Presentation to the Investment Analysts Society 4th & 5th March 2014 1
Presentation overview Overview and Highlights Financial Results Fred Robertson Lawrie Brozin Underlying Investment Performance Mustaq Brey Questions 2
Overview and Highlights Fred Robertson 3
Overview Profitable Empowering Making a difference Founded in 1995 and listed in 1998 55% economic interest held by previously disadvantaged individuals Track record of creating value for shareholders evidenced by share price growth and dividends 23 broad based NGOs as shareholders, with more than 3 million beneficiaries 4
Overview Sector focus: Financial Services, Food, Healthcare Long-term partnership approach to investments Enterprise Development Fund Strong, diverse and experienced team 5
Key investment sectors Food Healthcare Financial Services Other RE AFRICA 6
Contribution to Intrinsic Gross Asset Value Other 8% Healthcare 37% Food 41% Financial Services 15% 7
Financial Highlights Total assets increased by R1b to R6.8b NAV increased by R422m to R3.2b Intrinsic NAV increased by 16.1% to R4.2b Attributable Profit for the year R464m Headline Earnings for the year R461m Dividend increased by 20% to 30cps Special Dividend of 10cps Share price growth of 24.4% (BRT) and 17.2% (BRN) for the year Share price discount to INAV of 18.1% on Ords and N Ords at year end 8
Financial Results Lawrie Brozin 9
Statement of Comprehensive Income (R m) change 31 Dec 2013 31 Dec 2012 Revenue Sales and fee income Dividends 7.2% 7.5% 2.6% 2 086 1 930 155 1 946 1 795 151 Operating profit -51.1% 64 131 Fair value gains -47.1% 557 1 053 Share of profits of associates -53.6% 13 28 Finance costs 15.9% (111) (132) Profit before tax -49.7% 554 1 103 Taxation 69.0% (81) (261) Profit for the year -43.8% 473 842 Basic EPS (cps) -45.4% 189.9 348.1 Diluted EPS (cps) -45.4% 162.2 297.2 Basic HEPS (cps) -45.5% 188.4 346.0 Diluted HEPS (cps) -45.5% 160.9 295.4 10
Financial Position change 31 Dec 2013 31 Dec 2012 Total assets (R m) 18.8% 6 799 5 725 Interest bearing borrowings (R m) 1.4% 1 198 1 181 Book NAV (R m) 15.0% 3 238 2 815 Book NAV per share (cps) 14.8% 1 324 1 153 Intrinsic NAV (R m) 16.1% 4 187 3 605 Intrinsic NAV per share (cps) 15.9% 1 709 1 474 11
Fair Value Gains Investment 2013 R m 2012 R m Life Healthcare 429 732.2 Old Mutual 105-0.8 Nedbank 99 127.4 MTN Zakhele 44 26.4 Phuthuma Nathi 8.2 6 African & Overseas Ords -1.3 0.6 Rex Trueform Ords -1.4 0.1 Galaxy Gold -6.6-32 Taste Holdings -13.5 67 Rex Trueform N -15.9 4 African & Overseas N -16.6 1.8 Tiger Brands -87.5 96.7 Emthunzini BEE Business Partners Trust -0.1 2.1 Lion of Africa Holdings 15.3 21.5 TOTAL 557 1 053
NAV & INAV history (R m) 5000 4 187 3750 2815 3 605 3238 2 720 2 492 2500 2373 2 497 2 256 2191 2466 1570 1 909 1999 1250 1571 1 779 2009 2010 2011 2012 2013 0 2007 2008 NAV (R m) INAV (R'm) 2006 13
Dividend history (cps) 40 10 30 20 10 0 32 32 24 15 16 12 2006 2007200820092010 30 25 18 2011 201220132014 14
Underlying Investment Performance Mustaq Brey 15
Contribution to Intrinsic Gross Asset Value Other 8% Food 41% Healthcare 37% Financial Services 15% 16
Food Oceana Group Ltd (16.82%) Oceana accounts for 27.4% of Brimstone s intrinsic gross asset value Strong growth in the horse mackerel and hake divisions Lower canned fish sales due to weaker local demand Closing share price R82.00 per share (2012:R69.82) Received and accrued R64.7m in dividends and recorded R8.1m in equity accounted earnings (for 9 months to Sept 13) 17
Food Sea Harvest (58%) Overall catch rates 16% lower than previous period Sales volumes 16% higher that previous period Revenue increased by 20% to R1.2bn Operating profit before interest increased by 78% to R72m Recovery in US and Europe export markets Export revenue increased by 22% on prior year Maintained its market leader position in local market Findus & Quorn now selling well in domestic market In process of refinancing debt structure on more favourable terms 18
Food Sea Harvest change 31 Dec 2013 31 Dec 2012 TAC (tons) 7.9% 156 151 144 741 Sea Harvest quota (tons) 1.7% 39 385 38 728 Sea Harvest percentage 25.2% 26.8% Sales (R m) 20.2% 1 237 1 029 EBITDA (R m) 19.5% 147 123 External debt -4.6% 207 217 Cash on hand - 148 147 Average exchange rates R/Euro R/US$ 12.81 9.30 10.58 8.18 Average oil price ($/barrel) 108 112 19
Food Tiger Brands Rights to 1 813 613 shares (0.95%) at R140.67 Matures in Dec 2017 Trickle Dividend of R2.4m received Recorded R87.5m fair value loss Closing price R266.93 per share (2012:R325.25) Taste Holdings Hold 24 540 099 shares at average cost of R1.57 per share Dividends received during the period R1.3m Recorded R13.5m fair value loss Closing price R3.75 per share (2012:R4.30) 20
Contribution to Intrinsic Gross Asset Value Other 8% Food 41% Healthcare 37% Financial Services 15%
Financial Services Lion of Africa Insurance Company (100%) Lion of Africa is the largest black-owned short term insurer Dismal underwriting cycle Gross premium increased by 12.4% Net loss ratio 78.4% After tax loss of R67m for the year NAV R147m at year end 22
Financial Services Old Mutual plc Rights to 16 954 350 shares (0.35%) acquired in 2005 at R13.08 per share Revalued by R105.1m to R172m Closing price R32.79 per share (2012:R24.49) Performance fees earned R8.2m Deal matures on 1 May 2015 Nedbank Group Rights to 4 008 937 shares (0.78%) (initial 2.6m shares acquired at R74.75 per share in 2005) Revalued by R99.1m to R424m Closing price R210.00 per share (2012:R188.00) Performance fees earned R7.5m Deal matures on 1 January 2015 23
Financial Services AON Re Africa (18%) Leading reinsurance broker in SA and sub-saharan Africa Received dividends of R2.3m Equity accounted earnings R1.7m Afena Capital (28.8%) Investment manager offering specialist equity and balanced portfolios Received dividends of R3.1m Equity accounted earnings of R0.9m 24
Contribution to Intrinsic Gross Asset Value Other 8% Food 41% Healthcare 37% Financial Services 15% 25
Healthcare Life Healthcare (5.04%) Total dividends received for the year R66.2m Share price growth from R33.70 to R41.86 per share at year end Fair value adjustment of R428.5m Special dividend R52m receivable in March 2014 The Scientific Group (28.2%) Shareholder loan repayments R6.0m to December 2013 Equity accounted earnings R0.2m 26
Contribution to Intrinsic Gross Asset Value Other 8% Food 41% Healthcare 37% Financial Services 15% 27
Other House of Monatic (100%) Turnover increased by 3% to R179m Profit after tax increased by 40% to R6.9m Employment levels remained stable throughout the year Continues to benefit from the DTI Productivity Incentive enabling upgrade of plant and equipment by R15m over the past 3 years Rex Trueform and African & Overseas (Queenspark) (33%) Acquired in 2007 for R47.3m Dividend received of R3.1m Fair value loss of R35.3m Valued at R77.8m at year end 28
Other Phuthuma Nathi (2.53%) Phuthuma Nathi is a 20% shareholder in Multichoice SA Valued at R153.4m at year end Closing price of R90.00 per share MTN Zakhele (1.25%) Hold 1 010 500 shares MTN Zakhele is a 4% shareholder in MTN Group Ltd Revalued by R44m to R132.3m MTN closing price R217.02 per share (2012:R177.60) 29
Intrinsic NAV summary % change 31 Dec 2013 31 Dec 2012 Book NAV (R m) 15.0% 3 238 2 815 Intrinsic NAV (R m) 16.1% 4 187 3 605 Book NAV per share (cps) 14.8% 1 324 1 153 Intrinsic NAV per share (cps) 15.9% 1 709 1 474 Fully diluted intrinsic NAV per share (cps) 15.5% 1 616 1 399 Market price per share (cps) Ordinary shares N ordinary shares 24.4% 17.2% 1 400 1 400 1 125 1 195 Discount to Intrinsic NAV Ordinary shares N ordinary shares 18.1% 18.1% 23.7% 18.9% 30
Intrinsic NAV detail Asset % held Valuation basis Gross Value (R 000) Debt (R 000) CGT (R 000) INAV (R 000) Life Healthcare 5.04% Mkt val per share 2 197 990 - (401 053) 1 796 937 Oceana 16.82% Mkt val per share 1 647 934 (285 521) (201 710) 1 160 703 Sea Harvest 58.10% DCF & EV/EBITDA 531 987 - (52 304) 479 683 Nedbank option 0.78% Option valuation 424 119 - (51 489) 372 630 Lion of Africa 100% Price to book & PE 192 556 - (2 367) 190 189 Tiger Brands option 0.95% Option valuation 180 631 - (31 180) 149 451 A&O / Rex Trueform 33.0% Mkt val per share 77 839 - (5 693) 72 146 Taste Holdings 12.46% Mkt val per share 92 025 - ( 9 997) 82 028 MTN Zakhele 1.25% Option valuation 132 271 - - 132 271 Old Mutual option 0.35% Option valuation 172 333 - (28 012) 144 321 Afena Capital 28.8% AUM & PE 44 931 - - 44 931 Investment properties 100% Discount to mkt cap rate 49 825 (24 256) (7 081) 18 488 Phuthuma Nathi 2.53% Mkt val per share 153 442 (2 683) 150 759 AON Re Africa 18% Price to earnings 53 810 - (8 546) 45 264 The Scientific Group 28.2% EV/EBITDA 26 946 - (481) 26 465 House of Monatic 100% Book value 35 173 - (965) 34 208 Other investments Various Book value 7 220-9 401 16 620 Other BEE options Various Market value 6 149 - (1 147) 5 002 Funding Book value (3 975) (653 870) (77 265) (735 109) TOTAL 6 023 206 (963 646) (872 572) 4 186 988 Intrinsic NAV per share (cps) 2 458 (393) (356) 1 709
In conclusion Strong balance sheet and access to facilities Well positioned to pursue value enhancing transactions Solid track record of unlocking value Strong experienced team with proven deal-making ability Long term view on underlying investments Continue to do empowerment differently and make a real difference to all our stakeholders 32
Questions 33
PROFITABLE. EMPOWERING. MAKING A DIFFERENCE. 34