Virgin Active’s global operations in the eye of coronavirus storm

Brait said in a trading update that while trading in Virgin Active and New Look improved significantly after the easing of the initial lockdown restrictions. Picture: Thobile Mathonsi/African News Agency(ANA)

Brait said in a trading update that while trading in Virgin Active and New Look improved significantly after the easing of the initial lockdown restrictions. Picture: Thobile Mathonsi/African News Agency(ANA)

Published Feb 2, 2021

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DURBAN - BRAIT said yesterday that the emergence of the second wave of Covid-19 continued to create uncertainty, which affected the group’s halfyear results.

The group said in a trading update that while trading in Virgin Active and New Look improved significantly after the easing of the initial lockdown restrictions, the second coronavirus wave that surfaced at the end of October in Europe and the UK had resulted in governments re-imposing national lockdowns.

In Virgin Active, the UK emerged from its second lockdown at the beginning of December, but it soon returned to a third national lockdown on December 18 and is expected to continue until April 2. Virgin Active in Italy was also hit after the country went into lockdown on October 26, but it was expected to be lifted at the beginning of January.

However, the rise in Covid-19 numbers in Italy delayed the lifting of the lockdown and it is now anticipated to be lifted at the beginning of March, while Virgin Active clubs in Bangkok reopened on January 23 having been closed for most of January.

The lockdown and closure of the clubs has resulted in lower operating costs for Virgin Active. “Despite the significantly reduced operating costs and utilisation of government support packages, these extended lockdown periods have adversely impacted the liquidity of the Virgin Active UK, Italy and Asia Pacific business, partly due to cash burn and also delays in the membership recovery rates,” the group said.

In the first lockdown Virgin Active shareholders were required to contribute £20 million (R415m) by way of shareholder loans, Brait’s pro-rata share was £16m, to provide support to the UK, Italy and Asia Pacific territories.

In South Africa, the group said its clubs had remained operational since re-opening on August 24 last year, despite the recent government enforced level 3 lockdown restrictions that were put in place in late December.

“The territory (South Africa) had benefited from a steady improvement in member engagement, with utilisation rates increasing to 70 percent in December. However, as expected the subsequent level 3 restrictions, which include limiting the number of members in a club, have resulted in lower usage rates, an increase in terminations and lower sales,” the group said.

Brait shares closed 1.97 percent lower at R2.99 on the JSE yesterday.

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