Market cheers Brait’s return to profit

Market cheers Brait’s return to profit


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BRAIT’S share price rose by more than 10 percent on the JSE yesterday morning after the investment holding company returned to profitability in the year to end March, boosted by the proceeds from the sale of its majority stake in Iceland Foods, cost containment measures and the decline in finance costs.

Brait reported a profit of R446 million compared to a loss of R15.96 billion reported a year earlier despite feeling the impact of Covid-19 to some of its investments, which includes Virgin Active and New Look.

The group also reported earnings per share (Eps) of 34 cents a share compared to a loss of 2 799c reported last year while its net asset value a share of R7.90 increased by 2.5 percent compared to the first half of the year, but was down from R8.27 compared to last year.

The share price leapt to a day-high of R2.82 a share, up from Tuesday’s closing price of R2.55 after the release of the results. The share closed the day at xxx

Brait’s performance improved during the year after selling its 63.1 percent stake in Iceland Foods in June last year to a newly established company NewCo for R2.35bn, in line with its revised strategy to maximise value from its assets in the next five years.

The group also reduced its expenses by 58 percent to R163m while finance costs halved to R617m and board and advisory fees were slashed by 25 percent.

However, Brait said the Covid-19 outbreak significantly impacted Virgin Active and its UK-based multichannel fashion brand New Look during the first wave of the pandemic between March and July 2020, and resulted in lockdown trading restrictions.

Virgin Active’s revenue for the year to end December declined to £295.9m (R5.8 billion) compared to £601.8m reported a year earlier while its earnings before interest, tax, depreciation and amortisation (Ebitda) resulted to a loss of £16.7m compared to a profit of £142.4m reported a year earlier.

In New Look, Brait’s unrealised carrying value for its investment in the fashion brand amounted to R545m compared to R940m a year earlier.

The group said the management teams of both Virgin Active and New Look responded with appropriate measures to preserve liquidity, which included measures to defer or reduce rental expenses, progressing online strategies, as well as accessing government support initiatives.

However, Premier performed well during the period and its unrealised carrying value increased by 26 percent to R7.60bn.

Looking ahead, Brait said all the portfolio company management teams had proactively implemented plans to address the unexpected and unprecedented impact of the pandemic.

“The focus will be on reducing costs, preserving cash and maximising liquidity to manage their businesses through this difficult period. The board, with the assistance of the adviser, remains focused on executing Brait’s strategy of maximising value through the realisation of portfolio companies over the medium term,” the group said.

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