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Brait posts loss as value of UK deals hurt by Brexit vote

Johannesburg - Brait [JSE:BAT] reported a first-half loss as the South African owner of health-club chain Virgin Active and clothing retailer New Look said the pound’s weakness against the rand cut into the net asset value of the UK units it bought last year.

The investment company, whose biggest shareholder is South African billionaire Christo Wiese, posted a R4.5bn loss for the six months through September compared with a profit of R18.1bn a year earlier, the San Gwann, Malta-based company said in a statement on Wednesday. Net asset value fell to R105.06 a share from R123.50 a year earlier.

“The UK apparel market continues to be challenging,” Brait said. “The recent macro events have highlighted the importance of increasing the diversity of operations.”

The loss comes as Brait seeks a listing on the London Stock Exchange and is looking for new capital to fund future deals. The company’s most recent investments have focused on the UK, where Brait last year spent a combined £1.6bn (R28.42bn) on Virgin Active, New Look and an increased stake in low-cost supermarket chain Iceland. The pound tumbled after the the UK voted to leave the European Union on June 23.

Brait stock has declined 45% in Johannesburg this year, the worst performer on the FTSE/JSE Top40 Index, and is on track for its first annual drop in five years. The shares closed at R90.5 on Wednesday.

Brait has applied to the Maltese Registry of Companies to transfer its head office to the UK and will put the move to shareholders at an extraordinary general meeting on November 22. The board has the authority to abandon the move at any time, the company said.

New Look’s net asset value tumbled 42% to R18.7bn. The clothing retailer, which accounts for 30% of Brait’s net worth, this month said that adjusted earnings before interest, taxes, depreciation and amortization slumped 29%  in the half-year through September 24.

Virgin Active’s net asset value slid to R16.1bn from R16.3bn. The gym chain accounts for 26% of the company’s value.

Iceland’s like-for-like sales gained 0.8% in the three months after Brexit, compared with a 2.4% fall in the quarter ended June 30, as demand increased for lower-priced food, Brait said. Iceland’s payments to suppliers are mostly pound-denominated, meaning the chain had relatively low exposure to the currency’s decline.

Brait is in the final stages of concluding a new 8.5 billion-rand facility with lenders with a four-year term to November 2020, the company said.

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