Brait concerned by second Covid wave


Brait concerned by second Covid wave

Published Date: 2020-11-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

Brait concerned by second Covid wave

Virgin Active and New Look have closed their doors once again due to new lockdown restrictions in Europe and the UK.

Brait says the second wave of Covid-19 sweeping across Europe is a key concern, resulting in new lockdown restrictions that have forced Virgin Active's health clubs in the UK and Italy to close their doors, while New Look's stores in the UK and the Republic of Ireland have also shut once again. As with the first lockdown, it says management have reduced all expenditure in the underlying businesses and are benefitting from government support in the UK and Italy.

Releasing results for the six months ended September, the investment holding company reported a mixed performance from its underlying businesses. Its net asset value (NAV) per share for the period declined by 6.8% to R7.71 as a strong operational performance from fast-moving consumer goods group Premier and the sale of its 63.1% stake in Iceland Foods at a premium to its carrying value partially offset the impact of Covid-19 on Virgin Active and New Look. It uses NAV as its key reporting metric.

Over the period, it disposed of its stake in DGB (Douglas Green Bellingham) for R470 million and completed the sale of Iceland Foods for £115 million. It's received the initial payments from both disposals. Shareholders also recapitalised Virgin Active in Europe and Asia Pacific with £20 million of new funding - with Brait's share amounting to £16 million. Its pro rata share of a recent £40 million recapitalisation of New Look came to £7.3 million.

Following the disposals, and last year's write-down of New Look, Virgin Active now makes up 49% of Brait's total assets. Premier, which makes up 44% of assets, reported a strong performance for the six months due to a strong performance in its MillBake division. New Look now falls under the group's 'other investments' portfolio, which also includes its remaining private equity fund investments such as Consol Glass.

Over the six months, it reported a R2.8 billion cash inflow from its portfolio, up from R1.6 billion in the comparative period, and reduced group debt by R5.6 billion. It raised R5.25 billion in a rights issue at the beginning of the year and sold additional shares worth R350 million to Ethos Private Equity, which came on board as its advisor.

Brait said the extent and severity of the second wave of Covid-19 and restrictions imposed by governments across Europe and the UK was uncertain.

Brait closed 4.9% down at R3.66 yesterday.

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