Wrap Text
Unaudited Results for the Six Months ended 30 June 2013
Brimstone Investment Corporation Limited
ISIN Number: ZAE000015277
Share Code: BRT
ISIN Number: ZAE000015285
Share Code: BRN
Company Registration Number: 1995/010442/06 (Incorporated in the Republic of
South Africa) ("Brimstone" or "the Company")
Commentary
Profit for the period under review is satisfactory, albeit lower than the
previous reporting period as a result of a decrease in fair value adjustments
of underlying investments. There were also challenging conditions in the
insurance underwriting market which were partially offset by improved
profitability at Sea Harvest. Total Assets increased to R5.9 billion at
30 June 2013.
Basis of preparation
The condensed financial information has been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS), the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by the Financial Reporting
Standards Council, and contain the information as required by IAS34: Interim
Financial Reporting and the requirements of the Companies Act of South
Africa. The report has been prepared using accounting policies that comply
with IFRS which are consistent with those applied in the financial
statements for the year ended 31 December 2012.
The condensed financial information was prepared under the supervision of
the group financial director, Lawrie Zev Brozin, B.Com B.Acc CA(SA).
Issue of shares
The following shares were issued during the period under review:
"N" Ordinary
Share option scheme
28 March 2013 313 040
28 May 2013 103 020
Brimstone Portfolio
SUBSIDIARIES
Sea Harvest
The total allowable catch for hake increased by 7.8% in 2013. Catches during
the period were erratic with catch rates marginally down on the comparative
period.
Revenue increased driven by a higher value product mix, price increases across
all geographies, and a weaker Rand exchange rate. Local seafood business
volumes increased significantly while local retail reported stable volumes and
firm prices. Demand for Cape Hake remains strong both locally and
internationally.
Lion of Africa Holdings
A challenging South African underwriting cycle in terms of both the
frequency and severity of claims has resulted in a decrease of the
underwriting result from a profit in the comparative period of R5.5 million
to a R47.7 million loss in the period under review. Net investment returns
of R9.3 million reduced the net loss after tax for the period under review.
House of Monatic
Despite poor retail trading conditions, House of Monatic's half-year
turnover increased by a marginal 2% to R88.9 million whilst net profit
remained flat at R2.1 million. Employment levels continued to be stable and
have averaged at a slightly higher staff complement of 780 compared to 750
in the comparative period.
The IDC approved Productivity Incentive (PI) has enabled House of Monatic to
spend R5 million in 2013 on new plant and machinery. In addition to its own
brands Carducci, C2, Monatic, and Viyella, House of Monatic currently
manufactures formal wear for the major retail brands in South Africa.
ASSOCIATES
Oceana
The group contributed significantly to Brimstone's dividends received and
equity accounted earnings for the review period. Oceana's share price closed
at R84.20 per share, up from R69.82 per share at 31 December 2012.
Aon Re Africa
Aon Re Africa (Pty) Ltd, trading as Aon Benfield, has maintained its
position as the premier reinsurance broker in Southern Africa during 2013.
Aon Benfield's revenue is above budget for the 6 months to 30 June 2013.
Growth has mainly been from business emanating from the rest of Africa, new
business acquisition, and movements in exchange rates.
The Scientific Group
Turnover for the first six months of 2013 has seen double digit growth although
trading conditions remain challenging. Scientific Group's Diagnostics and
Bioscience divisions have shown some recovery in terms of export sales into
sub-Saharan Africa as well as the sale of capital equipment into the market
that conducts research. Spend on capital equipment from the public sector in
the hospital market remains sluggish. Profitability was positively influenced
by the strong growth in turnover but partially eroded through the impact of the
depreciation of the Rand.
Afena Capital
Afena Capital is an investment management firm that offers specialist equity
and balanced portfolios serving the South African institutional market.
Brimstone received a dividend of R2.5 million from Afena during the period
under review.
INVESTMENTS
Life Healthcare
Life Healthcare's share price closed at R37.50 per share, up from R33.70 per
share at 31 December 2012. The investment was revalued upwards by R199.6
million. Brimstone received a dividend of 54 cents per share amounting to
R28.3 million.
Taste Holdings
Taste Holdings' share price closed at R3.71 per share, down from R4.30 per
share at 31 December 2012. The investment was revalued downwards by R14.5
million.
Nedbank
Brimstone's rights to Nedbank shares, accounted for as options, have been
revalued at period end. This independently calculated option valuation was
based on a closing price of R175.53 per share, down from R188.00 per share
at 31 December 2012. The investment was revalued downwards by R41.5 million.
Old Mutual
Brimstone's rights to Old Mutual plc shares, accounted for as options, have
been revalued at period end, based on a closing price of R27.55 per share,
up from R24.49 per share at 31 December 2012. The investment was revalued
upwards by R37 million.
MTN Zakhele
Brimstone's MTN Zakhele shares, accounted for as options, have been revalued
at period end. The independently calculated option valuation was based on a
closing MTN share price of R184.00 per share, up from R177.60 per share at
31 December 2012. The investment was revalued upwards by R15.7 million.
Tiger Brands
Brimstone's rights to Tiger Brands shares, accounted for as options, have
been revalued at period end. The independently calculated option valuation
was based on a closing share price of R295.90 per share, down from R325.25
per share at 31 December 2012. The investment was revalued downwards by
R30.4 million.
Rex Trueform and African & Overseas Enterprises (Queenspark)
The market price of all classes of Rex Trueform and African & Overseas
Enterprises shares reduced during the period under review resulting in a
downward revaluation of R10.2 million.
HEADLINE EARNINGS PER SHARE
Unaudited Unaudited Audited
6 Months 6 Months Year
ended ended ended
30 June 30 June 31 Dec
2013 2012 2012
Headline earnings per share (cents)
Basic 61,7 194,6 346,0
Diluted 52,7 166,1 295,4
Headline earnings calculation (R'000)
Net profit attributable to equity
holders of the parent 153 919 478 688 849 398
Profit on disposal of property,
plant, equipment and vehicles (4 739) (106) (456)
Realised loss on disposal of
available-for-sale asset - - 292
Impairment of investment in associate 158 5 858 252
Impairment of intangible asset of associate - - 2 647
Additional purchase consideration on
acquisition of business - - 1 736
Adjustments relating to results
of associates (15) (9 663) (9 584)
Total tax effects of adjustments 1 331 51 77
Headline earnings 150 654 474 828 844 362
Weighted average number of shares
on which earnings and headline
earnings per share is based (000's) 244 326 243 947 244 039
Weighted average number of shares
on which diluted earnings and diluted
headline earnings per share is
based (000's) 286 101 285 815 285 813
INTRINSIC NET ASSET VALUE (INAV)
Unaudited Unaudited Change since
30 June 31 Dec 31 Dec
2013 2012 2012
INAV of Brimstone (Rm) 3 852 3 605 6.9%
INAV per share (cents) 1 572 1 474 6.6%
Fully diluted INAV per share (cents) 1 486 1 399 6.2%
Market price per share (cents)
Ordinary shares 1 350 1 125 20.0%
"N" Ordinary shares 1 375 1 195 15.1%
Discount to INAV
Ordinary shares 14.1% 23.7%
"N" Ordinary shares 12.5% 18.9%
The breakdown of INAV is available on the company's website at
www.brimstone.co.za.
Subsequent events
There are no significant subsequent events affecting these results.
Dividend
No dividend is declared for the half year (2012: Nil).
Prospects
Brimstone remains well capitalised and in addition has substantial approved
facilities to pursue value enhancing transactions based on quality assets.
Management is cognisant of the market's current high earnings multiples and
will continue its prudent consideration of investment opportunities.
Changes to the Board
Shareholders are referred to the announcement released on SENS on 17 January
2013 regarding the appointment of Mr F Robertson as executive chairman of
the Company. Mr PL Campher will continue in his role as lead independent
non-executive director.
On behalf of the board
F. Robertson M.A. Brey
Executive Chairman Chief Executive Officer
27 August 2013
Directorate and administration
Registered office: Boundary Terraces, 1 Mariendahl Lane, Newlands 7700,
Cape Town
Transfer Secretaries: Computershare Investor Services (Pty) Ltd, 70 Marshall
Street, Johannesburg 2001
Sponsor: Nedbank Capital, 135 Rivonia Road, Sandton 2196
Directorate: F Robertson (Executive Chairman)*, MA Brey (Chief Executive
Officer)*, LZ Brozin (Financial)*, PL Campher (Lead Independent), M Hewu,
N Khan, MK Ndebele, LA Parker, FD Roman *Executive
Website: www.brimstone.co.za
E-mail: info@brimstone.co.za
Condensed Group Statement of Comprehensive Income
for the six months ended 30 June 2013
Unaudited Unaudited Audited
6 Months 6 Months Year
ended ended ended
30 June 30 June 31 Dec
R'000 2013 2012 2012
Revenue 1 048 942 952 356 1 946 472
Sales and fee income 990 709 895 372 1 795 026
Dividends received 58 233 56 984 151 446
Operating expenses (1 005 285) (877 844) (1 815 434)
Operating profit 43 657 74 512 131 038
Fair value gains 162 820 653 774 1 053 311
Exceptional items 7 989 (6 036) (2 280)
Share of profits of associates
and joint venture 28 533 30 840 27 612
Profit before net finance costs 242 999 753 090 1 209 681
Income from investments 14 496 12 081 26 410
Finance costs (45 859) (65 773) (131 597)
Outside unit holders' interest (1 466) (2 148) (1 357)
Net profit before taxation 210 170 697 250 1 103 137
Taxation (45 145) (215 040) (261 021)
Profit for the period 165 025 482 210 842 116
Other comprehensive income, net of tax (1 609) (3 918) (3 938)
Cash flow hedges
Loss arising during the period (1 609) (3 918) (11 606)
Net value gain on available-for-sale
financial asset - - 7 668
Total comprehensive income for the
period 163 416 478 292 838 178
Profit attributable to:
Equity holders of the parent 153 919 478 688 849 398
Non-controlling interests 11 106 3 522 (7 282)
165 025 482 210 842 116
Total comprehensive income/(loss)
attributable to:
Equity holders of the parent 152 984 476 411 847 110
Non-controlling interests 10 432 1 881 (8 932)
163 416 478 292 838 178
Earnings per share (cents)
Basic 63.0 196.2 348.1
Diluted 53.8 167.5 297.2
Condensed Group Statement of Financial Position
as at 30 June 2013
Unaudited Unaudited Audited
30 June 30 June 31 Dec
R'000 2013 2012 2012
ASSETS
Non-current assets 4 548 342 4 033 731 4 344 407
Property, plant, equipment and vehicles 262 306 265 321 266 663
Goodwill and other intangible assets 158 105 161 927 164 309
Deferred acquisition costs 40 092 30 862 50 524
Investments in associate companies
and joint venture 816 763 769 972 781 995
Investments 3 252 477 2 803 321 3 080 415
Deferred taxation 5 504 2 328 -
Other financial assets 13 095 - 501
Current assets 1 372 602 1 198 306 1 381 057
Inventories 262 538 246 518 230 226
Trade and other receivables 491 644 445 995 407 288
Reinsurance contracts 433 774 369 497 418 432
Taxation 6 638 2 381 9 090
Cash and cash equivalents 178 008 133 915 316 021
TOTAL ASSETS 5 920 944 5 232 037 5 725 464
EQUITY AND LIABILITIES
Capital and reserves 3 050 099 2 555 071 2 929 986
Share capital 45 45 45
Capital reserves 325 516 302 536 310 132
Revaluation reserves 14 331 9 876 14 331
Cash flow hedging reserve (1 302) 4 099 (367)
Changes in ownership (11 839) (11 839) (11 839)
Retained earnings 2 595 438 2 131 872 2 502 581
Attributable to equity holders
of the parent 2 922 189 2 436 589 2 814 883
Non-controlling interests 127 910 118 482 115 103
Non-current liabilities 1 643 610 1 664 246 1 470 287
Long-term interest bearing borrowings 1 034 665 1 110 715 888 134
Long-term provisions 20 882 20 169 20 882
Other financial liabilities - - 125
Deferred taxation 588 063 533 362 561 146
Current liabilities 1 227 235 1 012 720 1 325 191
Short-term interest bearing borrowings 116 401 95 395 292 934
Bank overdrafts 28 150 35 776 15 434
Trade payables 285 058 298 465 293 087
Other payables 90 904 64 070 71 130
Insurance contracts 655 522 480 360 616 860
Outside unit holders' interest 16 502 12 118 14 495
Other financial liabilities 2 292 - 2 000
Short-term provisions 14 452 15 302 16 305
Taxation 17 954 11 234 2 946
TOTAL EQUITY AND LIABILITIES 5 920 944 5 232 037 5 725 464
NAV per share (cents) 1 195.0 998.6 1 153.1
Shares in issue at end
of period (000's) 244 531 243 994 244 108
Condensed Group Statement of Changes in Equity
for the six months ended 30 June 2013
Share Capital Revaluation
R'000 capital reserves reserves
Balance at 1 January 2012 - Audited 45 316 904 9 876
Attributable profit for the year
ended 31 December 2012 - - -
Other comprehensive income - - 4 455
Total comprehensive income - - 4 455
Recognition of share-based payments - 9 815 -
Dividend paid - - -
Subsidiary's accrual for preference
dividends - - -
Issue of share capital/trust units - 1 363 -
Repurchase of trust units - (752) -
Disposal of treasury shares - 292 -
Transfer from statutory contingency
reserve - (19 683) -
Share of non-distributable reserves
of associates transferred
directly to equity - 2 193 -
Balance at 31 December 2012 - Audited 45 310 132 14 331
Attributable profit for the six
months ended 30 June 2013 - - -
Other comprehensive income - - -
Total comprehensive income - - -
Recognition of share-based payments - 4 826 -
Dividend paid - - -
Subsidiary's accrual for preference
dividends - - -
Issue of share capital - 2 812 -
Disposal of treasury shares - 48 -
Share of non-distributable reserves
of associates transferred directly to equity - 7 698 -
Balance at 30 June 2013 - Unaudited 45 325 516 14 331
1 January 2012 to 30 June 2012
Balance at 1 January 2012 - Audited 45 316 904 9 876
Attributable profit for the six months
ended 30 June 2012 - - -
Other comprehensive income - - -
Total comprehensive income - - -
Recognition of share-based payments - 4 874 -
Dividend paid - - -
Subsidiary's accrual for preference
dividends and repurchase of shares - - -
Issue of share capital - 1 370 -
Treasury shares acquired - (1 465) -
Transfer from statutory contingency reserve - (19 683) -
Share of non-distributable reserves of
associate transferred directly to equity - 536 -
Balance at 30 June 2012 - Unaudited 45 302 536 9 876
Condensed Group Statement of Changes in Equity
for the six months ended 30 June 2013
Cash flow Changes
hedging in Retained
R'000 reserve ownership earnings
Balance at 1 January 2012 - Audited 6 376 (11 839) 1 677 390
Attributable profit for the year
ended 31 December 2012 - - 849 398
Other comprehensive income (6 743) - -
Total comprehensive income (6 743) - 849 398
Recognition of share-based payments - - -
Dividend paid - - (43 890)
Subsidiary's accrual for preference
dividends - - -
Issue of share capital/trust units - - -
Repurchase of trust units - - -
Disposal of treasury shares - - -
Transfer from statutory contingency
reserve - - 19 683
Share of non-distributable reserves
of associates transferred
directly to equity - - -
Balance at 31 December 2012 - Audited (367) (11 839) 2 502 581
Attributable profit for the six
months ended 30 June 2013 - - 153 919
Other comprehensive income (935) - -
Total comprehensive income (935) - 153 919
Recognition of share-based payments - - -
Dividend paid - - (61 062)
Subsidiary's accrual for preference
dividends - - -
Issue of share capital - - -
Disposal of treasury shares - - -
Share of non-distributable reserves
of associates transferred directly to equity - - -
Balance at 30 June 2013 - Unaudited (1 302) (11 839) 2 595 438
1 January 2012 to 30 June 2012
Balance at 1 January 2012 - Audited 6 376 (11 839) 1 677 390
Attributable profit for the six months
ended 30 June 2012 - - 478 688
Other comprehensive income (2 277) - -
Total comprehensive income (2 277) - 478 688
Recognition of share-based payments - - -
Dividend paid - - (43 889)
Subsidiary's accrual for preference
dividends and repurchase of shares - - -
Issue of share capital - - -
Treasury shares acquired - - -
Transfer from statutory contingency reserve - - 19 683
Share of non-distributable reserves of
associate transferred directly to equity - - -
Balance at 30 June 2012 - Unaudited 4 099 (11 839) 2 131 872
Condensed Group Statement of Changes in Equity
for the six months ended 30 June 2013
Attributable
to equity Non-
holders of controlling
R'000 the parent interests Total
Balance at 1 January 2012 - Audited 1 998 752 114 878 2 113 630
Attributable profit for the year
ended 31 December 2012 849 398 (7 282) 842 116
Other comprehensive income (2 288) (1 650) (3 938)
Total comprehensive income 847 110 (8 932) 838 178
Recognition of share-based payments 9 815 - 9 815
Dividend paid (43 890) (840) (44 730)
Subsidiary's accrual for preference
dividends - 9 881 9 881
Issue of share capital/trust units 1 363 631 1 994
Repurchase of trust units (752) (1 567) (2 319)
Disposal of treasury shares 292 - 292
Transfer from statutory contingency
reserve - - -
Share of non-distributable reserves
of associates transferred
directly to equity 2 193 1 052 3 245
Balance at 31 December 2012 - Audited 2 814 883 115 103 2 929 986
Attributable profit for the six
months ended 30 June 2013 153 919 11 106 165 025
Other comprehensive income (935) (674) (1 609)
Total comprehensive income 152 984 10 432 163 416
Recognition of share-based payments 4 826 - 4 826
Dividend paid (61 062) (1 480) (62 542)
Subsidiary's accrual for preference
dividends - 3 774 3 774
Issue of share capital 2 812 - 2 812
Disposal of treasury shares 48 - 48
Share of non-distributable reserves
of associates transferred directly
to equity 7 698 81 7 779
Balance at 30 June 2013 - Unaudited 2 922 189 127 910 3 050 099
1 January 2012 to 30 June 2012
Balance at 1 January 2012 - Audited 1 998 752 114 878 2 113 630
Attributable profit for the six months
ended 30 June 2012 478 688 3 522 482 210
Other comprehensive income (2 277) (1 641) (3 918)
Total comprehensive income 476 411 1 881 478 292
Recognition of share-based payments 4 874 - 4 874
Dividend paid (43 889) (840) (44 729)
Subsidiary's accrual for preference
dividends and repurchase of shares - 2 563 2 563
Issue of share capital 1 370 - 1 370
Treasury shares acquired (1 465) - (1 465)
Transfer from statutory contingency
reserve - - -
Share of non-distributable reserves of
associate transferred directly to equity 536 - 536
Balance at 30 June 2012 - Unaudited 2 436 589 118 482 2 555 071
Condensed Group Statement of Cash Flows
for the six months ended 30 June 2013
Unaudited Unaudited Audited
6 months 6 months Year ended
30 June 30 June 31 Dec
R'000 2013 2012 2012
Operating activities
Net attributable profit 165 025 482 210 842 116
Adjustments for non-cash items (137 177) (425 738) (765 167)
Operating cash flows before movements
in working capital 27 848 56 472 76 949
Increase in inventories (31 731) (19 715) (3 423)
(Increase)/decrease in trade and
other receivables (86 694) 36 118 58 706
Outside unit holders' interest 2 007 1 458 3 835
Increase in trade and other payables 11 745 59 195 60 877
Net (increase)/decrease in
reinsurance contracts (15 342) 73 531 24 596
Net decrease/(increase) in
deferred acquisition costs 10 432 8 748 (10 914)
Net increase/(decrease) in
insurance contracts 38 662 (125 717) 10 783
Cash (used in)/generated from
operations (43 073) 90 090 221 409
Income taxes paid (5 708) (8 156) (37 235)
Finance costs (35 897) (24 669) (108 359)
Net cash (used in)/from operating
activities (84 678) 57 265 75 815
Investing activities
Interest received 14 496 12 081 26 410
Dividends received from associates
and joint venture 26 507 22 109 75 843
Dividends received from other
equity investments 31 726 34 875 75 603
Proceeds on disposal of investments - - 173 977
Proceeds on disposal of property,
plant, equipment and vehicles 10 009 140 773
Acquisition of property, plant,
equipment and vehicles (27 582) (15 781) (52 756)
Acquisition of businesses - (290) (1 736)
Acquisition of intangible assets (4 636) - (13 018)
Acquisition of investments (8 272) (81 814) (131 705)
Net cash from/(used in) investing
activities 42 248 (28 680) 153 391
Financing activities
Dividends paid by company and
subsidiaries (62 542) (44 729) (44 730)
Repayments of borrowings (57 246) (89 705) (196 555)
Loans raised 8 629 76 398 185 014
Shares sold/(repurchased) 48 (1 465) 292
Proceeds on issue of trust units/shares 2 812 1 370 1 994
Units/shares repurchased by subsidiaries - - (2 319)
Increase in bank overdrafts 12 716 22 413 2 071
Net cash used in financing activities (95 583) (35 718) (54 233)
Net (decrease)/increase in cash
and cash equivalents (138 013) (7 133) 174 973
Cash and cash equivalents at
beginning of period 316 021 141 048 141 048
Cash and cash equivalents at
end of period
Bank balances and cash 178 008 133 915 316 021
Segmental information for the six months ended 30 June 2013
Profit from Headline
R'000 Revenue Operations Profit Assets Liabilities
Fishing 592 593 59 062 9 381 925 406 560 793
Insurance 300 640 (45 938) (30 346) 987 433 810 334
Clothing 88 864 3 862 2 137 170 753 67 811
Investments 66 845 26 671 169 482 3 837 352 1 431 907
Total -
Unaudited 1 048 942 43 657 150 654 5 920 944 2 870 845
Date: 27/08/2013 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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