Brait (BAT) H2 2024 earnings summary

Executive summary

• Recapitalisation plan extended bond maturities by three years, reduced net debt by ZAR 2.4 billion, and strengthened the balance sheet, providing flexibility for asset exits and value maximisation.

• Virgin Active, Premier, and New Look all delivered improved operational performance, with Virgin Active showing significant membership and yield growth and all territories EBITDA positive.

• Premier achieved 4% revenue growth to ZAR 18.6 billion and 19% EBITDA growth to ZAR 2.1 billion, with a return on invested capital rising to 22.4%.

• New Look maintained profitability despite an 8.8% revenue decline, focusing on gross margin improvement and cost control.

• Premier declared a maiden dividend of ZAR 2.20 per share.

Financial highlights

• Virgin Active's EBITDA run rate increased from GBP 33 million in September 2023 to GBP 80 million in March 2024, with group membership up 7% year-over-year to 1.021 million.

• Premier's EBIT margin surpassed 8% for the first time, net profit rose 16% year-over-year, and leverage ratio reduced to 0.9x.

• New Look's EBITDA was broadly flat year-on-year, with a 4% increase in gross margin.

• Brait NAV per share decreased 8% year-over-year to ZAR 652; diluted NAV per share at ZAR 5.70.

• Group loss for the year at ZAR 171 million, with total comprehensive loss at ZAR 800 million.

Outlook and guidance

• Virgin Active targets further yield and retention improvements, with management confident in achieving ZAR 121 million maintainable EBITDA.

• Premier expects continued high CapEx for expansion, guiding ZAR 700 million spend for the current and next year.

• Strategy remains focused on monetising the asset base to optimise capital returns; recapitalisation provides runway for asset recovery and growth.

• Board will consider special dividends if surplus cash becomes available, subject to bondholder offers.

• New Look anticipates improved market conditions as UK consumer sentiment recovers and interest rates potentially fall.