Brait reports R11.3bn loss for year to March
Brait speaks of a challenging year in both SA and the UK, with its stock falling 89%, partly due to its disastrous investment in British retailer New Look
Brait, whose investments include Virgin Active, Iceland Foods, Premier and struggling UK retailer New Look, made a loss of R11.3bn in the year to end-March, up from a R10.6bn loss the previous year.
“We have had a challenging year in our key markets of SA and the UK,” Brait chair Jabu Moleketi said, citing weak consumer demand, rising costs, and more promotions by competitors.
Brait said its net asset value per share fell by a quarter to R41.80 as the company and its peers reduced their valuation multiples.
The company’s shares last traded at R18.21 on Tuesday, a 3.2% gain on the day. Partly because of the disastrous investment into British high street retailer New Look, the stock has fallen 89% since reaching highs of more than R170 in late 2015.
“Brait remains committed to its investment strategy, materially reducing the debt on its balance sheet, and driving performance in its companies, with the support of excellent management teams,” Moleketi said.
Brait, which counts Christo Wiese as a large shareholder, said it wants to cut debt ahead of the redemption and repayment of its convertible bonds due in September 2020. It will soon receive R610m from Virgin Active SA’s debt refinancing process. It will also use its own cash flows and “portfolio realisations” to repay debt, and is considering a new bond issue.
The group said it has pulled the plug on its share buy-back programme, partly because it is focused on reducing debt.
Meanwhile, Brait said it is positioning itself “for a new acquisitive phase by the end of this period”. It wants to have a wider spread of investments that are mainly focused on consumer-facing and industrial investments in SA and the UK.
The group said Virgin Active’s “strong volume growth” is expected to continue. The business will probably generate mid- to upper-single digit earnings growth in 2019.
New Look’s “materially deleveraged” balance sheet and more flexible capital structure gives it a stable platform to operate from, Brait said.
“Strengthened liquidity provides sufficient resources to accelerate investing in the business, with no significant near-term maturities providing a runway for management to focus on long-term growth.”
Brait owns 18.5% of New Look’s equity, making it the chain’s largest shareholder. However, since September 2017, Brait’s equity investment in New Look has been valued at zero.