Brait SE (JSE:BAT) News - Virgin Active CEO appointment, capital raise and the amalgamation of the nutrition assets of Real Foods

BRAIT P.L.C.
(Registered in Mauritius as a Public Limited Company)
(Registration No. 183309 GBC)
Share code: BAT ISIN: LU0011857645
Bond code: WKN: A2SBSU ISIN: XS2088760157
LEI: 549300VB8GBX4UO7WG59
("Brait")

VIRGIN ACTIVE CEO APPOINTMENT, CAPITAL RAISE AND THE AMALGAMATION OF THE
NUTRITION ASSETS OF REAL FOODS

After a global search for a successor for the Virgin Active International Investments ("Virgin Active")
CEO, Matthew Bucknall, who is retiring after 25 years in June 2022, Virgin Active has appointed Dean
Kowarski as the new CEO for Virgin Active. Dean has been active in the wellness space for many
years, both personally and professionally. He started the Real Foods Group in 2013 and acquired the
Kauai business in 2015 and has subsequently grown the business from 100 stores to 204 stores of
which 108 are operated within Virgin Active gyms. Dean has had a close association with the Virgin
Active business for many years and has an in-depth understanding and passion for the health and
wellness space. Dean took over as the CEO on 4 March 2022.

Virgin Active has also appointed Mark Field (currently the Managing Director of Virgin Active South
Africa ("VASA")) as the Group CFO. Mark has significant experience across a number of different
roles and territories in the group and will take on the CFO role once a successor for him as VASA
Managing Director has been appointed.

Brait shareholders are advised that Virgin Active has concluded binding agreements to give effect to a
capital raise from third parties and existing investors totalling GBP88.4 million (ZAR1.8 billion) (the
"Capital Raise Transaction"). The Capital Raise Transaction is subject to regulatory approval and is
expected to close by the end of March 2022.

In addition, Virgin Active has entered into binding agreements to merge the nutrition assets of Real
Foods (namely Kauai and Nü chains of healthy fast casual restaurants) into VASA (the "Real Foods
Transaction") for the Rand equivalent of GBP28.6 million (subject to customary adjustments). The
Real Foods Transaction is subject to certain conditions, including regulatory approvals, which are
expected to be obtained by no later than 30 September 2022. Once the transaction conditions are
met, the vendor interests will be exchanged into equity in Virgin Active (the "Real Foods Exchange").

Overview of the Capital Raise Transaction

Certain members of the investment consortium in Real Foods (the "DK Consortium"), will inject
GBP18.2 million to subscribe for equity in Virgin Active at a post money valuation that is based on the
Virgin Active Enterprise Value, as per Brait’s Net Asset Valuation as at 30 September 2021, using the
updated net debt position as at 31 December 2021 (the "Post Money Valuation"). The resultant
equity stake in Virgin Active is 3.4%.

Titan Premier Investments (Pty) Limited ("Titan"), an investment vehicle of Christo Wiese, will inject
GBP50.0 million to subscribe for equity in Virgin Active at the Post Money Valuation. In the interests
of good corporate governance, the Titan representatives on the Board recused themselves from all
the deliberations and decisions taken at the Brait Board meeting with regards to the transactions.

The existing shareholders of Virgin Active, namely Brait and Virgin Group, will inject GBP20.2 million
to subscribe for equity in Virgin Active at the Post Money Valuation, pro rata to their current
shareholdings (80:20).

The capital injections above, totalling GBP88.4 million, will be used for liquidity purposes and growth
capital in the various Virgin Active businesses. This will provide the requisite funding for the group to
fast track some of its growth initiatives as its health clubs emerge from the devastating impact of the
COVID pandemic.

As part of the Capital Raise Transaction, the existing shareholders of Virgin Active will also capitalise
the R950 million shareholder commitment to the lenders of VASA that was entered into in 2021
("VASA Capitalisation"). This will also provide further capital to expedite the rejuvenation and growth
program for VASA.

The Post Money Valuation for Virgin Active is determined as follows:

                                                                              GBP’m
 Maintainable EBITDA                                                          105.4
 EV / EBITDA multiple                                                          9.0x
 Enterprise value                                                             948.6
 Net debt as at 31 December 2021                                            (443.9)
 Deferred payments                                                           (34.5)
 Pre Money Equity Value                                                       470.2

 New capital raised                                                            88.4
 VASA lender shareholder commitment capitalised                                46.3
 The Real Foods Exchange                                                       28.6
 Post Money Valuation                                                         633.5


In addition, the DK Consortium has been granted the option, available to be exercised until 31 March
2023, to subscribe for additional equity in Virgin Active with an aggregate value of GBP25.0 million at
the Post Money Valuation. Members of the DK Consortium have also been granted a further option,
available to be exercised until 31 March 2025, to acquire additional equity equating to 0.61% of Virgin
Active’s fully diluted share capital at the Post Money Transaction Valuation.

Brait, Virgin Group and Titan ("Other Virgin Active Shareholders") have also been granted the
option to subscribe for additional equity with an aggregate value of GBP25.0 million at the Post
Money Valuation. The option will be available to be exercised until 31 March 2023 and has been
granted in proportion to the new capital injected by the Other Virgin Active Shareholders (including the
VASA Capitalisation).

Rationale for the Capital Raise Transaction

Health club businesses globally have been significantly impacted by the devastating effects of
COVID. However, the pandemic has driven an increased focus and acceptance of health and
wellness in peoples’ lives and, with many countries finally opening up and removing residual COVID
restrictions, the health club industry is starting to return to normality and capitalise on renewed growth
prospects.

Virgin Active has also begun to benefit from the improved consumer sentiment in some of its key
territories. In the UK, sales since the latest Work From Home guidance was lifted in January 2022
have been strong and above budget and 2019 levels. Whilst Italy is likely to retain its existing COVID
restrictions until end March 2022, sales have seen a continual improvement as cases in the country
subside. In South Africa, January and February sales have been in line with 2019 levels and
consumer sentiment is likely to improve further as the current State of Emergency is lifted in the near
future. Whilst these are early emerging trends, it provides confidence in the Virgin Active value
proposition and its positioning for growth.

Virgin Active is one of the largest global fitness brands and achieved record like for like EBITDA in
2019 of GBP142 million prior to the pandemic. Investment into the group’s businesses to provide
liquidity and growth capital will help position the business for a period of sustained growth through
capital reinvestment, development of new products and services, enhanced digital technology and,
ultimately, improved customer engagement and a greater wellness focus. The capital injection of
GBP88.4 million (GBP135 million including the VASA Capitalisation) will expedite its recovery and
enable management to focus on delivering on its health and wellness strategy.

Overview of and rationale for the Real Foods Transaction

Virgin Active together with Kauai and Nü have had a successful partnership since 2005 with
nutritional offerings in 108 of Virgin Active’s gyms (including 5 outside South Africa). Virgin Active’s
stated wellness strategy has been to improve its members’ lives in a broader sense than just the
provision of fitness clubs. Nutrition and preventative wellness is key to delivering on an integrated
wellness strategy. The acquisition of Real Foods will provide significant additional customer touch-
points, cross incentives and, importantly, data and customer offerings. The combination will enhance
the member experience and help deliver a holistic wellness experience to the Virgin Active
community.

Real Foods has grown rapidly, however, it was impacted by the COVID pandemic. Virgin Active will
merge the Real Food nutrition assets into VASA and, on completion of the Real Foods Exchange, the
vendor interests will be converted into equity in Virgin Active. This will ensure significant alignment
with the other Virgin Active shareholders in the pursuit of value creation.

The Real Foods assets are acquired on a valuation basis determined using the same valuation
metrics as Virgin Active (i.e.: a 9.0x multiple on the 2 year forward EBITDA) and the share
consideration was based on the Virgin Active Post Money Valuation. Post the Real Foods Exchange,
the Real Foods Transaction will result in the DK Consortium acquiring a further 4.5% stake in Virgin
Active.

Impact on Brait

The transactions represent a significant vote of confidence in the Virgin Active business. The inclusion
of like-minded partners will assist to recalibrate the potential for the business through the injection of
new capital to fund growth projects as the business emerges from the COVID pandemic.

Brait will inject its share of the GBP20.2 million (GBP16.2 million) as part of the Capital Raise
Transaction. Brait will also capitalise its share of the R950 million shareholder commitment (R760
million) which it provided to the VASA lenders.

Post these transactions, the Brait shareholding (before the Virgin Active management LTIP) will
decrease from 79.8% to 67.3% with Virgin Group 16.6%, Management investors 0.3%, DK
Consortium 7.9% and Titan 7.9%.

Brait’s pro forma BML RCF net debt as at 31 December 2021, will increase from R2.0bn (including
the VASA Capitalisation) to R2.4 billion (facility limit R3.0 billion). Post the receipt of proceeds from
the Consol disposal, the pro forma BML RCF net debt would reduce to R2.0 billion.

Brait is extremely grateful to Matthew Bucknall, who co-founded the business in 1997, for his
management and guidance over the years. Matthew will remain as a special adviser to the Virgin
Active board and as a non-executive board member of Virgin Active Italy. The appointment of Dean
as CEO will ensure a smooth transition and bring new energy and passion into the business. Having a
CEO who is heavily invested in the business has proved to be a successful strategy in many privately
managed companies. Brait looks forward to working with Dean to drive Virgin Active through the
recovery phase and to leverage the strong growth platform that the business has.

Port Louis, Mauritius

4 March 2022

Brait’s primary listing is on the Euro MTF market of the Luxembourg Stock Exchange ("LuxSE") and
its secondary listing is on the exchange operated by the JSE Limited ("JSE"). Brait’s Convertible
Bonds due 4 December 2024 are dual listed on the Open Market (Freiverkehr) segment of the
Frankfurt Stock Exchange as well as the Official Market of the Stock Exchange of Mauritius Ltd
("SEM").

LuxSE Listing Agent:
Harney Westwood & Riegels SARL

JSE Sponsor:
Rand Merchant Bank (A division of FirstRand Bank Limited)

SEM Authorised Representative and Sponsor:
Perigeum Capital Limited

Date: 04-03-2022 08:55:00
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