Brait hurt by soft UK op­er­a­tions

The Star Early Edition - - COMPANIES - Sandile Mchunu

IN­VEST­MENT com­pany Brait saw its share price div­ing by more than 7 per­cent on the JSE yes­ter­day af­ter the com­pany re­ported a dis­ap­point­ing set of re­sults. The share price dropped to R60.89 a share and later closed 4.55 per­cent down at R62.51 on the JSE yes­ter­day.

Brait, with in­vest­ments in busi­nesses like Vir­gin Ac­tive, Premier, Ice­land Foods and other in­vest­ments which in­clude DGB, has been un­der pres­sure since the UK an­nounced its in­ten­tions in June last year to leave the EU.

As a re­sult, its share price has fallen by 61.08 per­cent in the space of one year. The share price has dropped from R156.43 a share in June 2016 to the cur­rent lev­els of R62.51 a share.

The UK op­er­a­tions, where the group has most of its in­vest­ments, was dom­i­nated by lev­els of eco­nomic un­cer­tainty and a weak re­tail en­vi­ron­ment.

The group said UK con­sumer con­fi­dence has been im­pacted dur­ing the year by the ref­er­en­dum on Brexit and the de­ci­sion to leave the EU.

While in the UK there was a big­ger de­cline in the group’s net as­set value (NAV) a share, the im­pact was less in South Africa, which saw its NAV a share drop­ping by 5.2 per­cent to R78.12 by the end of March, down from R82.45 a year ago.

For the year ahead, the group wants to grow the dif­fer­ent busi­nesses.

Vir­gin Ac­tive gen­er­ated a strong fi­nan­cial per­for­mance in 2016 with rev­enue and earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion for con­tin­u­ing op­er­a­tions in­creas­ing by 9 per­cent and 12 per­cent re­spec­tively for the year to end March.

Fo­cussed

The group said it re­mained fo­cussed on its strat­egy of be­ing the lead­ing pre­mium health op­er­a­tor in its cho­sen mar­kets.

It wants to in­vest in growth mar­kets in Asia and Aus­tralia.

How­ever, the over­all re­sults were dis­ap­point­ing with in­vest­ment losses com­ing in at € 978 mil­lion (R14.1 bil­lion) for the pe­riod, as com­pared with in­vest­ment gains of € 1.45bn in 2016.

The group fur­ther re­ported a loss € 1.29bn as op­posed to a € 1.12bn profit re­ported a year ago. Head­line loss per share was recorded at 202 euro cents per share against head­line earn­ings per share of 283 euro cents per share.

In Premier Foods the group wants to in­vest in three new bak­ing plants. For Ice­land Foods the group in­tends to open be­tween 50 and 60 stores in the UK dur­ing the 2018 fi­nan­cial year.

The UK re­tail chain New Look will see it di­ver­si­fy­ing in China. It said New Look’s cash flow gen­er­a­tion and ex­ist­ing avail­able un­drawn bor­row­ing fa­cil­i­ties were suf­fi­cient to fund op­er­a­tions, cap­i­tal ex­pen­di­ture and ser­vice the coupon on its high yield bond.

Ron Klipin, a port­fo­lio man­ager at Cratos Wealth, said the re­sults were be­low mar­ket ex­pec­ta­tions caused by the worse than fore­cast re­sults from New Look.

The lack of con­fi­dence hurt mar­gins, re­sult­ing in a nega­tive im­pact on Brait’s prof­its, he said.

PHOTO: THOBILE MATHONSI

The Vir­gin Ac­tive Men­lyn Maine health club is part of Brait’s in­vest­ment. Vir­gin Ac­tive gen­er­ated a strong fi­nan­cial per­for­mance in 2016, with rev­enue in­creas­ing by 9 per­cent.

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