Wrap Text
Reviewed preliminary condensed consolidated financial results for the year ended 31 December 2016
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" or "the Group")
Reviewed preliminary condensed consolidated financial results for the year ended 31 December 2016
Highlights
- Dividend income increased by 10.3% to R339.9 million
- Net profit before tax of R283.5 million
- INAV increased by 21.4% to over R5 billion
- Dividend declared increased by 20% to 42cps
- Sea Harvest listing expected March 2017
Commentary
The Company reported a profit for the year under review of R197.3 million
compared to a loss of R668.1 million in the prior year.
The significant contributors to this improvement in earnings were:
- An increase in operating profit of R273.7 million, due to a significant
improvement in the results of Lion of Africa and an excellent result
produced by Sea Harvest;
- Share of profits of associates and joint ventures which is up from a loss
of R341.5 million in 2015 to a profit of R98.3 million in 2016; and
- Fair value losses reduced from R429.6 million in 2015 to R70.8 million
in 2016.
Intrinsic gross assets increased to R9.3 billion. Intrinsic Net Asset Value
(INAV) increased by 22.9% to R5.13 billion (R21.40 per share) at 31 December
2016 from R4.23 billion or R17.41 per share at 31 December 2015.
Brimstone Portfolio (unreviewed)
SUBSIDIARIES
Sea Harvest (85%)
In July 2016, Sea Harvest increased its shareholding in Australian-based
listed agri-business Mareterram Limited ("Mareterram") from 19.9% to a
controlling interest of 55.9%. The group's revenue increased by 41% to
R1.9 billion (including Mareterram's revenue of R279.7 million) compared
to the prior year, due to good sales volume growth and higher prices in both
the local and international markets. The group's earnings before interest
and tax increased by 115% to R250.2 million, with earnings before interest
tax depreciation and amortisation up by 80% to R368 million. The growth in
profitability is attributable to investments made in two freezer trawlers in
the last two years as well as the factory optimisation project. The positive
impact of these investments started to show in 2016. The benefits of the
weakening Rand were not completely realised as the company posted a
R55 million hedging loss.
Lion of Africa Insurance Company (Lion of Africa) (100%)
Lion of Africa reported a net loss for the year under review of
R15.4 million compared to a loss of R179.6 million in the prior year.
This loss includes once-off reorganisation costs and legacy claims.
The turnaround is driven by the significant improvement in the gross
underwriting results, with a gross loss ratio of 66.3% compared to 104.4%
in the prior year. The result has also improved significantly due to the
remedial action and strategic changes made in the business. These include
more stringent risk acceptance procedures to clearly define the acceptance
of risks being covered; a new underwriting system and a new experienced
executive team. Lion of Africa continues to focus on intermediated
relationships focusing on commercial business, public sector (including
municipalities), marine and engineering. Lion of Africa's Capital Adequacy
Ratio comfortably exceeded the statutory requirement at year end.
House of Monatic (Monatic) (100%)
Revenue decreased by 3% to R207.7 million (2015: R214 million) and a small
profit was reported. This is mainly due to the poor retail climate
affecting Monatic's own retail outlets as well as sales to independent
retailers, and a significant chain customer (Stuttafords) going into
business rescue. Monatic now has a retail footprint of 9 stores.
ASSOCIATES AND JOINT VENTURES
Oceana (17%)
Brimstone now holds 23 million Oceana shares with a market value of
R2.8 billion. Oceana's share price closed at R120.00 per share at
31 December 2016, up from R117.00 per share at 31 December 2015. Brimstone
received dividends of R107.9 million (2015: R80.6 million) from Oceana
during the year under review and recognised R67.7 million (2015: R35.1
million) in equity accounted earnings based on Oceana's reported full year
earnings to 30 September 2016.
Grindrod (6.7%)
Brimstone accounts for its share of the results in the Consortium SPV as
a joint venture. Brimstone had written its investment in the consortium
down to nil at 31 December 2015. Since then the share price has recovered
resulting in the carrying value of the investment via the Consortium SPV
increasing to R21 million. Grindrod's share price closed at R13.45 at
31 December 2016, up from R11.29 per share at 31 December 2015.
Aon Re Africa (18%)
Aon Re Africa is a leading reinsurance broker licensed and operating in
South Africa and the rest of Africa. Brimstone recorded R5.7 million in
equity accounted losses after receiving a dividend of R14.3 million from
Aon Re Africa during the year under review.
South African Enterprise Development (SAED) (25%)
SAED is an investment vehicle providing equity capital to high growth
potential small and medium sized enterprises. During the year under review,
SAED concluded investments in Decision Inc. (Pty) Ltd (a business
intelligence and data analytics solutions provider), ASG Holdings
(Pty) Ltd (involved primarily in the wholesale distribution of high-end
branded cycling products) and ZAR X (Pty) Ltd (a newly formed licensed
stock exchange). SAED made a positive contribution to earnings during
the year under review.
Obsidian Health (25.07%)
The company remains positive in its outlook of building a world class
medical device solutions provider in the longer term given the healthcare
challenges faced locally and in Africa. Brimstone recorded R0.7 million
in equity accounted earnings during the year under review.
INVESTMENTS
Equites (10%)
Equites' share price closed at R15.80 per share at 31 December 2016, up
from R12.75 per share at 31 December 2015. Brimstone acquired an additional
R100 million worth of Equites shares during the second half of the year
under review. Brimstone received a dividend of R29.6 million from Equites
during the year under review. The investment was revalued upwards by
R94 million to R551 million at year end.
Life Healthcare (4.7%)
Life Healthcare's share price closed at R32.60 per share at 31 December
2016, down from R35.07 per share at 31 December 2015. The investment was
revalued downwards by R118 million to R1 635 million at year end. Brimstone
received dividends of R82.8 million from Life Healthcare during the year
under review, up from R80.9 million for the prior year.
MTN Group and MTN Zakhele Futhi (1.5%)
The MTN Zakhele transaction matured in November 2016. Brimstone elected
to convert the majority of its holding in MTN Zakhele into MTN Group
ordinary shares with the balance being reinvested in the newly formed
MTN Zakhele Futhi. At year end, Brimstone held 570 000 MTN Group ordinary
shares and 1 818 795 MTN Zakhele Futhi ordinary shares after selling
286 916 MTN Group ordinary shares to settle the related debt. Brimstone
received a dividend of R0.4 million and revalued reinvestments upwards
by R12.1 million during the year under review.
Phuthuma Nathi (7%)
The Phuthuma Nathi 1 shares and Phuthuma Nathi 2 shares closed at
R129.60 and R132.99 per share at 31 December 2016 (R165 and R163 per share
at 31 December 2015) respectively. The investment was revalued downwards
by R158.6 million to R619.9 million. Brimstone received a dividend of
R91.3 million from Phuthuma Nathi during the year under review, up from
R65 million for the prior year.
Tiger Brands (0.9%)
Brimstone's right to Tiger Brands shares, accounted for as an option, has
been revalued at year end. The independently calculated option valuation was
based on a closing share price of R397.83 per share at 31 December 2016, up
from R316.44 per share at 31 December 2015. The investment was revalued
upwards by R123.3 million to R373.3 million. This option matures in December
2017 and has been reclassified as a current asset.
INAV
INAV at 31 December 2016 calculated on a line-by-line basis, totalled R5.13
billion, or R21.40 per share (31 December 2015: R4.23 billion or R17.41 per
share), representing an increase of 21.4% from 2015 (an increase of 22.9% on
a per share basis). As at 31 December 2016, Brimstone Ordinary shares were
trading at a discount of 39.3% to INAV (31 December 2015: 22.5%). Brimstone
"N" Ordinary shares traded at a discount of 43.9% to Brimstone's INAV (31
December 2015: 27.1%). The analysis of INAV is available on the Company's
website at www.brimstone.co.za.
SHARE REPURCHASES
Specific repurchase
During the year under review Brimstone repurchased 8 802 969 Brimstone "N"
Ordinary shares following the exercise of the Unencumbered Brimstone Share
Call Option as set out in the circular to shareholders dated 15 August 2016.
The shares were acquired from The Brimstone Black Executives Investment
Trust, The Brimstone General Staff Investment Trust and The Brimstone
Broad-Based BEE Trust, in terms of the trust deeds. The shares were duly
delisted and cancelled on 7 November 2016.
Acquisition of treasury shares
During the year under review Brimstone acquired, via a wholly-owned
subsidiary, 319 987 Brimstone Ordinary shares and 4 759 174 Brimstone "N"
Ordinary shares in the open market for an aggregate consideration of
R60.4 million at an average price of R11.90 per share including costs. These
shares have been accounted for as treasury shares.
DIVIDEND DECLARED
Brimstone's board has declared a final dividend of 42 cents per share for
the year ended 31 December 2016 (2015: 35 cents per share) payable on
Monday, 24 April 2017. The final dividend has been declared out of income
reserves.
In compliance with the requirements of Strate, the Company has determined
the following salient dates for the payment of the final dividend:
Last day to trade cum dividend Tuesday, 18 April 2017
Shares commence trading ex dividend Wednesday, 19 April 2017
Record date Friday, 21 April 2017
Payment date Monday, 24 April 2017
Shares may not be rematerialised or dematerialised from Wednesday, 19 April
2017 to Friday, 21 April 2017, both days inclusive.
The final dividend is subject to Dividends Withholding Tax (DWT) at 20%. The
net local dividend amount is 33.6 cents per share for shareholders liable to
pay DWT and 42 cents per share for shareholders exempt from paying DWT.
The number of Brimstone Ordinary and "N" Ordinary shares eligible for the
final dividend at the date of this declaration is 42 757 604 and 208 777 687
respectively (this excludes 29 646 000 "N" Ordinary shares held by The
Brimstone Black Executives Investment Trust, The Brimstone General Staff
Investment Trust and The Brimstone Broad-Based BEE Trust which are not
eligible to receive dividends) and the Company's tax reference number is
9397002719.
PROSPECTS
The Group is defined by bona fide empowerment credentials, and its
long-term ability to enhance NAV and pay dividends. The Group will
continue to maintain its positive long-term view on its investments and
pursue value accreting opportunities.
On behalf of the board
F Robertson MA Brey
Executive Chairman Chief Executive Officer
27 February 2017
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 CIB, 135 Rivonia Road, Sandton 2196
Directorate: F Robertson (Executive Chairman)*, MA Brey (Chief Executive
Officer)*, GG Fortuin (Financial)*,
MI Khan (Chief Operating Officer)*, PL Campher (Lead Independent),
M Hewu, N Khan, KR Moloko, MK Ndebele,
LA Parker, FD Roman *Executive
Website: www.brimstone.co.za
E-mail: info@brimstone.co.za
CONDENSED CONSOLIDATED INCOME STATEMENT
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 Notes 2016 2015
Revenue 2 688 490 2 208 137
Sales and fee income 2 348 592 1 899 954
Dividends received 339 898 308 183
Operating expenses (2 229 010) (2 022 394)
Operating profit 459 480 185 743
Fair value losses (70 803) (429 562)
Exceptional items 30 189 32 846
Share of profits/(losses) of associates
and joint ventures 98 300 (341 545)
Profit/(loss) before net finance costs 517 166 (552 518)
Income from investments 4 27 042 30 991
Finance costs 4 (260 708) (224 237)
Net profit/(loss) before taxation 283 500 (745 764)
Taxation 5 (86 173) 77 625
Profit/(loss) for the year 197 327 (668 139)
Profit/(loss) attributable to:
Equity holders of the parent 170 739 (698 978)
Non-controlling interests 26 588 30 839
197 327 (668 139)
Earnings/(loss) per share (cents)
Basic 70.9 (284.8)
Diluted 68.7 (284.8)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2016 2015
Profit/(loss) for the year 197 327 (668 139)
Other comprehensive income, net of tax 43 479 188
Items that may be reclassified subsequently
to profit or loss
Cash flow hedges
Profit/(loss) arising during the year 94 658 (98 115)
Foreign currency translation
Loss arising during the year (44 292) -
Share of non-distributable reserves of associates (12 662) 89 171
Items that will not be reclassified subsequently
to profit or loss
Share of non-distributable reserves of associates 5 775 9 132
Total comprehensive income/(loss) for the year 240 806 (667 951)
Total comprehensive income/(loss) attributable to:
Equity holders of the parent 209 680 (657 955)
Non-controlling interests 31 126 (9 996)
240 806 (667 951)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
31 December 31 December
R'000 2016 2015
ASSETS
Non-current assets 5 406 092 5 996 570
Property, plant, equipment and vehicles 607 721 499 942
Goodwill 116 364 12 140
Intangible assets 363 569 92 455
Investments in associate companies and
joint ventures 1 171 960 1 114 419
Investments 3 043 768 4 044 276
Deferred taxation 45 896 25 489
Insurance assets 55 581 204 057
Other financial assets 1 233 3 792
Current assets 2 274 169 1 656 025
Inventories 385 097 258 831
Trade and other receivables 561 938 604 366
Insurance assets 396 753 532 498
Other financial assets 46 800 2 456
Taxation 15 242 8 500
Investments 373 257 -
Cash and cash equivalents 495 082 249 374
TOTAL ASSETS 7 680 261 7 652 595
EQUITY AND LIABILITIES
Capital and reserves 2 588 031 2 626 972
Share capital 41 41
Capital reserves 380 181 427 049
Revaluation reserves 14 143 14 143
Cash flow hedging reserve 32 534 (42 414)
Foreign currency translation reserve (29 119) -
Changes in ownership (163 938) (11 839)
Retained earnings 2 193 293 2 143 330
Attributable to equity holders of the parent 2 427 135 2 530 310
Non-controlling interests 160 896 96 662
Non-current liabilities 3 509 121 3 387 466
Long-term interest bearing borrowings 2 783 204 2 624 018
Long-term provisions 31 209 25 427
Deferred grant income 13 733 -
Other financial liabilities 82 448 -
Insurance liabilities 75 377 270 525
Deferred taxation 523 150 467 496
Current liabilities 1 583 109 1 638 157
Short-term interest bearing borrowings 452 094 174 003
Bank overdrafts 24 390 21 644
Trade payables 409 482 508 884
Other payables 90 014 226 484
Insurance liabilities 529 784 685 787
Other financial liabilities 21 121 -
Short-term provisions 47 754 19 180
Taxation 8 470 2 175
TOTAL EQUITY AND LIABILITIES 7 680 261 7 652 595
NAV per share (cents) 1 011.5 1 044.0
Shares in issue at end of year (000's) 239 956 242 371
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOW
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2016 2015
Operating activities
Net attributable profit/(loss) 197 327 (668 139)
Adjustments for non-cash items 70 150 650 360
Operating cash flows before movements in
working capital 267 477 (17 779)
(Increase)/decrease in inventories (23 992) 6 785
Decrease/(increase) in trade and other receivables 117 999 (6 031)
Outside unit holders' interest - (16 145)
Decrease in trade and other payables (181 238) (20 334)
Net decrease/(increase) in insurance assets 284 221 (8 670)
Net decrease in insurance liabilities (351 151) (177)
Cash generated from/(utilised in) operations 113 316 (62 351)
Interest received 27 042 30 991
Dividends received from associates and joint ventures 130 980 110 148
Dividends received from other equity investments 208 918 198 035
Income taxes paid (64 177) (77 979)
Finance costs (207 545) (173 877)
Net cash generated from operating activities 208 534 24 967
Investing activities
Loan repayments and recoveries from associate
and investments 1 098 21 756
Proceeds on disposal of investments 658 802 955 628
Proceeds on disposal of property, plant,
equipment and vehicles 3 829 7 080
Acquisition of property, plant, equipment
and vehicles (126 084) (172 472)
Acquisition of subsidiaries
- shares acquired and loans advanced (195 859) -
Acquisition of intangible assets (7 611) (1 451)
Proceeds from receipt of a government grant 15 831 -
Acquisition of investments (134 548) (1 209 785)
Net cash generated from/(utilised in) in
investing activities 215 458 (399 244)
Financing activities
Dividends paid by Company and subsidiaries (91 517) (151 140)
Repayments of borrowings (248 716) (689 879)
Loans raised 490 472 1 274 372
Further investment in subsidiary (167 287) -
Shares repurchased (62 950) (51 962)
Disposal of treasury shares by subsidiary 3 938 -
Proceeds on issue of trust units/shares 19 870 13 812
Redemption of non-controlling shareholder's
preference shares (85 756) -
Share of distribution made by special purpose
entities (38 923) -
Units/shares repurchased by subsidiaries (108) -
Increase in bank overdrafts 2 746 6 829
Net cash (utilised in)/generated from financing
activities (178 231) 402 032
Net increase in cash and cash equivalents 245 761 27 755
Cash and cash equivalents at beginning of year 249 374 221 619
Foreign exchange differences (53) -
Cash and cash equivalents at end of year
Bank balances and cash 495 082 249 374
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Capital Revaluation
R'000 capital reserves reserves
Balance at 1 January 2015 - audited 45 342 032 14 143
Attributable (loss)/profit for the year
ended 31 December 2015 - - -
Other comprehensive income/(loss) - 98 359 -
Total comprehensive income/(loss) - 98 359 -
Recognition of share-based payments - 11 615 -
Dividend paid - - -
Subsidiary's accrual for preference
dividends - - -
Non-controlling interest arising on
recognition of subsidiary - - -
Acquisition of non-controlling
interest in subsidiary - - -
Issue of share capital - 11 526 -
Sale of trust units - - -
Treasury shares acquired (4) (51 958) -
Share of non-distributable reserves of
associates transferred directly to equity - 15 475 -
Balance at 31 December 2015 - audited 41 427 049 14 143
Attributable profit for the year ended
31 December 2016 - - -
Other comprehensive profit/(loss) - (6 888) -
Total comprehensive profit/(loss) - (6 888) -
Recognition of share-based payments - (9 788) -
Amount reclassified to share options
reserve - 17 747 -
Dividend paid - - -
Subsidiary's accrual for preference
dividends - - -
Non-controlling interest arising on
recognition of subsidiary - - -
Acquisition of non-controlling
interest in subsidiary - - -
Redemption of preference shares by
subsidiary - - -
Disposal of treasury shares by subsidiary - - -
Distributions made to participants of
share trusts - - -
Reduction of subsidiary's share capital - - -
Issue of share capital - 15 524 -
Sale of trust units - 992 -
Recognition of change in value of share
option liability directly in equity - (1 535) -
Treasury shares acquired - (62 950) -
Further acquisition of investment in
subsidiary - - -
Share of non-distributable reserves of
associates transferred directly to equity - 30 -
Balance at 31 December 2016 -
reviewed 41 380 181 14 143
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Foreign
R'000 Cash flow currency Changes
hedging translation in
reserve reserve ownership
Balance at 1 January 2015 - audited 14 922 - (11 839)
Attributable (loss)/profit for the
year ended 31 December 2015 - - -
Other comprehensive income/(loss) (57 336) - -
Total comprehensive income/(loss) (57 336) - -
Recognition of share-based payments - - -
Dividend paid - - -
Subsidiary's accrual for preference
dividends - - -
Non-controlling interest arising on
recognition of subsidiary - - -
Acquisition of non-controlling
interest in subsidiary - - -
Issue of share capital - - -
Sale of trust units - - -
Treasury shares acquired - - -
Share of non-distributable reserves of
associates transferred directly to equity - - -
Balance at 31 December 2015 - audited (42 414) - (11 839)
Attributable profit for the year
ended 31 December 2016 - - -
Other comprehensive profit/(loss) 74 948 (29 119) -
Total comprehensive profit/(loss) 74 948 (29 119) -
Recognition of share-based payments - - -
Amount reclassified to share options
reserve - - -
Dividend paid - - -
Subsidiary's accrual for preference
dividends - - -
Non-controlling interest arising on
recognition of subsidiary - - -
Acquisition of non-controlling
interest in subsidiary - - -
Redemption of preference shares by
subsidiary - - -
Disposal of treasury shares by subsidiary - - -
Distributions made to participants of
share trusts - - -
Reduction of subsidiary's share capital - - -
Issue of share capital - - -
Sale of trust units - - -
Recognition of change in value of share
option liability directly in equity - - -
Treasury shares acquired - - -
Further acquisition of investment in
subsidiary - - (152 099)
Share of non-distributable reserves of
associates transferred directly to equity - - -
Balance at 31 December 2016 -
reviewed 32 534 (29 119) (163 938)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Attributable
to equity
holders Non-
R'000 Retained of the controlling
earnings parent interests
Balance at 1 January 2015 - audited 2 965 681 3 324 984 109 421
Attributable (loss)/profit for the
year ended 31 December 2015 (698 978) (698 978) 30 839
Other comprehensive income/(loss) - 41 023 (40 835)
Total comprehensive income/(loss) (698 978) (657 955) (9 996)
Recognition of share-based payments - 11 615 -
Dividend paid (123 373) (123 373) (27 767)
Subsidiary's accrual for preference
dividends - - 7 983
Non-controlling interest arising on
recognition of subsidiary - - 123 078
Acquisition of non-controlling
interest in subsidiary - - (108 343)
Issue of share capital - 11 526 1 748
Sale of trust units - - 538
Treasury shares acquired - (51 962) -
Share of non-distributable reserves of
associates transferred directly to equity - 15 475 -
Balance at 31 December 2015 - audited 2 143 330 2 530 310 96 662
Attributable profit for the year
ended 31 December 2016 170 739 170 739 26 588
Other comprehensive profit/(loss) - 38 941 4 538
Total comprehensive profit/(loss) 170 739 209 680 31 126
Recognition of share-based payments - (9 788) 665
Amount reclassified to share options
reserve - 17 747 -
Dividend paid (85 791) (85 791) (5 726)
Subsidiary's accrual for preference
dividends - - 3 238
Non-controlling interest arising on
recognition of subsidiary - - 141 973
Acquisition of non-controlling
interest in subsidiary - - (15 188)
Redemption of preference shares by
subsidiary - - (88 994)
Disposal of treasury shares by subsidiary 3 938 3 938 -
Distributions made to participants of
share trusts (38 923) (38 923) -
Reduction of subsidiary's share capital - - (108)
Issue of share capital - 15 524 -
Sale of trust units - 992 (1 576)
Recognition of change in value of share
option liability directly in equity - (1 535) -
Treasury shares acquired - (62 950) -
Further acquisition of investment in
subsidiary - (152 099) -
Share of non-distributable reserves of
associates transferred directly to equity - 30 (1 176)
Balance at 31 December 2016 -
reviewed 2 193 293 2 427 135 160 896
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
R'000 Total
Balance at 1 January 2015 - audited 3 434 405
Attributable (loss)/profit for the
year ended 31 December 2015 (668 139)
Other comprehensive income/(loss) 188
Total comprehensive income/(loss) (667 951)
Recognition of share-based payments 11 615
Dividend paid (151 140)
Subsidiary's accrual for preference dividends 7 983
Non-controlling interest arising on recognition of subsidiary 123 078
Acquisition of non-controlling interest in subsidiary (108 343)
Issue of share capital 13 274
Sale of trust units 538
Treasury shares acquired (51 962)
Share of non-distributable reserves of
associates transferred directly to equity 15 475
Balance at 31 December 2015 - audited 2 626 972
Attributable profit for the year ended 31 December 2016 197 327
Other comprehensive profit/(loss) 43 479
Total comprehensive profit/(loss) 240 806
Recognition of share-based payments (9 132)
Amount reclassified to share options reserve 17 747
Dividend paid (91 517)
Subsidiary's accrual for preference dividends 3 238
Non-controlling interest arising on recognition of subsidiary 141 973
Acquisition of non-controlling interest in subsidiary (15 188)
Redemption of preference shares by subsidiary (88 994)
Disposal of treasury shares by subsidiary 3 938
Distributions made to participants of share trusts (38 923)
Reduction of subsidiary's share capital (108)
Issue of share capital 15 524
Sale of trust units (584)
Recognition of change in value of share
option liability directly in equity (1 535)
Treasury shares acquired (62 950)
Further acquisition of investment in subsidiary (152 099)
Share of non-distributable reserves of
associates transferred directly to equity (1 146)
Balance at 31 December 2016 - reviewed 2 588 031
HEADLINE EARNINGS /(LOSS) PER SHARE
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2016 2015
Headline earnings/(loss) per share (cents)
Basic 48.0 (295.3)
Diluted 46.5 (295.3)
Headline earnings/(loss) calculation (R'000)
Net profit/(loss) attributable to equity
holders of the parent 170 739 (698 978)
Profit on disposal of property, plant,
equipment and vehicles (2 098) (2 119)
Realised loss/(profit) on disposal of associates 9 451 (44 841)
Gain on remeasurement of previously held
interest in associate (38 649) -
Impairment of investment in associate - 11 994
Adjustments relating to results of associates (28 727) 65
Total tax effects of adjustments 4 865 9 338
Headline earnings/(loss) 115 581 (724 541)
Weighted average number of shares on
which earnings/(loss) and headline earnings/(loss)
per share is based (000's) 240 733 245 392
Weighted average number of shares on
which diluted earnings/(loss) and diluted headline
earnings/(loss) per share is based (000's) 248 409 245 392
FURTHER INFORMATION
1. Auditor's review report
The preliminary condensed consolidated financial statements for the
year ended 31 December 2016 have been reviewed by the Company's
auditors, Deloitte & Touche. The review was conducted in accordance
with ISRE 2410 Review of Interim Financial Information performed by
the Independent Auditor of the Entity. The auditor's unmodified review
conclusion does not necessarily cover all the information in this
announcement. Shareholders are therefore advised that in order to
obtain a full understanding of the nature of the auditor's work
they should obtain a copy of the review conclusion report together
with the accompanying financial information from the registered
office of the Company. Any reference to future financial performance
and Intrinsic Net Asset Value included in this announcement has not
been reviewed or reported on by the Company's auditors.
2. Basis of preparation
The preliminary condensed consolidated financial statements have
been prepared in accordance with the requirements of the JSE Limited
Listings Requirements for preliminary reports and the requirements
of the Companies Act of South Africa. The Listings Requirements
require preliminary reports to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the SAICA
Financial Reporting Guides as issued by the Accounting Practices
Committee and the Financial Pronouncements as issued by the Financial
Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting. The
accounting policies applied in the preparation of the preliminary
condensed consolidated financial statements are in terms of IFRS and
are consistent with those applied in the previous consolidated
annual financial statements.
The preliminary condensed consolidated financial statements were
prepared under the supervision of the Group financial director,
Geoffrey George Fortuin BCom(Acc)(Hons), CA(SA).
3. Significant accounting policies
These preliminary condensed reviewed consolidated financial statements
for the year ended 31 December 2016 have been prepared on the
historical cost basis, except for the revaluation of certain financial
instruments. The accounting policies and methods of computation
applied in the presentation of the financial results are consistent
with those applied for the year ended 31 December 2015.
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2016 2015
4. Income from investments
Interest received on bank deposits and
loans to associates and subsidiaries 27 042 30 991
Finance costs
Interest on borrowings 72 315 36 059
Interest rate swap 2 337 -
Preference dividends 185 900 188 038
Interest on obligations under instalment
sale agreements 156 140
260 708 224 237
5. Taxation
Current normal and deferred tax charge/(credit) 84 909 (81 286)
Dividends tax 453 417
Securities transfer tax 811 3 244
86 173 (77 625)
6. Capital commitments
Commitments for the acquisition of
property, plant, equipment and vehicles:
Contracted for 8 677 9 989
Authorised by directors but not contracted for 6 142 18 716
14 819 28 705
7. Segmental information
Information reported to the Group's operating
decision makers for the purpose of resource
allocation and assessment of segment performance
is specifically focused on the individual entity
in which Brimstone has invested. The Group's
reportable segments under IFRS 8: Operating
Segments are therefore fishing, insurance,
clothing and investments. Investments include
investments in associates, available-for-sale
investments, investments at fair value through
profit or loss and the Group's property portfolio.
Segment revenues and results
Segment revenue
Fishing 1 931 979 1 373 457
Insurance 208 679 310 303
Clothing 207 651 214 778
Investments 340 181 309 599
Total revenue 2 688 490 2 208 137
Segment profit/(loss) from operations
Fishing 196 562 121 653
Insurance (30 868) (178 676)
Clothing 5 918 10 707
Investments 287 868 232 059
Total profit from operations 459 480 185 743
Fair value losses (70 803) (429 562)
Exceptional items 30 189 32 846
Share of profits/(losses) of associates
and joint ventures 98 300 (341 545)
Income from investments 27 042 30 991
Finance costs (260 708) (224 237)
Profit/(loss) before taxation 283 500 (745 764)
Reviewed Audited
Year ended Year ended
R'000 31 December 31 December
Segment assets and liabilities 2016 2015
Segment assets Gross Net Gross Net
Fishing 1 873 269 1 873 269 1 117 341 1 117 341
Insurance 931 652 931 652 1 300 444 1 300 444
Clothing 195 445 195 445 193 775 193 775
3 000 366 3 000 366 2 611 560 2 611 560
Investments 5 967 671 4 679 895 5 854 165 5 041 035
Intergroup
balances 1 287 776 - 813 130 -
Other 4 679 895 4 679 895 5 041 035 5 041 035
Total segment
assets 8 968 037 7 680 261 8 465 725 7 652 595
Segment liabilities
Fishing 1 586 588 1 028 111 1 064 334 838 091
Insurance 1 171 667 788 733 1 525 085 1 260 151
Clothing 150 255 68 905 148 628 76 317
2 908 510 1 885 749 2 738 047 2 174 559
Investments 2 183 720 2 183 720 2 287 576 2 287 576
Total segment
liabilities 5 092 230 4 069 469 5 025 623 4 462 135
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2016 2015
Other segmental information
Depreciation and amortisation
Fishing 118 712 89 761
Insurance 1 590 3 089
Clothing 6 506 4 640
Investments 1 200 721
Total segment depreciation and amortisation 128 008 98 211
Additions to non-current assets
Fishing 110 614 152 488
Insurance 4 797 3 160
Clothing 14 540 10 140
Investments 3 746 8 136
Total segment additions to non-current assets 133 697 173 924
8. Fair value measurements
This note provides information about how the Group determines fair
values of various financial assets and financial liabilities.
Fair value of the Group's financial assets and financial liabilities
that are measured on a fair value basis on a recurring basis
Some of the Group's financial assets and financial liabilities are
measured at fair value at the end of each financial reporting period.
The following table gives information about how the fair values of
these financial assets and financial liabilities are determined
(in particular, the valuation technique(s) and inputs used).
The directors consider that the carrying amounts of financial assets
and financial liabilities not measured at fair value on a recurring
basis (but fair value disclosures are required) recognised in the
consolidated financial statements approximate their fair values.
R'000
2016 Reviewed Level 1 Level 2 Level 3 Total
Financial assets
at FVTPL*
Derivative
financial assets - 488 086(3) - 488 086
Listed shares 2 329 599 - - 2 329 599
Unlisted shares
and loan 619 885 - 5(1) 619 890
Available-for-sale
financial assets
Unlisted shares - - 25 265(2) 25 265
Unlisted shares - - 2 218(1) 2 218
Total 2 949 484 488 086 27 488 3 465 058
Financial liabilities
at FVTPL*
Derivative
financial liabilities - 103 569(3) - 103 569
2015 Audited Level 1 Level 2 Level 3 Total
Financial
assets at FVTPL*
Derivative
financial assets - 256 231(3) - 256 231
Listed shares 2 914 598 - - 2 914 598
Unlisted shares
and loan 778 459 - 5(1) 778 464
Other investments 73 748 - - 73 748
Available-for-sale
financial assets
Unlisted shares - - 25 265(2) 25 265
Unlisted shares - - 2 218(1) 2 218
Total 3 766 805 256 231 27 488 4 050 524
* FVTPL = Fair value through profit or loss
Notes
1. At cost or historical valuation.
2. Value determined by an independent valuer using market values.
3. The following methods and inputs are used in valuing level 2
financial assets and liabilities:
- Options are independently valued using the Monte Carlo method,
taking into account the number of option shares, the spot price
per share, the risk free rate, dividend yield, volatility and
outstanding debt of the relevant share.
- The fair value of interest rate swaps is calculated as the present
value of the estimated future cash flows based on observable
yield curves.
- The fair value of forward exchange contracts is determined using
forward exchange spot and forward rates at the reporting date.
There are no changes to unobservable inputs that might result in a
significantly higher or lower fair value measurement within level 2
and level 3 financial assets and liabilities.
The table provided analyses financial instruments that are measured
subsequent to initial recognition at fair value, grouped in Levels 1 to
3 based on the degree to which fair value is observable.
- Level 1 fair value measurements are those derived from quoted prices
(unadjusted) in active markets for identical assets or liabilities.
- Level 2 fair value measurements are those derived from inputs other
than quoted prices included within Level 1 that are observable for the
asset or liability, either directly (i.e. as prices) or indirectly
i.e. derived from prices).
- Level 3 fair value measurements are those derived from valuation
techniques that include inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
There were no transfers between levels 1, 2 and 3 in the current
or prior year.
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2016 2015
9. Share Capital (number)
In issue (number)
Ordinary shares 42 757 604 42 757 604
Held as treasury shares (4 273 074) (3 953 087)
38 484 530 38 804 517
"N" ordinary shares 238 423 687 244 103 200
Held as treasury shares (36 952 419) (40 536 751)
201 471 268 203 566 449
Total net of treasury shares 239 955 798 242 370 966
Weighted average number of shares on
which earnings and headline earnings per
share is based is 240 732 715
(2015 - 245 392 252)
Weighted average number of shares on
which diluted earnings and diluted headline
earnings per share is based is 248 409 451
(2015 - 245 392 252)
Reconciliation of weighted average number
of shares between basic and diluted
earnings per share and headline earnings
and diluted headline earnings per share.
Basic 240 732 715 245 392 252
Dilutive instruments 7 676 736 -
Diluted 248 409 451 245 392 252
Number of instruments treated
as anti-dilutive 25 805 605 41 748 046
Closing share price (cents)
Ordinary shares 1 299 1 350
"N" ordinary shares 1 200 1 270
10. Business combinations
In July 2016, the Group acquired an additional 35.99% interest in
Mareterram, a fishing and fish processing business situated on the
Australian West Coast and listed on the Australian Stock Exchange. The
acquisition from previous equity holders was done through the Australian
Stock Exchange. Sea Harvest expects to benefit from synergies, revenue
growth and future market development of Mareterram.
The Group gained a controlling interest in Mareterram through this
acquisition, and has accounted for the 55.89% interest as a non-wholly
owned subsidiary, with its results from July 2016 being fully
consolidated with that of the Group's results.
The Group has elected to measure the non-controlling interests in the
acquiree at its proportionate percentage of the recognised amounts of
the acquiree's identifiable net assets.
At the time of acquisition, the initial interest held (19.9%) was fair
valued using the market price on the Australian Stock Exchange. The
resulting gain was recognised in profit or loss and the fair value of
the previously held interest was used in the determination of goodwill
in accordance with the provisions of IFRS 3: Business Combinations.
Reviewed
Year ended
R'000 31 December 2016
Assets acquired and liabilities recognised at date
of acquisition
Property, plant and equipment 105 723
Intangible assets 310 918
Deferred tax assets 30 181
Financial derivative assets 230
Inventory 111 854
Trade and other receivables 85 240
Short-term financial derivative assets 1 566
Cash and cash equivalents 131
Long-term interest bearing borrowings (131 812)
Employee related liabilities (3 043)
Fishing licence liability (89 542)
Trade and other payables (60 684)
Short-term interest bearing borrowings (25 027)
Short-term fishing licence liability (23 308)
Short-term financial derivative liabilities (602)
311 825
Goodwill 115 722
Non-controlling interests (137 546)
Existing interest of Brimstone at date of acquisition (94 011)
Consideration transferred 195 990
Goodwill arising on acquisition
Consideration transferred 195 990
Existing interest of Brimstone at date of acquisition 94 011
Add: Non-controlling interests (proportionate
percentage of net identifiable assets) 137 546
Less: Fair value of assets acquired and liabilities assumed (311 825)
Goodwill 115 722
Goodwill is attributable to a control premium as well
as the benefit of expected synergies, revenue growth
and future market development of Mareterram.
Goodwill is not expected to be deductible for tax purposes.
The initial accounting for the acquisition of
Mareterram has not been finalised. This is the result
of uncertainties surrounding the valuation of certain
intangible assets. These uncertainties are expected to
be resolved by 31 December 2017.
Net cash (outflow)/inflow on acquisition of subsidiary
Consideration paid in cash (195 990)
Less: Cash and cash equivalents acquired 131
(195 859)
Impact of the acquisition on the results of the Group
Amounts included in Brimstone Group results since
date of acquisition:
Revenue 279 743
Profit for the year 22 000
Pro forma results of the Brimstone Group if Mareterram
had been consolidated from
1 January 2016:
Revenue 2 525 592
Profit for the year 196 327
Acquisition related costs
Acquisition costs of R4,2 million were recognised in profit or loss
for the 2016 year.
These costs relate to share registry costs and legal fees relating to
the acquisition.
11. Subsequent events
On 8 February 2017, Brimstone announced the proposed listing of Sea
Harvest on the JSE. A capital raising of up to R1.5 billion will be
undertaken by Sea Harvest by way of a private placement simultaneously
with the proposed listing. Brimstone remains committed and supportive of
Sea Harvest and will hold more than 50% post the listing.
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