Photographer: Simon Dawson/Bloomberg

Brait Posts Loss as Value of U.K. Deals Hurt by Brexit Vote

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  • Investment company spent $2 billion on U.K. retail in 2015
  • Brait’s largest shareholder is South African billionaire Wiese

Brait SE 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 U.K. units it bought last year.

The investment company, whose biggest shareholder is South African billionaire Christo Wiese, posted a 4.5 billion-rand ($318 million) loss for the six months through September compared with a profit of 18.1 billion rand a year earlier, the San Gwann, Malta-based company said in a statement on Wednesday. Net asset value fell to 105.06 rand a share from 123.50 rand a year earlier.

“The U.K. 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 U.K., where Brait last year spent a combined 1.6 billion pounds ($2 billion) on Virgin Active, New Look and an increased stake in low-cost supermarket chain Iceland. The pound tumbled after the the U.K. voted to leave the European Union on June 23.

Brait stock has declined 45 percent 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 were little changed at 91.47 rand as of 10:42 a.m. in the city.

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

New Look’s net asset value tumbled 42 percent to 18.7 billion rand. The clothing retailer, which accounts for 30 percent of Brait’s net worth, this month said that adjusted earnings before interest, taxes, depreciation and amortization slumped 29 percent in the half-year through Sept. 24. Virgin Active’s net asset value slid to 16.1 billion rand from 16.3 billion. The gym chain accounts for 26 percent of the company’s value.

Iceland’s like-for-like sales gained 0.8 percent in the three months after Brexit, compared with a 2.4 percent 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.