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Wednesday, June 29, 2022

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Premier listing to proceed when equity markets improve

Premier, the owner of iconic local brands such as Snowflake, SuperC, Polana and Nyala, makes up about 49 percent of the assets of Brait plc.

Premier, the owner of iconic local brands such as Snowflake, SuperC, Polana and Nyala, makes up about 49 percent of the assets of Brait plc.

Published Jun 22, 2022

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Brait plc, the Mauritius-headquartered investment group, said yesterday it would proceed with the listing of Premier , South Africa’s largest fast-moving consumer goods group, but only if market conditions are right.

Meanwhile, Premier has completed its initial public offering readiness plans, Brait said in its results for the year to March 31, 2022.

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Premier, the owner of iconic local brands such as Snowflake, SuperC, Polana and Nyala, makes up about 49 percent of the assets of Brait plc.

In February, Brait plc said it planned to list Premier this year, but global equity markets had begun to swing into bear territory due to slower growth, socio-political instability, rising inflation and interest rates and Covid 19 restrictions in China. Companies don’t like to list in weak markets for fear of a weak market valuation.

Brait’s results provided a window for potential investors in Premier to assess its value and performance ahead of a listing.

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Brait said Premier had continued its strong operational performance in the year to March 31, driven by market share gains, volume growth, input costs pass-through and cost management/operational leverage.

Premier’s performance was enhanced by the completion of the R419 million Mister Sweet acquisition - ten months of Mister Sweet were included in the results and debt refinancing.

Premier’s unrealised carrying value at the reporting date to Brait was R9.3 billion, reflecting a 22 percent increase over the previous financial year.

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Premier lifted revenue 16 percent to R14.5bn, while adjusted earnings before interest, tax depreciation and amortisation of R1.5bn had increased by 36 percent over the same figure a year before.

Premier’s MillBake business, which comprised 82 percent of Premier’s revenue, “significantly outperforming its peers” and had successfully passed on inflationary increases in a tough trading environment. Its revenue grew 12.5 percent to R11.9bn, comprising volume growth of 6 percent and average price inflation of 6.5 percent.

Premier’s Groceries and International division, which makes up 18 percent of Premier’s revenue - increased revenue by 35 percent. Adjusted Ebitda, excluding head office costs, increased by 24 percent to R200m, driven by capex spend, brand loyalty and product expansion.

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Brait, which also has gym group Virgin Active and UK clothing store chain New Look among its investments, lifted net asset value per share by 5.9 percent in the year to March 31 R8.37, the group said yesterday.

At Virgin Active, the past year had seen significant restructuring while debt was refinanced, raising 88.4 million UK pounds (R1.8 billion) of new capital in Virgin Active at Brait’s valuation. New management had also been appointed.

There had also been strong growth in the membership since the start of the calendar year across the key territories, from some 754 000 active members as at December 31, 2021 to 847 000 active members currently.

The capital raise and amalgamation of Kauai and Nü chains of healthy fast casual restaurants was expected to expedite Virgin Active’s recovery back to 2019 operational levels.

At New Look, the UK clothing store group, a strong performance was recorded for three quarters of its 2022 financial year, offset by underperformance in October – December 2021 due to Omicron, with lower than expected footfall and supply chain issues.

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