financial statements are presented in accordance with IAS 34: Interim Financial Reporting and in accordance with the framework concepts,
     measurement and recognition requirements of IFRS. Except as detailed in note 2 below, the accounting policies and methods of computation 
     are consistent with those applied in the Group annual financial statements for the year ended 31 March 2018. The Group has only one operating 
     segment being that of an investment holding company.

     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: Pound 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:
     
               30 September 2018              31 March 2018             30 September 2017
                         Closing   Average      Closing       Average      Closing       Average
     GBP/ZAR             18.4331   17.7589      16.5965       17.2166      18.1636       17.0727
     EUR/ZAR             16.4167   15.7109      14.5952       15.1903      16.0183       15.0119
     USD/ZAR             14.1450   13.3619      11.8408       12.9902      13.5655       13.1902
     GBP/EUR              1.1228    1.1304       1.1371        1.1334       1.1339        1.1373
     USD/EUR              0.8616    0.8505       0.8112        0.8552       0.8469        0.8786
     
2. RESTATEMENT
   In the financial years 2011 to 2017 Brait accounted for the financial guarantees given by it for Fleet (the Investment Team's vehicle to 
   facilitate the holding of shares in Brait) under IAS 37 (Provisions, Contingent Liabilities and Contingent Assets) as required by IAS 39 
   (Financial Instruments: Recognition and Measurement). In the full year financials for 2018, and following extensive discussions with the 
   auditors, the decision was made to change the basis of accounting to consolidate Fleet in accordance with IFRS 10 (Consolidated Financial 
   Statements) and the comparative figures for 2016 and 2017 were restated accordingly.
   
   During the current financial period, this basis of accounting has been rigorously reassessed by the Audit Committee and the auditors. 
   It has been concluded that variations in the size of the net exposure under the guarantee do not provide Brait with any incremental rights 
   over the relevant activities of Fleet or any decision-making power over Fleet or any ability to influence the variable returns of Fleet in 
   the periods prior to the due date of the loans guaranteed by Brait. This has been the case since inception. The assessment of the facts and 
   the conclusion reached has also been confirmed by a written opinion from Senior Counsel. As such, the directors are of the view that, in 
   accordance with IFRS 10 paragraph B85, their initial assessment of Brait's control of Fleet has not changed simply because of a change in the 
   net exposure.

   Accordingly, Brait will again account for its net exposure as a financial guarantee as defined in IAS 39 and in accordance with IAS 37 and 
   will restate its comparative figures accordingly. The directors believe that this is a more accurate reflection of the commercial and legal 
   reality of the arrangements with Fleet. This is because, at any reporting period, Brait will recognise the amount payable under the financial 
   guarantee, if the loans were settled at that time.

2.1    Restatement impact on Group statement of financial position
       Brait's net exposure in terms of its financial guarantee to Fleet is now recognized as a liability. The net exposure takes into account 
       the loan amount owing by Fleet to the Lenders at each reporting date, reduced by the pledged Brait shares held as collateral for this loan, 
       which are valued at the closing share price. The number of pledged Brait shares recognised as collateral is limited to the extent of the 
       loan amount owing by respective individual Investment Team Borrowers, calculated using the closing share price at each reporting date.
       
       Previously                                                                                                             Previously
         reported     Adjustment     Restated                                                       Restated    Adjustment      reported
              R'm            R'm          R'm   March 2018                                             EUR'm         EUR'm         EUR'm
           (4 482)         (906)      (5 388)   Share capital and premium                              (565)          (95)         (470)
             5 125             -        5 125   Foreign currency translation reserve                     881            34           847
             (864)             -        (864)   Convertible Bond reserve                                (57)             -          (57)
          (26 904)         (353)     (27 257)   Retained earnings                                    (2 204)          (25)       (2 179)
          (27 125)       (1 259)     (28 384)   Ordinary shareholders' equity and reserves (NAV)     (1 945)          (86)       (1 859)
           (1 910)         1 910            -   Other liability                                            -           131         (131)
                 -         (651)        (651)   Financial guarantee liability                           (45)          (45)             -
            (52.4)        (34.9)       (17.5)   Number of treasury shares (m)                         (17.5)        (34.9)        (52.4)
             5 732         (146)        5 586   Net asset value per share (cents)                        383          (10)           393
       
2.2    Restatement impact on Group statement of comprehensive income
       As a result of recognising the net exposure in terms of the financial guarantee to Fleet as a liability, the change in exposure during the 
       period is recognised in the line item "Other expenses"
       
       Previously                                                                                                     Previously
         Reported   Adjustment    Restated                                                   Restated   Adjustment      Reported
              R'm          R'm         R'm   March 2018                                         EUR'm        EUR'm         EUR'm
       
            (897)          187       (710)   Finance costs                                       (47)           12          (59)
                -        (651)       (651)   Other expenses                                      (45)         (45)             -
          (9 249)            -     (9 249)   Other unchanged income/expense items               (608)            -         (608)
         (10 146)        (464)    (10 610)   Loss for the year                                  (700)         (33)         (667)
            (297)            -       (297)   Translation adjustments                             (99)            -          (99)
         (10 443)        (464)    (10 907)   Comprehensive loss for the year                    (799)         (33)         (766)
                                             Earnings/Headline earnings per share - basic
          (2 144)           52     (2 092)   (cents)                                            (138)            3         (141)

2.3    Restatement impact on Group statement of cash flows
       Under the previous consolidation basis, repayments made by Fleet or the Investment Team Borrowers on their respective outstanding loan
       amount gave rise to cash flows to Brait. As a result of recognising the net exposure in terms of the financial guarantee to Fleet as a 
       liability, Brait's cash flow statement will now only reflect a cash outflow should this be required at settlement.
   
         R'm     R'm     R'm    March 2018                                      EUR'm  EUR'm   EUR'm
   
       (113)    (55)    (168)   Net purchase of treasury shares                  (11)    (5)     (6)
       (348)      55    (293)   Interest paid                                    (20)      3    (23)
         134       -      134   Other unchanged cash flow items                     8      -       8
       (327)       -    (327)   Net decrease in cash and cash equivalents        (23)    (2)    (21)
        (50)       -     (50)   Effects of exchange rates on cash                 (8)      2    (10)
       3 284       -    3 284   Cash and cash equivalents at beginning of year    230      -     230
       2 907       -    2 907   Cash and cash equivalents at end of year          199      -     199

3. INVESTMENTS
   The Group designates the majority of its financial asset investments as FVTPL as the Group is managed on a fair value basis, with any 
   resultant gain or loss recognised in investment gains/losses. Fair value is determined in accordance with IFRS 13.
   
   Statement of financial position items carried at fair value include investments in equity debt 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, and price to book multiple. Listed investments are held at recent quoted 
   transaction prices.

   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 EBITDA 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.

   In accordance with IFRS 13, no control premium adjustment is considered for those portfolio investments in which the Group holds a majority
   interest. 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
   30 September 2018 investor presentation on the Group's website, www.brait.com.

31 March  30 Sept    30 Sept                                                30 Sept  30 Sept    31 March
    2018     2017       2018                                                   2018     2017        2018
     R'm      R'm        R'm                                                  EUR'm    EUR'm       EUR'm

  36 497   40 023     37 710    The Group's portfolio of investments          2 297    2 499       2 501

                                Equity and shareholder funding investments
  17 067   17 726     17 972    Virgin Active                                 1 095    1 107       1 169
  10 735   12 030      9 945    Premier                                         606      751         736
   6 287    8 511      6 602    Iceland Foods                                   402      531         431
       -        -          -    New Look                                          -        -           -
   2 408    1 756      3 191    Other Investments                               194      110         165

Valuation metrics            30 September 2018                30 September 2017                     31 March 2018
                                             3rd Party                         3rd Party                            3rd Party
                         EBITDA   Multiple    Net Debt   EBITDA     Multiple    Net Debt    EBITDA      Multiple     Net Debt

Virgin Active (GBP'm)       139      11.4x         345      139        11.4x         336       144         11.4x          331
Premier (R'm)             1 084      11.4x       2 118    1 170        12.4x       1 768     1 065         12.4x        1 938
Iceland Foods (GBP'm)       153       8.4x         713      163         9.0x         687       157          8.4x          689
New Look (GBP'm)                    Note 1                            Note 1                              Note 1
Other investments                   Note 2                            varied                              Note 2

Note 1  Brait's equity and shareholder loan investments in New Look are valued at nil based on the Enterprise Value at the reporting dates shown.

Note 2  As Brait was in the process of building a position in certain public market securities, this was referred to as a "Listed Position" at 31 March
        2018. This Listed Position relates to New Look Senior Secured Notes ("SSNs"), which at 30 September 2018, applying closing quoted prices translated
        at closing exchange rates, represents a carrying value of GBP111 million (R2.05 billion). The nominal value for this holding is GBP189 million, which
        represents 18.2% of the SSNs in issue.

Fair Value Hierarchy
IFRS 13 provides a hierarchy that classifies inputs used to determine fair value. Investments 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 assets or liability that are not based on observable market data.

The Level 1 classification relates to Brait's holding of SSNs. There are no financial assets that are categorised as Level 2 in the current or prior period.
All Level 3 investments have been valued using a maintainable earnings multiple model.

Level 1   Level 3    Total                                   Level 1   Level 3   Total
   R'm        R'm      R'm    30 September 2018                EUR'm     EUR'm   EUR'm

      -    17 972   17 972    Virgin Active                        -     1 095   1 095
      -     6 980    6 980    Premier                              -       425     425
      -     6 602    6 602    Iceland Foods                        -       402     402
  2 050     1 141    3 191    Other investments (1)              125        69     194
  2 050    32 695   34 745    Investments at fair value          125     1 991   2 116
                     2 965    Premier shareholding funding                         181
                     2 965    Investments at amortised cost                        181
                    37 710    Total investments                                  2 297

(1) The Other Investments portfolio comprises Brait's holding of the SSNs, its investment in DGB and remaining private equity fund investments.

   Audited      Unaudited                                                                                   Unaudited            Audited
year ended      six months                                                                                  six months        year ended
  31 March  30 Sept      30 Sept                                                                       30 Sept      30 Sept     31 March
      2018     2017         2018                                                                          2018         2017         2018
       R'm      R'm          R'm                                                                         EUR'm        EUR'm        EUR'm

        25        3          273    4.  ACCOUNTS RECEIVABLE                                                 17            -            2
                                        Included in accounts receivable is the outstanding balance
                                        of GBP14.1 million (R260 million/EUR15.8 million) relating to the
                                        New Look debtor factoring as per note 11.
                                        
                                    5.  CASH AND CASH EQUIVALENTS
     2 907    3 287        2 069        Balances with banks                                                126          205          199

       155      270           82        - ZAR cash                                                           5           17           11
       104       96           14        - USD cash                                                           1            6            7
     2 648    2 921        1 973        - GBP cash                                                         120          182          181

   Audited      Unaudited                                                                                  Unaudited             Audited
year ended      six months                                                                                 six months         year ended
  31 March  30 Sept      30 Sept                                                                       30 Sept      30 Sept     31 March
      2018     2017         2018                                                                          2018         2017         2018
       R'm      R'm          R'm                                                                         EUR'm        EUR'm        EUR'm

                                   6.   CONVERTIBLE BONDS
     5 443    5 883        6 124        On 18 September 2015 Brait received GBP350 million from            373          367          373
                                        the issuance of its five-year unsubordinated, unsecured
                                        convertible bonds ("Bonds"). The Bonds listed on the
                                        Open Market (Freiverkehr) segment of the Frankfurt
                                        Stock Exchange on 15 October 2015 and 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. The adjusted conversion price at
                                        reporting date is GBP7.7613 per ordinary share, which takes
                                        into account Brait's bonus share issues and cash dividend
                                        alternative since date of issue, in accordance with the
                                        Bonds terms and conditions. Using this conversion price,
                                        the Bonds would be entitled to convert into 45.096 million
                                        ordinary shares (8.6% of Brait's current share capital of
                                        525.599 million ordinary shares) on exercise of bondholder
                                        conversion rights.

                                        In the event that the bondholders have not exercised
                                        their conversion rights in accordance with the terms and
                                        conditions of the Bonds, the Bonds are settled at par
                                        value in cash on maturity on 18 September 2020. In accordance
                                        with IAS32, the Bonds' liability component is measured at reporting
                                        date as GBP 332.1, million (FY 2018: GBP 328.0 million; HY 2018: 
                                        GBP 332.9 million) and translated into Rands using the closing 
                                        GBP/ZAR exchange rate
   Audited       Unaudited                                                                                  Unaudited              Audited
year ended       six months                                                                                 six months          year ended
  31 March   30 Sept      30 Sept                                                                       30 Sept     30 Sept       31 March
      2018      2017         2018                                                                          2018        2017           2018
       R'm       R'm          R'm                                                                         EUR'm       EUR'm          EUR'm

                                    7.   BORROWINGS
     2 669     2 736        4 719        Opening Balance                                                    323         177            186
       372        81          241        Interest accrual                                                    15           5             24
         -         -            -        Foreign currency translation                                      (37)         (8)             13
     1 678       500          200        Net cash drawn from Borrowings                                      13          33            100

     1 971       500          200        Drawdowns                                                           13          33            120
     (293)         -            -        Repayments                                                           -           -           (20)

     4 719     3 317        5 160        Closing Balance                                                    314         207            323

                                         The loan from FirstRand Bank Limited (trading through
                                         its Rand Merchant Bank division) and Standard Bank of
                                         South Africa Limited (the "Lenders") is Rand denominated,
                                         bears interest at JIBAR plus 3.0% repayable quarterly,
                                         with a right to rollup. The R8.5 billion facility expires in
                                         December 2020 and is secured by Group assets.
  Restated       Unaudited                                                                                  Unaudited             Restated
year ended       six months                                                                                 six months          year ended
  31 March    30 Sept    30 Sept                                                                       30 Sept       30 Sept      31 March
      2018       2017       2018                                                                          2017          2017          2018
       R'm        R'm        R'm                                                                         EUR'm         EUR'm         EUR'm

       651          -        685     8.   FINANCIAL GUARANTEE LIABILITY                                     42             -            45
                                          At reporting date, Brait's net exposure in terms of its 
                                          financial guarantee is R685 million (FY2018: R651 million). 
                                          This represents the shortfall at reporting date between the 
                                          loan amount owing by Fleet to the Lenders of R2 007 million 
                                          (FY2018: R1 910 million), for which Brait has provided an 
                                          indemnity, and the R1,322 million (FY2018: R1 259 million) 
                                          value of Brait shares owned by the Investment Team and Fleet, 
                                          which are pledged as collateral to Brait for its indemnity, 
                                          and valued at the closing share price of R37.78 (FY2018: R36.10).

                                          Fleet's loan owing to the Lenders is Rand denominated and bears 
                                          interest at JIBAR plus 3%, with quarterly compounding of interest. 
                                          The current term of the loan is 6 December 2020.

                                          The number of pledged Brait shares owned by the Investment Team 
                                          available as collateral to Brait at each reporting date is limited to 
                                          the extent of the loan amount owing by respective Investment Team 
                                          Borrowers, calculated using the closing share price. As a result of 
                                          this calculation, 2.5 million pledged shares are not recognised by Brait 
                                          as collateral (FY2018: 2.6 million).

                                          At 30 September 2017, Brait's net exposure of R440 million was recognised 
                                          as a contingent liability (refer to note 12.1). Brait has since recognised 
                                          its net exposure in terms of this financial guarantee as a liability, with 
                                          changes in exposure recognised in the line item "other expenses" in the 
                                          statement of comprehensive income.

                                     9.   HEADLINE EARNINGS RECONCILIATION
   (10 610)    (7 980)    (3 394)         Loss and headline loss                                          (216)        (532)         (700)
        507        506        508         Weighted average ordinary shares in issue (m) - basic             508          506           507
    (2 092)    (1 577)      (668)         Loss and headline loss per share (cents) - basic                 (43)        (105)         (138)

                                          The conversion of the Bonds is anti-dilutive
  
  Restated                                                                                                                        Restated
  31 March      30 Sept      30 Sept                                                                     30 Sept      30 Sept     31 March
      2018         2017         2018                                                                        2018         2017         2018

                                       10. TREASURY SHARES
                                           Opening number of shares held for the vested
14 576 784   14 576 784   17 475 070       benefit of Brait SE                                        17 475 070   14 576 784   14 576 784
 2 898 286    2 898 286            -       Number of treasury shares purchased                                 -    2 898 286    2 898 286
                                           Closing number of shares held for the
17 475 070   17 475 070   17 475 070       vested benefit of Brait SE                                 17 475 070   17 475 070   17 475 070
    
11.  RELATED PARTIES
     Transactions between the Company and its subsidiaries have been eliminated on consolidation or on fair value of subsidiaries and are not disclosed in this note.
     During the six month period ended 30 September 2018, Group companies entered into the following transactions with related parties who are not members of the Group:

     On 10 May 2018, Brait Capital International Limited ("BCIL") (a wholly owned subsidiary of Brait SE) and New Look Retailers Limited ("NLR") (a wholly
     owned subsidiary of New Look Retail Group Limited) entered into a Debtor Purchase Agreement ("Agreement"). The terms of the Agreement allow
     NLR to sell and assign approved 3rd Party E-commerce debtor balances to BCIL, with no recourse. The credit assessment of debts offered and
     the decision to purchase are at the sole discretion of BCIL. The trade terms of the debtors acquired vary between 30 days and 75 days. A factoring
     charge of three-month LIBOR plus 2.0% per annum applies, which is within the pricing range quoted by third party banks. The current outstanding balance
     of GBP 14.1 million is included as part of Accounts Receivable as per note 4.

   Audited       Unaudited                                                                                        Unaudited              Audited
year ended       six months                                                                                       six months          year ended
  31 March    30 Sept     30 Sept                                                                             30 Sept      30 Sept      31 March
      2018       2017        2018                                                                                2017         2017          2018
       R'm        R'm         R'm                                                                               EUR'm        EUR'm         EUR'm

                                    Loss from operations include:
      (17)        (8)         (9)   Non-executive directors' fees                                                 (1)          (1)           (1)
       (2)        (1)         (1)   Professional fees - M Partners S.à r.l (1)                                      -            -             -
       (2)        (1)         (1)   Professional fees - Maitland International Holdings Plc (1)                     -            -             -
       (3)          -           -   Other expenses - Maitland International Holdings Plc (1)                        -            -             -
                                    (1) HRW Troskie is a director and shareholder of Brait, and is a
                                        director and shareholder of Maitland International Holdings Plc;
                                        M Partners S.a r.l. is a Maitland network law firm; HRW Troskie is
                                        neither a director nor a shareholder of M Partners S.a r.l.

   Audited      Unaudited                                                                                  Unaudited             Audited
year ended      six months                                                                                 six months         year ended
  31 March  30 Sept     30 Sept                                                                       30 Sept      30 Sept      31 March
      2018     2017        2018                                                                          2018         2017          2018
       R'm      R'm         R'm                                                                         EUR'm       EUR'm          EUR'm
                                   12.  CONTINGENT LIABILITIES AND COMMITMENTS
                                   12.1 Contingencies
                                        As at 30 September 2017, Brait's net exposure for its
                                        financial guarantee to fleet was R440 million. Given the 
                                        remaining term was more than three years, this amount was disclosed
                                        as a contingent liability. Brait has since recognised its net exposure
                                        in terms of this financial guarantee as a liability (refer to note 8) 

                                   12.2 Commitments
     6 209    6 882       6 806         Convertible Bond commitments                                      415          430           425
       160      175         177        - Coupon payment due within one year                                11           11            11
       240      350         177        - Coupon payments due between one and five years (1)                11           22            16
     5 809    6 357       6 452        - Principal settlement due within five years (1)                   393          397           398
                                        (1) The coupon payments due amounts reflect the semi-
                                            annual coupons payable in arrears over the Bond's
                                            five-year term. The principal settlement due amount
                                            is only payable in the event that the bondholders
                                            have not exercised their conversion rights. 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 trading days after 
                                            9 October 2018. If the soft call is exercised, 
                                            coupons from 18 September 2018 to
                                            18 September 2020 will not be payable.

        15       88          16         Private equity funding commitments                                  1            5             1
                                        Rental commitments (Malta and Mauritius)
         2        2           2         - Within one year                                                   -            -             -
         3        3           3         - Between one and five years                                        -            -             -
     6 229    6 975       6 827         Total commitments                                                 416          435           426

12.3  OTHER
      The Group has rights and obligations in terms of shareholder or purchase and sale agreements relating to its present or former investments.

13.   POST-BALANCE SHEET EVENTS
      No events have taken place between 30 September 2018 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.

Review of operations

The Board of Directors hereby reports to shareholders on the Group's unaudited interim results for the six months ended 30 September 2018.

Commenting on the results, Brait's Chairman Jabu Moleketi said: "Brait has performed in line with expectations with a broadly flat performance in a
tough environment in both South Africa and the United Kingdom. Focus continues on driving growth and value for shareholders in its underlying portfolio
companies in addition to progressing strategies to reduce debt on Brait's own balance sheet and increasing cash flow at Brait itself".

FINANCIAL HIGHLIGHTS

- Key performance metric of NAV per share largely flat for the six months ended 30 September 2018 at ZAR55.23 (31 March 2018: restated NAV per
  share of ZAR55.86 - Note 1)

- Valuation multiple for Premier reduced from 12.4x to 11.4x; Virgin Active and Iceland Foods unchanged

- The Listed Position refers to New Look Senior Secured Notes (GBP111 million carrying value), which are included in the Other Investments portfolio

- Cash received from portfolio for the current six-month period of ZAR545 million, which compares to ZAR484 million received during FY2018

- Available cash and facilities of ZAR3.4 billion at reporting date

- Operating costs to AUM at 0.68%, within target of being less than 0.85%

Note 1: The audited NAV per share at 31 March 2018 of ZAR57.32 has been restated to ZAR55.86. Refer to the discussion on the reversion to the previous accounting
treatment for Fleet.

REPORTED NAV PER SHARE
Brait's valuation policy is to reference the EV/EBITDA valuation multiple on a historical basis for each of its investments, relative to their peer group's
average 3-year trailing multiple. The EV/EBITDA historical valuation multiples used compared to respective peer average multiples are:

                           30 September 2018                           31 March 2018                        30 September 2017

                                    % discount/                               % discount/                            % discount/
                   Valuation      (premium) to            Valuation         (premium) to           Valuation       (premium) to
                    multiple      peer average:            multiple         peer average:           multiple       peer average:
                        used                                   used                                     used
                                  3-year         spot                      3-year        spot                     3-year            spot

Virgin Active          11.4x         17%          24%         11.4x           16%         17%          11.4x         17%             15%
Premier                11.4x         10%         (8%)         12.4x            5%          2%          12.4x          7%           (10%)
Iceland Foods           8.4x         14%           5%          8.4x           18%           -           9.0x         21%             20%
New Look (Note 2)          -          -             -             -             -           -              -           -               -

Note 2: Brait's equity investment in New Look since 30 September 2017 is valued at zero based on the Enterprise Value at reporting dates

The composition of the peer groups applied are unchanged, with the exception of Iceland Foods, where as of 31 March 2018, following the delisting of
Booker, Iceland Foods' peer group includes Marks & Spencer as a replacement.

The valuation multiple for Premier was reduced from 12.4x to 11.4x at reporting date, largely to take consideration of the decline in the peer spot multiple
evidenced in the current period. The 11.4x multiple used represents a 10% discount to the peer average 3-year trailing multiple at reporting date.

The NAV breakdown is as follows:

   Unaudited    Restated    Unaudited                                             Unaudited    Restated     Unaudited
30 September    31 March 30 September                                          30 September    31 March  30 September
        2017        2018         2018                                                  2018        2018          2017
       ZAR'm       ZAR'm        ZAR'm                                        %        EUR'm       EUR'm         EUR'm
      40 023      36 497       37 710   Investments                         94        2 297       2 501         2 499
      17 726      17 067       17 972   Virgin Active                       45        1 095       1 169         1 107
      12 030      10 735        9 945   Premier                             25          606         736           751
       8 511       6 287        6 602   Iceland Foods                       16          402         431           531
           -           -            -   New Look                             -            -           -             -
       1 756       2 408        3 191   Other investments                    8          194         165           110
       3 287       2 907        2 069   Cash and cash equivalents            5          126         199           205
           3          25          273   Accounts receivable                  1           17           2             -
      43 313      39 429       40 052   Total assets                       100        2 440       2 702         2 704
       9 462      11 045       11 988   Total liabilities                               730         757           590
       5 883       5 443        6 124   Convertible bond                                373         373           367
       3 317       4 719        5 160   Borrowings                                      314         323           207
           -         651          685   Financial guarantee liability                    42          45             -
         262         232           19   Accounts payable                                  1          16            16

      33 851      28 384       28 064   NAV                                           1 710       1 945         2 114
      508.12      508.12       508.12   Net issued ordinary shares ('mil)            508.12      508.12        508.12
       6 662       5 586        5 523   NAV per share (cents)                           336         383           416

Note: The closing GBP/ZAR exchange rates used to translate the Group's net Pound denominated assets into its rand presentation currency are as at 30 September 2018:
R18.43; 31 March 2018 - R16.60; 30 September 2017 - R18.16

KEY HIGHLIGHTS FOR THE GROUP'S INVESTMENT PORTFOLIO ARE:

Virgin Active

-  For the nine months ended 30 September 2018, Virgin Active has focused on membership growth, investment into its existing club portfolio and
   selected new club rollouts to support growth in several of its territories.

-  Virgin Active has expanded its group exercise offering and enhanced its digital platform in order to improve the member experience.

-  Using actual Pound Sterling exchange rates for the nine months ended 30 September 2018, revenue grew by 1%, with EBITDA decreasing by 6%
   on the comparative period. EBITDA growth was impacted by the upfront recognition of increased commission costs associated with the substantial
   growth in sales, new club start-up expenses and adverse exchange rate movements. Excluding these impacts, EBITDA at constant currency was up 7%. 
   All territories generated positive revenue growth, driven by volume growth in membership and the maturing of new and developing clubs.

-  During the nine months ended 30 September 2018, Virgin Active has opened a net 5 new clubs, with the group now comprising 238 well
   invested profitable clubs with 1.2 million members across 8 countries.

-  Closing membership at 30 September 2018, excluding club closures, grew 3% over the comparative period, driven by membership sales that were up 13% relative to the
   comparative period.

-  Virgin Active continues to invest in boutique quality group exercise, where studio space has been increased across the UK estate. In South Africa,
   9 new format group exercise studios have been introduced.

-  Virgin Active has made further investment in improving its digital proposition. In Italy, new initiatives include digital coaching and Revolution Live, which
   offers customers the ability to participate in digital cycle classes outside of the gym.

-  Post the GBP25 million repayment of shareholder funding in September 2018, of which Brait received GBP19.8 million (ZAR365 million), Virgin Active's leverage
   ratio for net debt owing to third parties, based on last twelve months (LTM) EBITDA, is 2.5x (30 September 2017: 2.4x)

-  Virgin Active, in which Brait has an effective 71.9% (HY2018: 71.9%) equity value participation (post dilution for the performance based sweet equity
   granted to the Virgin Active management team) and 79.2% (HY2018: 79.2%) shareholder funding participation, has a carrying value of ZAR18.0 billion
   (HY2018: ZAR17.7 billion), representing 45% of Brait's total assets (HY2018: 41%).

Premier
-  In a challenging macro environment Premier's focus on margin management delivered EBITDA growth of 10% for the six months ended 30 September
   2018. Lower commodity prices and the resulting deflationary environment led to group revenue for the period reducing by 8% on the comparative.

-  EBITDA margin of 10.2% compares favourably to the 8.5% for the prior period. Whilst gross profit margin for the current six-month period was largely
   in line with FY2018, increased costs derived from the weakened rand, higher fuel prices, labour settlements and administration costs resulted in the
   slight decrease in EBITDA margin compared to FY2018's 10.4%.

-  The milling division, which represents 30% of net revenue, generated a 158% increase in EBITDA, led by the maize business, which continues to
   improve profitability after the extreme price volatility experienced post the drought in 2016 and record maize crop in 2017/18.

-  Premier's bread division, which accounted for 52% of the group's net revenue, recorded a satisfactory performance in a market which remains
   deflationary. Sales volumes grew by 2.4% over the comparative period, with the average selling price per loaf remaining flat for the 278 million loaves
   produced. EBITDA was down 9% due to substantial increases in fuel and wheat prices.

-  No significant expansionary projects are budgeted for FY2019, with capital expenditure for the current six-month period at 3% of revenue
   (HY2018: 3%).

-  During the six-month period, Premier repaid Brait ZAR106 million shareholder funding, with a further ZAR111 million repaid on 1 October 2018.
   Premier's leverage ratio for net debt owing to third parties, based on LTM EBITDA, is 1.9x (HY2018: 2.1x).

-  Brait increased its shareholding in Premier in the six-month period from 93.7% to 96.0% (HY2018: 92.7%), through the exercise of put and call
   option agreements.

-  The reduction in valuation multiple from 12.4x to 11.4x takes into account the decline in the peer average spot multiple during the six-month reporting
   period, and is the main reason for Premier's carrying value having reduced from ZAR10.7 billion to ZAR9.9 billion at reporting date (HY2018: ZAR12.0 billion), 
   which represents 25% of Brait's total assets (HY2018: 28%).

Iceland Foods:
-  The UK retail market while in growth, partly driven by increasing inflation, continues to be competitive.

-  Sales (in GBP) for the 24 weeks ended 14 September 2018 grew by 5.1%. LFL sales are 1% positive on the comparative period. Iceland benefitted
   from the net 17 new stores opened in the period, which includes 15 Food Warehouse formats, and the net 30 new stores opened in the previous
   financial year. The online business continues to achieve strong LFL growth.

-  EBITDA for the period is down 21.5% on the comparative. This principally reflects increased staffing costs following the rise in the National Living Wage
   from April 2018; increased costs due to both higher fuel prices and the need to adapt the distribution network to accommodate growing demand, and some
   investment in price and promotions to drive transaction growth. Management believes that the third quarter provides the opportunity to recover the 
   EBITDA year on year shortfall, subject to sales performance.

-  Iceland products were made available in September 2018 in three of The Range home, garden and leisure stores as an initial trial.

-  During the period, Iceland refitted a total of 24 Iceland facia stores across the UK, taking the total number of completed refurbishments to 77 at
   14 September 2018, with this group of refurbished stores consistently achieving LFL sales performance ahead of the company average. A new,
   lower cost store refit has been trialled, with results from the initial five stores encouraging.

-  The total estate at 14 September 2018 is 949 stores (FY2018: 932 stores) which includes 74 Food Warehouse stores. The pace of store openings will
   increase during the second half of the financial year, aided by the acquisition of 19 former Poundworld stores from the receivers of that business.

-  Liquidity remains strong, however, due to the increased capital expenditure for growing and refreshing the store estate and increased potential
   stock holding, may result in the year-end net debt position being higher than the comparative. Management are comfortable with this position, 
   given the nature of these two drivers. Iceland's leverage ratio for net debt owing to third parties, based on LTM EBITDA is
   4.8x (HY2018: 4.2x).

-  Following a company share buyback during April 2018, Brait's shareholding in Iceland increased from 60.1% to 63.1% (HY2018:60.1%).

-  Iceland's carrying value of ZAR6.6 billion (HY2018: ZAR8.5 billion) represents 16% of Brait's total assets (HY2018: 20%).

New Look
-  New Look continues to deliver on its turnaround plan in a heavily promotional UK market. Its return to proven broad appeal product and better value is
   evidenced by having outperformed the market by 5.6% (*), and consequently increasing its market share as the UK's number 2 womenswear retailer in
   the 18 to 44 age range (#). Conversion rates have increased in UK stores to 24.4% (HY2018: 23.1%) and are +2.0% LFL for online.

-  For the 26 weeks ended 22 September 2018, continued focus on more profitable sales within the E-commerce channel and the decline in franchise
   revenue due to planned franchisee store reductions, were the main reasons for group revenue decreasing by 4.2% on the comparative.

-  Group EBITDA for HY2019 increased by 106% to GBP49.8 million (HY2018: GBP24.2 million). Excluding operations in China, which New Look
   announced on 18 October 2018 it would be exiting as part of its strategic review of international operations, group EBITDA for the period is
   GBP57.9 million.

-  Annual cost savings of GBP70 million have been identified and actioned for the group, of which GBP31.7 million has been recognised in the
   HY2019 results.

-  In terms of the CVA, the annual forecast EBITDA benefit has reduced by GBP5 million to GBP35 million due to landlord-enforced closure of
   profitable stores and lease renewals. A total of 85 stores have closed or are in the process of doing so, with 13 negotiations ongoing. Landlords can no
   longer terminate on 'B' classified stores.

-  Positive year-on-year gross profit results continued for key clothing ranges where initial attention has been focused, with improved ranges in denim,
   accessories and footwear having landed at the end of the period. Speed to market on key product categories has quickened and internal processes
   continue to improve.

-  Promotional activity was used to drive footfall, in line with the market, and manage slower moving stock lines, to maintain a clean stock position,
   with underlying stock down 10.6% year on year. Tighter stock management and increased sourcing from countries closer to the UK enable shorter lead 
   times for seasonal fashion product, providing greater 'Open to Buy' flexibility and maximising full price trading of trends.

-  Underlying operating profit for the E-commerce channel increased to GBP10.3 million (HY2018: GBP1.4 million). E-commerce is driving footfall into stores,
   demonstrated by Click and Collect sales mix increasing from 28% to 41%, and online returns to stores mix now at 77% (HY2018: 65%).

-  New Look's liquidity has improved from year-end, with total cash, liquidity and operating facilities available of GBP93.8 million at its interim reporting
   date of 22 September 2018.

-  Brait's equity investment and shareholder loan in New Look is valued at nil (HY2018: nil) based on the Enterprise Value at reporting date

-  Footnotes: (*) measured by the British Retail Consortium (BRC) for the 26 weeks ended 22 September 2018 for Women's Clothing in UK stores; (#)
   measured by KantarWorldPanel for the 24 weeks ended 23 September 2018, Womenswear by value

Other Investments:

-  As Brait was in the process of building a position in certain public market securities, this was referred to as a "Listed Position" at 31 March 2018.
   This holding relates to New Look Senior Secured Notes ("SSNs"), which at 30 September 2018, applying closing quoted prices translated at closing
   exchange rates, represents a carrying value of GBP111 million (ZAR2.05 billion). The nominal value for this holding is GBP189 million, which represents
   18.2% of the SSNs in issue.

-  The net increase in carrying value for the Other Investments portfolio over the past twelve months is therefore a function of: (i) the investment in SSNs;
   (ii) proceeds received in excess of ZAR200 million, which includes Brait IV's realisation of its investment in Primedia in December 2017; and
   (iii) a decrease in the carrying value of DGB, which includes the impact of a discontinued contract, offset by a 10% increase in shareholding to 91.3%.

-  At reporting date, the Other Investments portfolio carrying value of ZAR3.2 billion (HY2018: ZAR1.8 billion) comprises 8% of Brait's total assets
   (HY2018: 4%).

Significant cash flow within the underlying assets over any 3-year period
Brait's portfolio of investments are highly cash flow generative. Currently, cash flow generated by the Group's portfolio of investments is mostly retained
within the portfolio for growth and deleveraging. Whilst ensuring growth is not compromised for the portfolio, Brait received ZAR545 million during the
current six-month period (HY2018: ZAR42 million), mostly in the form of shareholder funding repayments made by Virgin Active (GBP19.8 million) and
Premier (ZAR106 million). Premier repaid a further ZAR111 million on 1 October 2018.

LOW COST TO AUM RATIO FOR BRAIT
Brait's operating expenditure for the six-month period is ZAR138 million which is in line with the comparative period's ZAR135 million. On an annualised
basis, this equates to operating expenditure of ZAR276 million, compared to R281 million for FY2018. Using Brait's average AUM for the six-month period
as the reference basis, annualised operating costs are 0.68% (FY2018: 0.66%) and net after fee income of 0.64% (FY2018: 0.58%), compared to the
target of 0.85% or less.

GROUP FUNDING POSITION
The Group's committed revolving ZAR8.5 billion facility from the Lenders is Rand denominated, bears interest at JIBAR plus 3.0% payable quarterly, with
the right to rollup these quarterly interest payments. This facility is secured by the assets of Brait Malta Limited and its subsidiaries. At 30 September 2018,
the Group has available undrawn gearing facilities of ZAR1.3 billion, representing Brait's borrowing facility of ZAR8.5 billion, reduced for the amount drawn
of ZAR5.2 billion and the loan that Fleet owes its bankers of ZAR2.0 billion (which does not take into consideration the ZAR1.3 billion value of the pledged
shares held as collateral). Taking into account the Group's ZAR2.1 billion cash, this results in total liquidity of ZAR3.4 billion at reporting date.

CONVERTIBLE BOND
Brait's GBP350 million unsubordinated, unsecured convertible bonds are listed on the Open Market (Freiverkehr) segment of the Frankfurt Stock Exchange
("Bonds"). The Bonds have a five-year term ending 18 September 2020 and carry a fixed coupon of 2.75% per annum payable semi-annually in arrears.
In accordance with the terms and conditions of the Bonds, Brait's bonus share and cash dividend alternatives issued / paid during the Bonds' term result
in adjustment to the Bonds' conversion price, which at reporting date is GBP7.7613. Using this conversion price, the Bonds would be entitled to convert
into 45.096 million ordinary shares (8.6% of Brait's current share capital of 525.599 million ordinary shares) on exercise of bondholder conversion rights.
In the event that the bondholders have not exercised their conversion rights in accordance with the terms and conditions of the Bonds, the Bonds are to
be settled at par value in cash on maturity date.

In accordance with IAS 32 (Financial Instruments: Presentation), the Bonds' liability component is measured at reporting date as GBP332.1 million.
Applying the closing GBP/ZAR exchange rate of ZAR18.43, results in the Bonds' translated carrying value of ZAR6.1 billion.

ORDINARY SHARE CAPITAL
Total issued ordinary share capital at 30 September 2018 is 525,599,215 shares of EUR0.22 each (HY2018: 525,599,215 shares). The Group has
17,475,070 purchased treasury shares at 30 September 2018 (HY2018: 17,475,070 purchased treasury shares held). This results in net ordinary share
capital in issue of 508,124,145 shares (HY2018: 508,124,145 shares).

As set out below, as a result of reverting to the 'Historic Basis' of accounting for Fleet (as set out in Brait's FY2018 results presentation), the Group no
longer recognises as treasury shares the pledged Brait shares held as collateral for the loan to Fleet.

CHANGE IN ACCOUNTING TREATMENT FOR FLEET
In the financial years 2011-2017 Brait accounted for the financial guarantees given by it for Fleet (the Investment Team's vehicle to facilitate the holding
of shares in Brait) under IAS37 (Provisions, Contingent Liabilities and Contingent Assets) as required by IAS39 (Financial Instruments: Recognition and
Measurement). In the full year financials for 2018, and following extensive discussions with the auditors, the decision was made to change the basis of
accounting to consolidate Fleet in accordance with IFRS10 (Consolidated Financial Statements) and the comparative figures for 2016 and 2017 were
restated accordingly.

During the current financial period, this basis of accounting has been rigorously reassessed by the Audit Committee and the auditors. It has been
concluded that variations in the size of the net exposure under the guarantee do not provide Brait with any incremental rights over the relevant activities
of Fleet or any decision-making power over Fleet or any ability to influence the variable returns of Fleet in the periods prior to the due date of the loans.
This has been the case since inception and as confirmed by Senior Counsel. As such, the Directors are of the view that, in accordance with IFRS 10
paragraph B85, their initial assessment of Brait's control of Fleet has not changed simply because of a change in the net exposure.

Accordingly, Brait will again account for its net exposure as a financial guarantee (as done in 2012 to September 2017) as defined in IAS39 and in
accordance with IAS37 and will restate its comparative figures accordingly. The Directors believe that this is a more accurate reflection of the commercial
and legal reality of the arrangements with Fleet. This is because, at any reporting period, Brait will recognise the amount payable under the financial
guarantee, if the loans were settled at that time. At 30 September 2018, this amounts to ZAR685 million (31 March 2018: ZAR651 million), representing
the shortfall between Fleet's loan amount of ZAR2.0 billion (31 March 2018: ZAR1.9 billion), for which Brait has provided an indemnity, and collateral held
in the form of 35.0 million pledged Brait shares held by Fleet and the Investment Team (31 March 2018: 34.9 million pledged shares), valued using the
closing Brait share price of ZAR37.78 (31 March 2018: ZAR36.10).

The restatement effect for the interim financial statements is isolated to the FY2018 reported results and a resulting restated NAV per share for FY2018 of
ZAR55.86, compared to the ZAR57.32 reported under the IFRS10 consolidation basis. The September 2017 interim results remain unchanged from that
previously reported (NAV per share of ZAR66.62).

GROUP OUTLOOK
Focus for the next 18 months is to position Brait to resume its previous success in growing NAV per share:

-  Enhancing organic growth in Virgin Active, Premier and Iceland Foods and execution of New Look's turnaround strategy

-  Materially reducing debt on Brait's own balance sheet and increasing cash flow at Brait itself

-  Preparing for the possible redemption and repayment of Brait's Bonds due September 2020

-  Positioning for a new acquisitive phase by the end of this period to achieve a wider investment spread but still primarily focused on consumer facing
   and industrial investments mainly in our chosen geographies of South Africa and the UK

Executing on these plans should result in the reduction of the discount of Brait's share price to the reported NAV per share.

For the investment portfolio:
-  Virgin Active's focus in the current year has been delivering on membership growth, setting a strong growth platform for the future. Further investment
   is planned to enhance group exercise and personal training offerings including growing the group's digital proposition. A return to double digit EBITDA
   growth is expected in the near term as revenue from members acquired in 2018 flows through to 2019

-  Premier's focus remains on margin management across all categories, cost savings and efficiencies. Premier continues to optimise its bakery
   manufacturing footprint, aligning capacity with demand and upgrading the inland bakeries to match the standard set by coastal. In keeping with
   its growth strategy, Premier remains alert to potential value enhancing acquisitions to enter new categories and/or geographies.

-  Iceland's sales continue to grow with positive LFL to date in its third quarter, providing the opportunity to recover the EBITDA year-on-year shortfall.
   Liquidity remains strong. Iceland continues to focus on investing for the long-term success of the business.

-  New Look continues to make good progress in delivering improved operational and financial stability with increasing UK market share demonstrating
   its strengthened breadth of appeal. Although womenswear clothing performance is improving, key challenges in footwear and accessories remain.
   The exit from China allows New Look to focus on core trading, with the review of its other international markets ongoing. A clean stock position at the
   end of H1, supplemented with continued cost savings, sees New Look well placed for the coming peak trading quarter to deal with challenging market
   conditions, uncertainties and headwinds.

In conclusion, Brait believes that driving value in the existing portfolio should remain the focus for the year ahead.

For and on behalf of the Board

PJ Moleketi
Non-Executive Chairman

12 November 2018

Directors (all non-executive)

PJ Moleketi (Chairman)*,JC Botts^, AS Jacobs(##), Dr LL Porter##, CS Seabrooke*, HRW Troskie**, Dr CH Wiese* (Alternate: JD Wiese)*
(##) British  ^American  **Dutch  *South African

Brait's primary listing is on the Euro MTF market of the Luxembourg Stock Exchange and its secondary listing is on the Johannesburg Stock Exchange.

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Date: 12/11/2018 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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