Wrap Text
Reviewed preliminary condensed consolidated financial results for the year ended 31 December 2017
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 2017
SIGNIFICANT EVENTS
- Sea Harvest listing resulted in a R786 million increase in net
asset value of Brimstone
- Unlisted operating subsidiaries disappoint with losses of R107 million
- Dividends received decreased by R117 million
- Entry into tertiary education sector with investment in Stadio
- Cash dividend with scrip alternative of 42 cps (2016: 42 cps) declared
COMMENTARY
The Company reported a profit for the year under review of R147.1 million
compared to a profit of R197.3 million in the prior year.
Significant contributors to the movement in earnings were:
- the excellent result produced by Sea Harvest
- an increase in fair value gains of R142.2 million
- losses at Lion of Africa and House of Monatic and a decrease of
R117 million in dividends received
- a decrease in other investment gains and share of profits of associates
and joint ventures of R70.1 million.
Brimstone Portfolio (unreviewed)
SUBSIDIARIES
Sea Harvest (54.9%)
Sea Harvest reported earnings before interest and tax of R383 million and
profit after tax of R267 million for the year ended 31 December 2017, an
increase of 53% and 103% respectively on the same period last year,
benefiting from the improved performance of its South African operations as
a result of strong market demand and exceptional performance of the Saldanha
Bay factories. Revenue for the year increased by 10% to R2.1 billion (2016:
R1.9 billion). Continued strong global demand for high value, sustainably
certified wild caught seafood with limited supply drove strong
pricing across all channels and markets, partially offsetting the impact of
the stronger Rand. Sea Harvest reported a gross profit of R717 million
(2016: R605 million) and gross profit margin expanded to 34% (2016: 31%),
benefiting from efficiency improvement projects in the South African
operations.
Lion of Africa Insurance Company (Lion of Africa) (100%)
Lion of Africa reported a net loss for the year under review of
R92.3 million compared to a loss of R15.4 million in the prior year. The
losses for the year were mainly as a result of larger than anticipated
claims experienced, notably on the property, liability and motor classes
within the Public Sector business. These claims resulted in a gross loss
ratio of 74.3% compared to 66.3% in the prior year. The management team has
however been proactive in addressing these losses and has already
implemented steps to ensure these losses do not recur. The positive results
of these plans were seen during the 4th quarter of 2017 where a reduction in
the loss ratio was achieved, from 84.5% for the first 9-months to 74.3% for
the full year.
House of Monatic (Monatic) (100%)
Revenue decreased by 16% to R174.4 million (2016: R207.7 million) and a loss
of R14.4 million (2016: Profit R0.04 million) was reported. This is mainly
due to the poor retail climate affecting Monatic's own retail outlets and
sales to independent retailers, which were exacerbated by independent
customers going into liquidation or business rescue. Due to the
aforementioned factors, the factory suffered 21 days of short-time, which
resulted in the under-recovery of factory overheads of about R17 million.
This is in accordance with Monatic's strategy of not producing inventory
unless it is necessary to satisfy confirmed orders.
ASSOCIATES AND JOINT VENTURES
Oceana (17%)
Brimstone holds 23 million shares in Oceana with a market value of
R1.96 billion. Oceana's share price closed at R85.00 per share, down from
R120.00 per share at 31 December 2016. Brimstone received dividends of
R20.7 million (2016: R107.9 million) from Oceana during the year under
review and recognised R65.7 million (2016: R67.7 million) in equity
accounted earnings based on Oceana's reported full year earnings to
30 September 2017.
Grindrod (6.7%)
Brimstone accounts for its share of the results in the Consortium SPV as a
joint venture. Brimstone has written its investment in the consortium
down to nil at 31 December 2017 as the value of the debt of the
Consortium SPV exceeded the value of the investment, despite Grindrod's
share price closing at R13.65 at 31 December 2017, up from R13.45 per
share at 31 December 2016. At 31 December 2016 the carrying value of the
investment via the Consortium SPV was R21 million.
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 R3.7 million in
equity accounted earnings after receiving a dividend of R5.55 million
from Aon Re Africa during the year under review.
Obsidian Health (Obsidian) (25.07%)
Obsidian is a distributor of medical equipment, medical consumables and
pharmaceutical products. The company contributed positively to Brimstone's
profits during the year under review.
South African Enterprise Development (SAED) (25%)
SAED is an investment vehicle providing equity growth capital to high
potential small and medium sized enterprises. SAED holds 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), ZAR X
(Pty) Ltd (a newly formed licensed stock exchange), High Duty Castings (Pty)
Ltd (an iron foundry involved in the manufacture of castings) and Tombake
Holdings (Pty) Ltd (involved in the supply and manufacture of baking and
confectionary equipment). SAED made a positive contribution to earnings
during the year under review.
Vuna Fishing Company (Vuna) (49.8%)
Vuna was acquired from Sea Harvest on 1 January 2017. Vuna contributed
R4.8 million in equity accounted earnings during the year under review.
INVESTMENTS
Equites (8.5%)
Equites' share price closed at R21.00 per share at 31 December 2017, up from
R15.80 per share at 31 December 2016. Brimstone received a dividend of
R40.8 million (2016: R29.6 million) from Equites during the year under
review. The investment was revalued upwards by R181.5 million to
R732.8 million at year end.
Life Healthcare (4.5%)
Life Healthcare's share price closed at R27.75 per share at 31 December
2017, down from R32.60 per share at 31 December 2016. Brimstone followed
its rights in April 2017 in terms of the Life Healthcare rights offer
and acquired 17.2 million shares at R24.50 per share for an aggregate
R420.5 million. In September 2017, 2.5 million shares were sold at an
average price of R23.36 per share. The investment was revalued downwards by
R198.5 million to R1 799 million at year end. Brimstone received dividends
of R52.8 million from Life Healthcare during the year under review, down
from R82.8 million for the prior year. Subsequent to year-end, Brimstone
sold 13.5 million shares at an average price of R26.78 per share.
Long4Life (4.0%)
Brimstone acquired 40 million shares in Long4Life ahead of its listing on
the JSE in April 2017 at R5.00 per share. Long4Life's share price closed at
R4.90 per share at 31 December 2017. In December 2017, 4.5 million shares
were sold at an average price of R4.51 per share. The investment was
revalued downwards by R5.7 million to R173.95 million at year end.
MTN Group and MTN Zakhele Futhi (1.5%)
Brimstone disposed of its remaining 570 000 MTN Group shares during March
2017 at an average price of R127.56. Brimstone holds 1 818 795 MTN Zakhele
Futhi shares which are accounted for as options. The independently
calculated option valuation was based on a MTN Group closing share price
of R136.60 per share, up from R126.17 per share at 31 December 2016. The
investment was revalued upwards by R3.8 million to R70.6 million.
Phuthuma Nathi (7%)
The Phuthuma Nathi 1 shares and Phuthuma Nathi 2 shares closed at R99.90
and R98.00 per share at 31 December 2017 (R129.60 and R132.99 per share
at 31 December 2016) respectively. The investment was revalued downwards
by R149.7 million to R470.1 million. Brimstone received a dividend of
R91.3 million (2016: R91.3 million) from Phuthuma Nathi during the year
under review.
Stadio (4.3%)
Brimstone acquired 33.8 million shares in Stadio as part of its BBBEE
transaction in November 2017 at R2.96 per share. Stadio's share price
closed at R8.05 per share at 31 December 2017. The investment was
revalued upwards by R172 million to R272 million at year end.
Tiger Brands (0.9%)
The lock-in period applicable to Brimstone's Tiger Brands stake ended on
31 December 2017. On expiry of the lock-in period, Tiger Brands was
entitled to repurchase a number of Tiger Brands shares from Brimstone
to settle the outstanding notional vendor funding owing to Tiger Brands
that arose in terms of the 2009 Tiger Brands BEE transaction. At year end
the number of shares to be repurchased by Tiger Brands was 861 257 at a
price of R7.40 per share. Brimstone's remaining unencumbered shareholding in
Tiger Brands was valued at R389.8 million which included a R48.3 million
derivative loss as Brimstone had entered into a forward sale transaction
enabling it to sell 600 000 Tiger Brands shares in early 2018 at R374.80
per share (Tiger Brands' closing price was R460.00 at 31 December 2017).
Subsequent to year end, Tiger Brands repurchased the aforementioned
shares and Brimstone disposed of its residual stake for an aggregate
of R387.3 million.
Intrinsic net asset value (INAV)
INAV at 31 December 2017 calculated on a line-by-line basis, totalled
R4.32 billion, or R18.01 per share (31 December 2016: R5.13 billion or
R21.40 per share), representing a decrease of 15.9% from 2016 (a decrease of
15.8% on a per share basis). As at 31 December 2017, Brimstone Ordinary
shares were trading at a discount of 27.8% to INAV (31 December 2016: 39.3%)
and "N" Ordinary shares traded at a discount of 37.5% to INAV (31 December
2016: 43.9%). The analysis of INAV is available on the Company's website at
www.brimstone.co.za.
The INAV information presented in this report has been prepared on a basis
consistent with that used in the integrated report for the year ended
31 December 2016.
SHARE REPURCHASES
Specific repurchases
During May 2017 Brimstone repurchased 2 137 000 Brimstone Ordinary shares
and 4 809 174 Brimstone "N" Ordinary shares in terms of a special resolution
passed at the annual general meeting on 10 May 2017. The shares which were
held by wholly-owned subsidiary, Septen Investments (Pty) Ltd, were delisted
and cancelled on 23 May 2017.
During November 2017 Brimstone repurchased 8 717 629 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 21 November 2017.
Acquisition of treasury shares
During the year under review Brimstone acquired, via a wholly-owned
subsidiary, 2 029 848 Brimstone "N" Ordinary shares in the open market
for an aggregate consideration of R23.9 million at an average price of
R11.75 per share including costs. These shares have been accounted for as
treasury shares.
DECLARATION OF A CASH DIVIDEND ("CASH DIVIDEND") INCORPORATING AN
ELECTION TO RECEIVE THE CASH DIVIDEND OR A SCRIP DIVIDEND AS AN
ALTERNATIVE (THE "SCRIP DIVIDEND ALTERNATIVE"), WITH THE DEFAULT ELECTION
BEING THE SCRIP DIVIDEND ALTERNATIVE
Brimstone's board has declared the final Cash Dividend of 42 cents per
Brimstone share ("Share") for the year ended 31 December 2017 (2016: 42
cents per Share) payable on Monday, 23 April 2018. In addition,
shareholders have been provided with an election to receive the Cash
Dividend or the Scrip Dividend Alternative, with the default election being
the Scrip Dividend Alternative.
Details of the Cash Dividend and the Scrip Dividend Alternative
By electing the Scrip Dividend Alternative, Brimstone ordinary
shareholders and Brimstone "N" ordinary shareholders will increase their
shareholding in either Brimstone ordinary Shares or Brimstone "N" ordinary
Shares respectively (collectively "Shares"), without incurring securities
transfer tax and other dealing costs.
Brimstone shareholders are entitled, in respect of all or part of their
shareholding, to receive the Scrip Dividend Alternative to the extent that
such shareholders have not elected to receive the Cash Dividend. The number
of Brimstone shares to which shareholders are entitled in terms of the Scrip
Dividend Alternative will be determined by reference to:
1. for Brimstone ordinary Shares: the ratio that 42 cents per Brimstone
ordinary Share bears to the ratio price, being the fifteen day volume
weighted average traded price ("VWAP") less the dividend of 42 cents,
of a Brimstone ordinary share on the JSE prior to the finalisation date
of Tuesday, 10 April 2018 ("Finalisation Date"); and
2. for Brimstone "N" ordinary shares: the ratio that 42 cents per Brimstone
"N" ordinary Share bears to the ratio price, being the fifteen day VWAP
Less the dividend of 42 cents, of a Brimstone "N" ordinary Share on the
JSE prior to the Finalisation Date.
Where a shareholder's entitlement to Brimstone Shares in relation to the
Scrip Dividend Alternative gives rise to a fraction of a new Brimstone
Share, such fraction will be rounded down to the nearest whole number and
the cash balance will be paid to the shareholder. The cash balance will be
determined based on the volume weighted average price of Brimstone Shares on
Wednesday, 18 April 2018, discounted by 10%.
If no election is made to participate in the Cash Dividend, shareholders
will receive the Scrip Dividend Alternative in respect of all the Brimstone
Shares held on the record date, being Friday, 20 April 2018.
The directors of Brimstone, at their discretion, may withdraw the Scrip
Dividend Alternative should market conditions warrant such action and such
withdrawal will be communicated to shareholders prior to the finalisation
announcement to be published by 11:00 on Tuesday, 10 April 2018.
A circular providing full details of the Cash Dividend and Scrip Dividend
Alternative, including the procedures to be followed by shareholders and the
form of election will be posted to shareholders on Thursday, 8 March 2018.
DECLARATION OF A CASH DIVIDEND (continued)
The salient dates and times of the Cash Dividend and Scrip Dividend
Alternative are as follows:
2018
Circular and form of election posted to Brimstone
shareholders and posting of circular announced on SENS Thursday, 8 March
Announcement of Scrip Dividend Alternative ratio and
finalisation information ("Finalisation Date")
released on SENS by 11:00 Tuesday, 10 April
Last day to trade ("LDT") in order to be eligible for
the Cash Dividend and Scrip Dividend Alternative Tuesday, 17 April
Brimstone Shares commence trading ex Cash Dividend
and Scrip Dividend Alternative Wednesday, 18 April
Listing of maximum possible number of Brimstone Shares
in respect of the Scrip Dividend Alternative commences
on the JSE Wednesday, 18 April
Announcement in respect of the cash payment applicable
to fractional entitlements, based on the volume
weighted average price of Brimstone Shares on
Wednesday, 18 April 2018, discounted by 10%
released on SENS Thursday, 19 April
Last day to elect to receive the Cash Dividend
(no late forms of election will be accepted) by 12:00 Friday, 20 April
Record date of Cash Dividend and Scrip Dividend
Alternative ("Record Date") Friday, 20 April
Announcement of results of Cash Dividend and Scrip
Dividend Alternative on SENS Monday, 23 April
Cheques posted to certificated shareholders and
accounts credited by CSDP or broker to dematerialised
shareholders electing the Cash Dividend on Monday, 23 April
Share certificates posted to certificated shareholders
and accounts credited by CSDP or broker to dematerialised
shareholders deemed to have elected the Scrip Dividend
Alternative on Monday, 23 April
Announcement of results of Cash Dividend and
Scrip Dividend Alternative in the press Tuesday, 24 April
Adjustment to Brimstone Shares listed on Tuesday, 24 April
Notes:
1. All dates and times indicated are South African dates and times.
2. All dates and times indicated are subject to change. Any change
will be announced on SENS.
3. Brimstone Shares may not be dematerialised or rematerialised between
commencement of trade on Wednesday, 18 April 2018 and the close of trade
on Friday, 20 April 2018, both dates included.
Tax implications
In terms of the Income Tax Act, the Cash Dividend, unless exempt, is subject
to dividend taxation at a rate of 20%. Shareholders that are not exempt from
dividend taxation will have such amount withheld from the Cash Dividend,
resulting in receiving a net amount of 33.6 cents per Brimstone Share in
respect of the Cash Dividend.
The Scrip Dividend Alternative is not subject to dividend taxation in terms
of the Income Tax Act. However, any subsequent disposal of Brimstone Shares
obtained as a result of the Scrip Dividend Alternative may have income tax
or capital gains tax implications.
Other information
- As at the date of this declaration, the number of Brimstone ordinary
Shares and "N" ordinary Shares eligible for the Cash Dividend and/or the
Scrip Dividend Alternative is 40 620 604 and 207 509 954 respectively
(this excludes 20 402 000 "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
the Cash Dividend and/or the Scrip Dividend Alternative).
- The Company's tax reference number is 9397002719.
- The Cash Dividend has been declared out of income reserves.
- The new Shares issued in terms of the Scrip Dividend Alternative will be
settled by way of capitalisation of Brimstone's distributable retained
profits.
PROSPECTS
The Group has a track record of more than 20 years of creating and unlocking
shareholder value in a sustainable way and has the team with the skills and
experience to conclude value adding deals. The Group is defined by bona fide
empowerment credentials, and its ability to enhance NAV and pay dividends.
Brimstone has over the years demonstrated its resilience to withstand tough
economic conditions as it has once again shown during the 2017 financial
year. Brimstone remains well capitalised to pursue value enhancing
transactions based on cash generative quality assets and will continue to
maintain a long-term view and partnership approach to its underlying
investments.
On behalf of the board
F Robertson MA Brey
Executive Chairman Chief Executive Officer
6 March 2018
DIRECTORATE AND ADMINISTRATION
Registered office: Boundary Terraces, 1 Mariendahl Lane, Newlands 7700,
Cape Town
Transfer Secretaries: Computershare Investor Services (Pty) Ltd, Rosebank
Towers, 15 Biermann Avenue, Rosebank, 2196
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
for the year ended 31 December 2017
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2017 2016
Revenue 2 783 431 2 688 490
Sales and fee income 2 560 328 2 348 592
Dividends received 223 103 339 898
Operating expenses (2 408 978) (2 229 010)
Operating profit 374 453 459 480
Fair value gains/(losses) 71 359 (70 803)
Other investment gains - 30 189
Share of profits of associates and joint ventures 58 116 98 300
Profit before net finance costs 503 928 517 166
Income from investments 48 942 27 042
Finance costs (290 506) (260 708)
Net profit before taxation 262 364 283 500
Taxation (115 290) (86 173)
Profit for the year 147 074 197 327
Profit attributable to:
Equity holders of the parent 45 958 170 739
Non-controlling interests 101 116 26 588
147 074 197 327
Earnings per share (cents)
Basic 19.1 70.9
Diluted 18.6 68.7
Condensed consolidated Statement of Comprehensive Income
for the year ended 31 December 2017
Restated
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2017 2016
Profit for the year 147 074 197 327
Other comprehensive (loss)/income, net of tax (49 607) 41 894
Items that may be reclassified subsequently
to profit or loss
Cash flow hedges
(Loss)/profit arising during the year (20 224) 94 728
Foreign currency translation
Loss arising during the year (11 573) (45 947)
Share of non-distributable reserves of associates (28 553) (12 662)
Revaluation of available-for-sale asset
Gain arising during the year 12 368 -
Items that will not be reclassified subsequently
to profit or loss
Measurement of defined benefits plans 1 625 -
Share of non-distributable reserves of associates (3 250) 5 775
Total comprehensive income for the year 97 467 239 221
Total comprehensive income attributable to:
Equity holders of the parent 6 424 208 095
Non-controlling interests 91 043 31 126
97 467 239 221
Condensed Consolidated Statement of Financial Position
as at 31 December 2017
Restated
Reviewed Audited
31 December 31 December
R'000 2017 2016
ASSETS
Non-current assets 6 535 734 5 496 345
Property, plant, equipment and vehicles 915 799 607 721
Investment properties 80 884 -
Goodwill 96 360 98 174
Intangible assets 494 206 505 557
Investments in associate companies and joint
ventures 1 208 196 1 171 960
Investments 3 630 102 3 043 768
Loans and receivables 6 110 -
Loans to supplier partners 1 959 -
Deferred taxation 29 838 12 351
Insurance assets 47 455 55 581
Other financial assets 24 825 1 233
Current assets 2 649 370 2 274 169
Inventories 404 976 385 097
Trade and other receivables 615 164 561 938
Insurance assets 355 833 396 753
Other financial assets 41 896 46 800
Taxation 6 827 15 242
Investments 444 457 373 257
Cash and cash equivalents 780 217 495 082
TOTAL ASSETS 9 185 104 7 770 514
EQUITY AND LIABILITIES
Capital and reserves 3 561 722 2 602 387
Share capital 41 41
Capital reserves 307 630 380 181
Revaluation reserves 19 592 14 143
Cash flow hedging reserve 11 987 32 534
Foreign currency translation reserve (21 315) (29 119)
Changes in ownership 579 857 (163 938)
Retained earnings 1 884 210 2 193 293
Attributable to equity holders of the parent 2 782 002 2 427 135
Non-controlling interests 779 720 175 252
Non-current liabilities 3 491 320 3 585 018
Long-term interest bearing borrowings 2 671 147 2 783 204
Long-term provisions 26 342 31 209
Deferred grant income 12 109 13 733
Other financial liabilities 61 223 82 448
Insurance liabilities 82 406 75 377
Share-based payment liability 18 789 -
Deferred taxation 619 304 599 047
Current liabilities 2 132 062 1 583 109
Short-term interest bearing borrowings 774 659 452 094
Bank overdrafts 104 731 2 4 390
Trade payables 470 521 409 482
Other payables 82 356 90 014
Deferred grant income 1 505 -
Insurance liabilities 579 190 529 784
Other financial liabilities 69 165 21 121
Short-term provisions 38 291 47 754
Taxation 11 644 8 470
TOTAL EQUITY AND LIABILITIES 9 185 104 7 770 514
NAV per share (cents) 1 160.3 1 011.5
Shares in issue at end of year (000's) 239 767 239 956
Condensed Consolidated Statement of Cash Flows
for the year ended 31 December 2017
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2017 2016
Operating activities
Net attributable profit 147 074 197 327
Adjustments for non-cash items 101 235 70 150
Operating cash flows before movements in
working capital 248 309 267 477
Increase in inventories (21 890) (23 992)
(Increase)/decrease in trade and other receivables (56 945) 117 999
Increase/(decrease) in trade and other payables 55 741 (181 238)
Net decrease in insurance assets 49 046 284 221
Net increase/(decrease) in insurance liabilities 56 435 (351 151)
Cash generated from operations 330 696 113 316
Interest received 48 942 27 042
Dividends received from associates and joint ventures 32 578 130 980
Dividends received from other equity investments 190 525 208 918
Income taxes paid (95 447) (64 177)
Finance costs (238 129) (207 545)
Net cash generated from operating activities 269 165 208 534
Investing activities
Loans and receivables advanced (7 833) -
Loan repayments and recoveries from associate
and investments - 1 098
Proceeds on disposal of investments 160 105 658 802
Proceeds on disposal of property, plant,
equipment and vehicles 2 855 3 829
Acquisition of property, plant, equipment and
vehicles (430 870) (126 084)
Acquisition of subsidiaries
- shares acquired and loans advanced - (195 859)
Acquisition of intangible assets (3 687) (7 611)
Proceeds from receipt of a government grant - 15 831
Investment property acquired (51 258) -
Acquisition of investments (755 827) (134 548)
Net cash (utilised in)/generated from investing
activities (1 086 515) 215 458
Financing activities
Dividends paid by company and subsidiaries (108 056) (91 517)
Repayments of borrowings (480 064) (248 716)
Loans raised 643 125 490 472
Further investment in subsidiary (1 479) (167 287)
Shares repurchased (23 851) (62 950)
Disposal of treasury shares by subsidiary - 3 938
Proceeds on issue of trust units/shares 15 172 19 870
Issue of shares by subsidiaries 1 253 995 -
Prepayment of other financial liabilities (22 253) -
Redemption of non-controlling shareholder's
preference shares - (85 756)
Share of distribution made by special purpose
entities (248 733) (38 923)
Units/shares repurchased (5 699) (108)
Increase in bank overdrafts 80 341 2 746
Net cash generated from/(utilised in) from
financing activities 1 102 498 (178 231)
Net increase in cash and cash equivalents 285 148 245 761
Cash and cash equivalents at beginning of year 495 082 249 374
Foreign exchange differences (13) (53)
Cash and cash equivalents at end of year
Bank balances and cash 780 217 495 082
Condensed Consolidated Statement of Changes in Equity
for the year ended 31 December 2017
R'000 Share Capital Revaluation
capital reserves reserves
Balance at 1 January 2016 - Audited 41 427 049 14 143
Attributable profit for the year ended
31 December 2016 - - -
Other comprehensive income/(loss)
- Restated - (6 888) -
Total comprehensive income/(loss) - (6 888) -
Recognition of share-based payments - (9 788) -
Amount reclassified to share
options reserve - 17 747 -
Dividends 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
- Audited 41 380 181 14 143
Attributable profit for the year
ended 31 December 2017 - - -
Other comprehensive income/(loss) - (30 730) 12 368
Total comprehensive income/(loss) - (30 730) 12 368
Recognition of share-based payments - 32 074 -
Dividends paid - - -
Recognition of forfeitable share plan
reserves - (78 396) -
Recognition of change in value of
share-based payment liability directly
in equity - (5 613) -
Transfer to share-based payment
liability (modification) - (19 789) -
Acquisition of non-controlling interest
in subsidiary - - -
Share of distribution made by associate - - -
Distributions made to participants of
share trusts and share repurchase - - -
Shares issued by subsidiaries - 20 885 (6 919)
Issue of share capital - 38 568 -
Repurchase of trust units - (5 699) -
Treasury shares acquired - (23 851) -
Change in investment in subsidiary - - -
Balance at 31 December 2017
- Reviewed 41 307 630 19 592
Condensed Consolidated Statement of Changes in Equity (continued)
for the year ended 31 December 2017
R'000 Cash Foreign
flow currency Changes
hedging translation in
reserve reserve ownership
Balance at 1 January 2016 - Audited (42 414) - (11 839)
Attributable profit for the year ended
31 December 2016 - - -
Other comprehensive income/(loss)
- Restated 74 948 (29 119) -
Total comprehensive income/(loss) 74 948 (29 119) -
Recognition of share-based payments - - -
Amount reclassified to share
options reserve - - -
Dividends 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
- Audited 32 534 (29 119) (163 938)
Attributable profit for the year
ended 31 December 2017 - - -
Other comprehensive income/(loss) (7 869) (13 302) -
Total comprehensive income/(loss) (7 869) (13 302) -
Recognition of share-based payments - - -
Dividends paid - - -
Recognition of forfeitable share plan
reserves - - -
Recognition of change in value of
share-based payment liability directly
in equity - - -
Transfer to share-based payment
liability (modification) - - -
Acquisition of non-controlling interest
in subsidiary - - (399)
Share of distribution made by associate - - -
Distributions made to participants of
share trusts and share repurchase - - -
Shares issued by subsidiaries (12 678) 21 106 744 024
Issue of share capital - - -
Repurchase of trust units - - -
Treasury shares acquired - - -
Change in investment in subsidiary - - 170
Balance at 31 December 2017
- Reviewed 11 987 (21 315) 579 857
Condensed Consolidated Statement of Changes in Equity (continued)
for the year ended 31 December 2017
R'000 Attributable
to
equity
holders Non-
Retained of the controlling
earnings parent interests
Balance at 1 January 2016 - 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 income/(loss)
- Restated - 38 941 2 953
Total comprehensive income/(loss) 170 739 209 680 29 541
Recognition of share-based payments - (9 788) 665
Amount reclassified to share
options reserve - 17 747 -
Dividends paid (85 791) (85 791) (5 726)
Subsidiary's accrual for
preference dividends - - 3 238
Non-controlling interest arising on
recognition of subsidiary - - 157 914
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
- Audited 2 193 293 2 427 135 175 252
Attributable profit for the year
ended 31 December 2017 45 958 45 958 101 116
Other comprehensive income/(loss) - (39 533) (10 074)
Total comprehensive income/(loss) 45 958 6 425 91 042
Recognition of share-based payments - 32 074 (1 843)
Dividends paid (102 743) (102 743) (2 200)
Recognition of forfeitable share plan
reserves - (78 396) -
Recognition of change in value of
share-based payment liability directly
in equity - (5 613) (988)
Transfer to share-based payment
liability (modification) - (19 789) -
Acquisition of non-controlling interest
in subsidiary - (399) (1 080)
Share of distribution made by associate (23 323) (23 323) -
Distributions made to participants of
share trusts and share repurchase (248 733) (248 733) (3 113)
Shares issued by subsidiaries 19 758 786 176 522 820
Issue of share capital - 38 568 -
Repurchase of trust units - (5 699) -
Treasury shares acquired - (23 851) -
Change in investment in subsidiary - 170 (170)
Balance at 31 December 2017
- Reviewed 1 884 210 2 782 002 779 720
Condensed Consolidated Statement of Changes in Equity (continued)
for the year ended 31 December 2017
R'000 Total
Balance at 1 January 2016 - Audited 2 626 972
Attributable profit for the year ended 31 December 2016 197 327
Other comprehensive income/(loss) - Restated 41 894
Total comprehensive income/(loss) 239 221
Recognition of share-based payments (9 123)
Amount reclassified to share options reserve 17 747
Dividends paid (91 517)
Subsidiary's accrual for preference dividends 3 238
Non-controlling interest arising on recognition of subsidiary 157 914
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 - Audited 2 602 387
Attributable profit for the year ended 31 December 2017 147 074
Other comprehensive income/(loss) (49 607)
Total comprehensive income/(loss) 97 467
Recognition of share-based payments 30 231
Dividends paid (104 943)
Recognition of forfeitable share plan reserves (78 396)
Recognition of change in value of
share-based payment liability directly
in equity (6 601)
Transfer to share-based payment liability (modification) (19 789)
Acquisition of non-controlling interest in subsidiary (1 479)
Share of distribution made by associate (23 323)
Distributions made to participants of share trusts
and share repurchase (251 846)
Shares issued by subsidiaries 1 308 996
Issue of share capital 38 568
Repurchase of trust units (5 699)
Treasury shares acquired (23 851)
Change in investment in subsidiary -
Balance at 31 December 2017 - Reviewed 3 561 722
HEADLINE EARNINGS PER SHARE
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2017 2016
Headline earnings per share (cents)
Basic 11.2 48.0
Diluted 10.9 46.5
Headline earnings calculation (R'000)
Net profit attributable to equity holders
of the parent 45 958 170 739
Profit on disposal of property, plant, equipment
and vehicles (1 938) (2 098)
Realised profit on disposal of associate - 9 451
Gain on remeasurement of investment property (20 000) -
Gain on remeasurement of previously held interest - (38 649)
Adjustments relating to results of associates (2 496) (28 727)
Total tax effects of adjustments 5 433 4 865
Headline earnings 26 957 115 581
Weighted average number of shares on which earnings
and headline earnings per share is based (000's) 240 170 240 733
Weighted average number of shares on which diluted
earnings and diluted headline earnings per share
is based (000's) 246 566 248 409
Further information
1. Auditor's review report
The preliminary condensed consolidated financial statements for the
year ended 31 December 2017 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 report 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 2017 have been prepared
on the historical cost basis, except for the revaluation of certain
financial instruments and investment properties. 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 2016.
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2017 2016
4. Income from investments
Interest received on bank deposits and
loans to associates and subsidiaries 48 942 27 042
Finance costs
Interest on borrowings 97 002 72 315
Interest rate swap 645 2 337
Preference dividends 190 165 185 900
Interest on obligations under instalment
sale agreements 95 156
Other 2 599 -
290 506 260 708
5. Taxation
Current normal and deferred tax expense 112 678 84 909
Dividends tax 398 453
Securities transfer tax 2 214 811
115 290 86 173
6. Capital commitments
Commitments for the acquisition of
property, plant, equipment and vehicles:
Contracted for 155 665 8 677
Authorised by directors but not contracted for 128 691 6 142
284 356 14 819
The increase in capital commitments relates
predominantly to Sea Harvest's new freezer
vessel conversion and further investment in the
fish processing factory in Saldanha Bay.
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 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 2 142 632 1 931 979
Insurance 234 442 208 679
Clothing 174 402 207 651
Investments 231 955 340 181
Total revenue 2 783 431 2 688 490
Segment profit/(loss) from operations
Fishing 333 812 196 562
Insurance (104 544) (30 868)
Clothing (8 674) 5 918
Investments 153 859 287 868
Total profit from operations 374 453 459 480
Fair value gains/(losses) 71 359 (70 803)
Other investment gains - 30 189
Share of profits of associates and joint ventures 58 116 98 300
Income from investments 48 942 27 042
Finance costs (290 506) (260 708)
Taxation (115 290) (86 173)
Profit for the year 147 074 197 327
R'000
Segment assets Reviewed Audited
and liabilities 31 December 31 December
2017 2016
Segment assets Gross Net Gross Net
Fishing 2 523 049 2 523 049 1 963 522 1 963 522
Insurance 1 001 637 1 001 637 931 652 931 652
Clothing 171 776 171 776 195 445 195 445
3 696 462 3 696 462 3 090 619 3 090 619
Investments 6 198 870 5 488 642 5 967 671 4 679 895
Intergroup balances 710 228 - 1 287 776 -
Other 5 488 642 5 488 642 4 679 895 4 679 895
Total segment assets 9 895 332 9 185 104 9 058 290 7 770 514
Segment liabilities
Fishing 1 004 416 1 004 416 1 662 485 1 104 008
Insurance 1 275 989 911 055 1 171 667 788 733
Clothing 155 457 75 178 150 255 68 905
2 435 862 1 990 649 2 984 407 1 961 646
Investments 3 187 520 3 187 520 2 183 720 2 183 720
Total segment
liabilities 5 623 382 5 178 169 5 168 127 4 145 366
Reviewed Audited
Year ended Year ended
31 December 31 December
R'000 2017 2016
Other segmental information
Depreciation and amortisation
Fishing 103 065 118 712
Insurance 2 866 1 590
Clothing 7 463 6 506
Investments 1 328 1 200
Total segment depreciation and amortisation 114 722 128 008
Additions to non-current assets
Fishing 371 403 110 612
Insurance 3 177 4 797
Clothing 5 599 14 540
Investments 105 636 3 746
Total segment additions to non-current assets 485 815 133 695
8. Fair value measurements
This note provides information about how the Group determines fair
values of various financial assets, non-financial assets and financial
liabilities.
Fair value of the Group's financial assets, non-financial assets and
financial liabilities that are measured on a fair value basis on a
recurring basis
Some of the Group's financial assets, non-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, non-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
2017 (Reviewed) Level 1 Level 2 Level 3 Total
Financial assets
at FVTPL*
Derivative financial
assets - 581 742(3) - 581 742
Listed shares 3 045 465 - - 3 045 465
Unlisted shares 470 149 - 5(1) 470 154
Non-financial assets
at fair value
Investment properties - - 80 884(2) 80 884
Available-for-sale
financial assets
Unlisted shares - - 25 265(2) 25 265
Unlisted shares - - 18 654(4) 18 654
Total 3 515 614 581 742 124 808 4 222 164
Financial liabilities
at FVTPL*
Derivative financial
liabilities - 130 388(3) - 130 388
2016 (Audited) 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 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
*FVTPL = Fair value through profit or loss
The table provided analyses financial instruments and non-financial
assets 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.
Notes
1. At cost or historical valuation.
2. Value determined by an independent valuer:
- non-financial assets represented by investment properties are
valued using the capitalisation of income method, other than where
the acquisition price is current and thus more indicative of
fair value.
- financial assets represented by unlisted shares in a vessel
owning company are valued based on the cash flows related to
the vessel.
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.
- The fair value of forward share sale contracts is calculated by
an independent valuer, taking into account the number of shares,
the forward price per the contract, the spot price, a discount
factor and any expected dividends.
4. Value is based on the effective interest held in the net assets
of the underlying entity.
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 and non-financial assets and liabilities.
Reconciliation of level 3 fair value measurements
Unlisted shares
and investment properties
Reviewed Audited
2017 2016
Opening balance 27 488 27 488
Total gains or losses
- in profit or loss 20 000 -
- in other comprehensive income 16 436 -
Advances/transfers in 60 884 -
Closing balance 124 808 27 488
Reviewed Audited
31 December 31 December
2017 2016
9. Share capital (number)
In issue (number)
Ordinary shares 40 620 604 42 757 604
Held as treasury shares (2 136 074) (4 273 074)
38 484 530 38 484 530
"N" ordinary shares 227 911 954 238 423 687
Held as treasury shares (26 629 290) (36 952 419)
201 282 664 201 471 268
Total net of treasury shares 239 767 194 239 955 798
Weighted average number of shares on which
earnings and headline earnings per share is
based is 240 170 204 (2016: 240 732 715)
Weighted average number of shares on which
diluted earnings and diluted headline earnings
per share is based is 246 565 919
(2016: 248 409 451)
Reconciliation of weighted average number
of shares between basic and diluted earnings
per share and headline earnings and diluted
headline earnings per share.
Basic 240 170 204 240 732 715
Dilutive instruments 6 395 715 7 676 736
Diluted 246 565 919 248 409 451
Number of instruments treated as
anti-dilutive 1 307 703 1 200 737*
Closing share price (cents)
Ordinary shares 1 300 1 299
"N" ordinary shares 1 125 1 200
* Restated from 31 December 2016
10. Restatement of the financial results for the year ended
31 December 2016
The audited financial results for the year ended 31 December 2016
have been restated for the finalisation of the purchase price
allocation of the Mareterram business combination.
In the prior year the Group's subsidiary, Sea Harvest, acquired a
55.89% interest in Mareterram Limited, a fishing and fish processing
business situated on the Australian West Coast and listed on the
Australian Stock Exchange. The initial accounting for the business
combination in the prior year was prepared using provisional values
as permitted in terms of paragraph 45 of IFRS 3 Business Combinations
("IFRS 3"). Subsequent to the end of the prior reporting period the
purchase price allocation was finalised within the measurement period,
being a period not exceeding 12 months from the acquisition date in
July 2016 and the provisional values adjusted in terms of paragraph 49
of IFRS 3.
The adjustment to the prior period statement of financial position are
summarised as follows:
R'000
Estimated
Assets fair 31 December
acquired value 2016
and at time Measurement Exchange Adjusted
liabilities of period rate closing
recognised acquisition adjustments difference balance
Property,
plant and
equipment 105 723 105 723
Intangible assets 310 918 157 648 (15 660) 452 906
Deferred tax assets 30 181 (121 512) 12 071 (79 260)
Financial
derivative assets 230 230
Inventory 111 854 111 854
Trade and other
receivables 85 240 85 240
Short-term
financial
derivative
assets 1 566 1 566
Cash and bank
balances 131 131
Long-term interest
bearing
borrowings (131 812) (131 812)
Employee
related
liabilities (3 043) (3 043)
Fishing licence
liability (89 542) (89 542)
Trade and
other payables (60 684) (60 684)
Short-term
interest bearing
borrowings (25 027) (25 027)
Short-term fishing
licence liability (23 308) (23 308)
Short-term
financial
derivative
liabilities (602) (602)
311 825 36 136 (3 589) 344 372
Goodwill 115 722 (20 196) 2 006 97 532
Non-controlling
interest (137 546) (15 940) 1 583 (151 903)
Fair value of
previously held
interest (94 011) (94 011)
Consideration
paid in cash 195 990 - - 195 990
11. Subsequent events
Subsequent to year-end, Brimstone sold 13.5 million Life Healthcare
shares at an average price of R26.78 per share. Brimstone also disposed
of its residual stake in Tiger Brands for an aggregate of
R387.3 million. Brimstone reduced its debt by R633 million as a result
of these disposals.
On 28 February 2018, Brimstone, through its wholly-owned subsidiary,
Newshelf 1416 (Pty) Ltd, acquired a 10% interest in FPG Property Fund
Ltd, a Cape-based black-owned and managed unlisted property fund with
a portfolio of properties operating in the retail, industrial and office
sectors, for a consideration of R131 681 380.
Date: 06/03/2018 08:01:00 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
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
Sharenet Sites 
