Ethos Capital expects further pressure from Covid-19
The investment holding company’s portfolio was under pressure in its year to end-June, and is downbeat about SA's prospects
Investment holding company Ethos Capital, which has stakes in TymeBank and Brait, said on Monday SA's economic recovery from the effects of the Covid-19 pandemic could take more than a year.
The group said its acquisition of a 9.8% stake in Virgin Active-owner Brait in February “could not have been timed worse”, after the pandemic shut gyms and hit economic activity.
Ethos proceeded with a R750m fully underwritten rights issue in February 2020, with the proceeds used to fund a R1.03bn investment in Brait, which led to about a 63% rise in the number of shares in issue during its year to end-June.
At the end of June, Ethos had a net asset value of R1.71bn, from R1.78bn previously, while net asset value per share fell 41% to R6.65.
The group’s share price at the end of June was R4.11, or 38% discount to net asset value per share.
Ethos had exposure to 22 companies at the end of June, and said the pandemic prompted closures at 18 of its investees.
The pandemic, however, had resulted in a significant refocus on operational efficiencies, the group said, which would be likely to benefit those companies when economic conditions improved.
“The impact of Covid-19 is likely to be felt for some time,” Ethos said.
“The board believes that it is unlikely that there will be a material improvement in the macroeconomic outlook for SA in the next 12 months,” the statement read.
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