- Virgin Active has been hit hard by lockdowns in South Africa and the UK, losing 25% of its members across the group.
- But its owner Brait has reported a profit after a huge loss in the previous year.
- This is thanks to the sale of its stake in UK retailer Iceland Foods, but also due to a strong performance from its SA food group Premier.
The investment group Brait has turned a profit of R446 million in the year to end-March, compared to a loss of almost R16 billion in the year - in large part thanks to the more than R2.3 billion it received from selling its stake in the UK food retailer Iceland Foods.
Christo Wiese remains the group's biggest shareholder, despite a big reduction in his holdings in recent years.
The gym group Virgin Active now represents almost half of Brait's assets, with the food producer Premier - owner of brands such as Blue Label and Snowflake - representing 45%. Brait also owns stakes in the glassmaker Consol and the struggling UK clothing retailer New Look.
On Wednesday, it released its first set of results following the sale of Iceland Foods, reporting that its net asset value per share was R7.90 at the end of March this year, compared to R8.27 a year before.
In morning trading on Wednesday, its share price jumped more than 7% to 276c following the results.
The company said that Virgin Active, which has operations in South Africa, the UK, Italy and elsewhere, lost around 25% of its total members since December 2019. The number of "active" members across the group is down 30%.
In South Africa, gyms were closed during lockdown for almost five months, while in the UK, the closure was even longer. The Virgin Active business is likely to take at least 18 to 24 months to revert to 2019 levels, Brait warned.
In South Africa, contract terminations have been in line with expectations, the company said.
"Recent performance has been positive since Level 1 restrictions [at the end of February] have been applied. However, effective 16 June 2021, South Africa reverted to Level 3 restrictions, which are likely to have an impact on operational performance."
Virgin Active South Africa has agreed to new terms with its lenders earlier this month, which will restructure and extend the term of its existing debt facilities. According to the deal, Brait agreed with the chain's banks that it will pay R600 million as part of a guarantee that was previously pledged. In May, Virgin Active in the UK received approval for a radical restructuring deal, which will wipe out some of its rental debts.
The value of Brait's investment in the total Virgin Active group fell by almost R1.4 billion to just below R8 billion over the past year. The value of its New Look business dropped from R940 million to R545 million.
But the value of its investment in Premier rose by almost R1.6 billion to R7.6 billion thanks to strong sales, which lifted the food producer's profit by 14%.