BRIMSTONE INVESTMENT CORPORATION LIMITED - Unaudited interim results for the six months ended 30 June 2018

Release Date: 28/08/2018 16:10
Code(s): BRT BRN
 
Wrap Text
Unaudited interim results for the six months ended 30 June 2018

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")


Brimstone: UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018


SIGNIFICANT EVENTS

- Operating profit increased by 18%

- R73 million increase in equity accounted earnings

- Downward revaluation of Life Healthcare, Equites and STADIO of

  R421 million

- Sea Harvest's acquisition of Viking Fishing and Aquaculture concluded 

  on 2 July 2018


COMMENTARY

The Company reported a loss for the period under review of R227.1 million 

compared to a loss of R201 million in the comparative period. The current 

period loss is mainly due to the downward revaluation of listed investments, 

which offset a reduced loss from subsidiary Lion of Africa Insurance 

Company, an increase in dividend income and an increase in equity accounted 

earnings.


Gross assets decreased to R7.8 billion, from R8.7 billion at 31 December 

2017. Intrinsic net asset value decreased to R4.0 billion from R4.3 billion 

at 31 December 2017.


Brimstone Portfolio


Subsidiaries


Sea Harvest (54.9%)

The Sea Harvest Group delivered headline earnings for the six months ended 

30 June 2018 of R111.3 million, an increase of 1% compared to the same 

period last year (2017: R110.6 million), after absorbing transaction costs 

relating to the Viking acquisition. Group revenue for the period decreased 

by 5% to R1.0 billion (2017: R1.1 billion), impacted by the 5% reduction in 

Total Allowable Catch in South Africa and the delayed start to the prawn 

fishing season in Australia. Gross profit for the period increased by 4% to 

R368 million (2017: R354 million) and the gross profit margin improved to 

36.6% (2017: 33.4%), benefiting from further efficiency gains across both 

the fleet and factory operations, an increase in higher margin export 

volumes, price increases and a weaker Rand. Group operating profit before 

joint venture and associate income for the period of R165.0 million was 2% 

lower than the same period last year (2017: R167.7 million), impacted by the 

lower revenue and the Viking transaction costs referred to above. Operating 

profit before net finance cost and taxation of R166 million was 18% lower 

than the prior period (2017: R205.6 million), as a result of a number of 

one-off, non-cash benefits recorded in the first half of 2017, including a 

gain on disposal of interest in joint venture of R23 million and a fair 

value gain on the initial measurement of an option of R14 million. Profit 

after tax of R111 million for the period decreased by 18% compared to the 

prior period (2017: R135 million), in line with the decrease in operating 

profit before net finance cost and taxation. On 2 July 2018, the acquisition 

of the business of Viking Fishing as part of a BBBEE consortium, and 51% of 

the shares of Viking Aquaculture, became effective. This is a 

transformational transaction for the Sea Harvest Group and will be earnings 

accretive from the outset. During the period Sea Harvest achieved Level 1 

BBBEE contributor status, making it one of the most transformed businesses 

in the fishing sector.


Lion of Africa Insurance Company (Lion of Africa) (100%)

Lion of Africa reported a reduced net loss for the six months ended 30 June 

2018 of R7.7 million compared to a loss of R38 million for the same period 

last year. This is a significant improvement from the prior year, which is 

as a result of the continuous remedial action. The claims ratio has improved 

to 64.0% compared to the loss ratio of 71.0% in the prior period. In 

addition to these improved claims ratios, gross written premium has 

increased by 55.4% on the prior period results.


House of Monatic (100%)

Revenue decreased by 12% to R78 million for the first six months, resulting 

in a loss of R17.9 million compared to a loss of R17.5 million in the 

comparative period, mainly due to the poor retail climate adversely 

affecting sales volumes. This together with changes in the sales mix 

resulted in reduced levels of production, shorter production runs and the 

under-recovery of fixed factory overheads.


ASSOCIATES AND JOINT VENTURES


Oceana (17%)

Brimstone holds 23 million shares in Oceana with a market value of R1.8 

billion. Oceana's share price closed at R79.00 per share, down from R85.00 

per share at 31 December 2017. Brimstone accrued R25.8 million in dividends 

during the period under review and recorded R46.2 million in equity 

accounted earnings based on Oceana's reported six months earnings to 

31 March 2018. An amount of R101 million was recorded as Brimstone's 

share of Oceana's other comprehensive loss, which is largely attributable 

to the decrease in Oceana's foreign currency translation reserves.


Grindrod (6.1%)

Brimstone accounts for its share of the results in the Consortium SPV as a 

joint venture. Brimstone wrote 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, which position remained unchanged at 30 June 

2018. During the period under review Grindrod Limited effectively unbundled 

its shipping business to its shareholders such that Grindrod shareholders 

received 2.5 Grindrod Shipping Holdings Limited ("GSH") shares for every 100 

Grindrod Limited shares held. As a result, the Consortium SPV received 

1.6 million GSH shares, representing a shareholding in GSH of 8.4%, with 

Brimstone's effective shareholding in GSH being 6.1%. GSH is a Singapore 

registered company and was listed on the Nasdaq on Monday, 18 June 2018 with 

a secondary listing on the JSE which commenced trading on Tuesday, 19 June 

2018.


Aon Re Africa (18%)

Brimstone, after adjusting for the non-controlling shareholder's share, 

received a dividend of R5.1 million from Aon Re Africa and recorded R6.3 

million in equity accounted earnings during the period 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 contributed R15.4 million 

in equity accounted earnings to Brimstone over the period. SAED has acquired 

an effective 32.5% in Allergy Free Kitchen and 35% in Dough Re Mi during the 

period. Its other interests include stakes in High Duty Castings (33.3%), 

Tombake Holdings (32.6%), Decision Inc. Holdings (25.3%), ASG Holdings (47%) 

and ZAR X (29.5%).


Vuna Fishing Company (Vuna) (49.8%)

Vuna contributed R0.9 million in equity accounted earnings during the period 

under review.


Milpark Education (Milpark) (12.8%)

During the period, Brimstone acquired an effective 30% stake in Milpark 

Education, a private provider of higher management education, together with 

STADIO Holdings Limited. Subsequently, Brimstone entered into an asset-for-

share agreement with STADIO in terms of which Brimstone sold 17.2% in 

Milpark to STADIO for approximately R50.9 million worth of STADIO ordinary 

shares issued at a 20% discount to the 30 day VWAP. Brimstone uses the 

equity method to account for the remaining interest in Milpark and 

recognised R0.8 million in equity accounted earnings during the period, 

after adjusting for STADIO's share.


INVESTMENTS


Equites (7.7%)

Equites' share price closed at R17.60 per share, down from R21 per share at 

31 December 2017. The investment was revalued downwards by R118.6 million to 

R614.2 million at period end.


FPG Property Fund (10%)

Brimstone acquired 10% of FPG Property Fund, a Cape-based black-owned and 

managed unlisted property fund with a portfolio of properties catering for 

the retail, industrial and office sectors for a consideration of R131.7 

million.


Life Healthcare (3.4%)

Life Healthcare's share price closed at R24.88 per share, down from R27.75 

per share at 31 December 2017. Brimstone disposed of 15.3 million Life 

Healthcare shares for an aggregate consideration of R409.1 million during 

the period. The total investment was revalued downwards by R158.2 million to 

R1.23 billion. Brimstone received a dividend of 38 cents per share resulting 

in total dividend receipts from Life Healthcare of R18.8 million for the 

period.


Long4Life (3.9%)

Long4Life's share price closed at R5.63, up from R4.90 at 31 December 2017. 

The investment was revalued upwards by R25.9 million to R199.9 million at 

period end.


MTN Zakhele Futhi (1.5%)

Brimstone holds 1.8 million 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 R107.90 per share, down from R136.60 per share 

at 31 December 2017. The investment was revalued downwards by R24 million to 

R46.5 million.


Phuthuma Nathi (7%)

The Phuthuma Nathi 1 and Phuthuma Nathi 2 shares closed at R103.50 and 

R108.50 per share respectively (R99.90 and R98 per share respectively at 

31 December 2017). The investment was revalued upwards by R28.8 million to 

R498.9 million. Phuthuma Nathi has recommended a dividend payable in 

September 2018. This dividend should amount to R92.7 million for Brimstone.


STADIO (5.3%)

After the asset-for-share swap of Milpark shares referred to above, 

Brimstone holds 43.6 million STADIO ordinary shares. STADIO's share price 

closed at R4.09 per share, down from R8.05 per share at 31 December 2017. 

The investment was revalued downwards by R144.6 million to R178.2 million.


INTRINSIC NET ASSET VALUE (INAV)

INAV at 30 June 2018 calculated on a line-by-line basis, totalled R4.02 

billion, or R16.54 per share (31 December 2017: R4.32 billion or R18.01 per 

share), representing a decrease of 6.9% from 31 December 2017 (a decrease of 

8.2% on a per share basis). As at 30 June 2018, Brimstone Ordinary shares 

were trading at a discount of 39.5% to INAV (31 December 2017: 27.8%). 

Brimstone "N" Ordinary shares traded at a discount of 39.5% to Brimstone's 

INAV (31 December 2017: 37.5%). 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 2017.


BASIS OF PREPARATION

The condensed consolidated interim financial information has been prepared 

in accordance with and containing the information required by IAS 34 Interim 

Financial Reporting as well as the SAICA Financial Reporting Guides as 

issued by the Accounting Practices Committee and Financial Reporting 

Pronouncements as issued by the Financial Reporting Standards Council, the 

JSE Listings Requirements and Companies Act of South Africa. The condensed 

consolidated interim financial statements have been prepared using 

accounting policies that comply with IFRS which are consistent with those 

applied in the financial statements for the year ended 31 December 2017, 

except for the adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue 

from Contracts with Customers that became effective on 1 January 2018. The 

adoption of these standards did not have a material impact on the Group. The 

condensed financial information was prepared under the supervision of the 

Group Financial Director, Geoffrey George Fortuin CA(SA).


The results have not been audited or reviewed by the Group's auditors, 

Deloitte & Touche.


Dividend

In line with previous years, no interim dividend is declared for the half 

year.


Prospects

The Group will continue to maintain its positive long-term view on its 

investments and pursue value accretive opportunities.


F Robertson            MA Brey

Executive Chairman     Chief Executive Officer


28 August 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)*, 

T Moodley*, 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 Statement of Profit or Loss

for the 6 months ended 30 June 2018


                                      Unaudited     Unaudited       Audited

                                       6 months      6 months          Year 

                                          ended         ended         ended

                                        30 June       30 June   31 December

R'000                                      2018          2017          2017



Revenue                               1 369 620     1 307 279     2 783 431

Sales and fee income                  1 284 489     1 234 142     2 560 328

Dividends received                       85 131        73 137       223 103

Operating expenses                   (1 185 963)   (1 151 416)   (2 408 978)



Operating profit                        183 657       155 863       374 453

Fair value (losses)/gains              (403 659)     (255 117)       71 359

Share of profits of associates 

and joint ventures                       76 901         3 976        58 116



(Loss)/profit before net finance costs (143 101)      (95 278)      503 928

Income from investments                  28 932        22 292        48 942

Finance costs                          (158 890)     (149 947)     (290 506)



Net (loss)/profit before taxation      (273 059)     (222 933)      262 364

Taxation credit/(charge)                 45 915        21 958      (115 290)



(Loss)/profit for the period           (227 144)     (200 975)      147 074



(Loss)/profit attributable to:

Equity holders of the parent           (282 120)     (244 102)       45 958

Non-controlling interests                54 976        43 127       101 116

                                       (227 144)     (200 975)      147 074



(Loss)/earnings per share (cents)

  Basic                                  (117.7)       (101.6)         19.1

  Diluted                                (117.7)       (101.6)         18.6



Condensed Consolidated Statement of Other Comprehensive Income

for the 6 months ended 30 June 2018


                                      Unaudited     Unaudited       Audited

                                       6 months      6 months          Year 

                                          ended         ended         ended

                                        30 June       30 June   31 December

R'000                                      2018          2017          2017



(Loss)/profit for the period           (227 144)     (200 975)      147 074

Other comprehensive loss, net of tax    (99 376)      (40 948)      (49 607)

Items that may be reclassified 

subsequently to profit or loss

Cash flow hedges

  Loss arising during the period        (27 985)      (17 917)      (20 224)

Foreign currency translation

  Profit/(loss) arising during 

  the period                             24 037         7 382       (11 573)

Share of non-distributable reserves 

of associates                           (95 809)      (31 336)      (28 553)

Revaluation of available-for-sale asset

  Gain arising during the year                -             -        12 368



Items that will not be reclassified 

subsequently to profit or loss

Remeasurement of defined benefit plans        -             -         1 625

Share of non-distributable reserve of 

associates                                  381           923        (3 250)



Total comprehensive (loss)/income 

for the period                         (326 520)     (241 923)       97 467



Total comprehensive (loss)/income 

attributable to:

Equity holders of the parent           (383 370)     (288 634)        6 425

Non-controlling interests                56 850        46 711        91 042

                                       (326 520)     (241 923)       97 467



Condensed Consolidated Statement of Financial Position

as at 30 June 2018


                                                     Restated*

                                      Unaudited     Unaudited       Audited

                                        30 June       30 June   31 December

R'000                                      2018          2017          2017



ASSETS

Non-current assets                    6 175 534     5 807 452     6 535 734

Property, plant and equipment           971 796       598 634       915 799

Investment properties                    80 884             -        80 884

Goodwill and intangible assets          652 883       611 014       590 566

Investments in associate companies 

and joint ventures                    1 270 485     1 167 855     1 208 196

Investments                           3 010 633     3 366 717     3 630 102

Loans and receivables                    10 134             -         6 110

Loans to supplier partners                  980             -         1 959

Deferred taxation                       114 845        28 025        29 838

Insurance assets                         36 814        19 924        47 455

Other financial assets                   26 080        15 283        24 825



Current assets                        2 159 085     2 500 091     2 649 370

Inventories                             485 046       411 447       404 976

Trade and other receivables             719 138       720 787       615 164

Insurance assets                        311 401       234 807       355 833

Other financial assets                    2 991        27 689        41 896

Taxation                                  3 957         8 878         6 827

Investments                                   -       322 408       444 457

Cash and cash equivalents               636 552       774 075       780 217



TOTAL ASSETS                          8 334 619     8 307 543     9 185 104



EQUITY AND LIABILITIES

Capital and reserves                  3 174 136     3 267 620     3 561 722

Share capital                                42            41            41

Capital reserves                        254 958       317 662       307 630

Revaluation reserves                     19 600         7 223        19 592

Cash flow hedging reserve                (4 336)       14 010        11 987

Foreign currency translation reserve    (10 476)      (15 917)      (21 315)

Changes in ownership                    578 872       580 602       579 857

Retained earnings                     1 499 765     1 646 438     1 884 210

Attributable to equity holders 

of the parent                         2 338 425     2 550 059     2 782 002

Non-controlling interests               835 711       717 561       779 720



Non-current liabilities               3 244 220     3 226 664     3 491 320

Long-term interest bearing 

borrowings                            2 537 685     2 575 567     2 671 147

Long-term provisions                     26 373        26 703        26 342

Deferred grant income                    11 498        14 501        12 109

Other financial liabilities              46 257        61 267        61 223

Insurance liabilities                    67 948        28 735        82 406

Share-based payment liability            25 373             -        18 789

Deferred taxation                       529 086       519 891       619 304



Current liabilities                   1 916 263     1 813 259     2 132 062

Short-term interest bearing borrowings  610 251       679 817       774 659

Bank overdrafts                          76 654        55 832       104 731

Trade payables                          450 301       456 204       470 521

Other payables                          123 871       161 445        82 356

Deferred grant income                         -             -         1 505

Insurance liabilities                   547 605       406 765       579 190

Other financial liabilities              38 748        22 548        69 165

Short-term provisions                    20 727         7 576        38 291

Taxation                                 48 106        23 072        11 644



TOTAL EQUITY AND LIABILITIES          8 334 619     8 307 543     9 185 104



NAV per share (cents)                     961.8       1 060.1       1 160.3

Shares in issue at end of 

period (000's)                          243 129       240 548       239 767



* Refer to note 1.



Condensed Consolidated Statement of Cash Flows

for the 6 months ended 30 June 2018


                                      Unaudited     Unaudited       Audited

                                       6 months      6 months          Year 

                                          ended         ended         ended

                                        30 June       30 June   31 December

R'000                                      2018          2017          2017



Operating activities

Net attributable (loss)/profit         (227 144)     (200 975)      147 074

Adjustments for non-cash items          375 513       298 950       101 235

Operating cash flows before 

movements in working capital            148 369        97 975       248 309

Increase in inventories                 (73 726)      (23 364)      (21 890)

Increase in trade and other receivables (98 528)     (157 192)      (56 945)

Increase in trade and other payables     16 992       117 537        55 741

Net decrease in insurance assets         55 073       197 603        49 046

Net (decrease)/increase in insurance 

liabilities                             (46 043)     (169 661)       56 435



Cash generated from operations            2 137        62 898       330 696

Interest received                        28 932        21 086        48 942

Dividends received from associates 

and joint ventures                       34 642        26 631        32 578

Dividends received from other 

equity investments                       50 489        46 506       190 525

Income taxes paid                       (82 929)      (45 757)      (95 447)

Finance costs                          (120 514)     (109 463)     (238 129)

Net cash (used in)/generated from 

operating activities                    (87 243)        1 901       269 165

Investing activities

Loans and receivable advanced            (4 024)            -        (7 833)

Proceeds on disposal of investments     848 738        80 311       160 105

Proceeds on disposal of property, 

plant, equipment and vehicles            59 392             1         2 855

Acquisition of property, plant, 

equipment and vehicles                 (154 125)      (54 499)     (430 870)

Acquisition of intangible assets        (36 565)       (3 460)       (3 687)

Investment property acquired                  -             -       (51 258)

Acquisition of investments             (263 362)     (648 470)     (755 827)

Net cash generated from/(used in) 

investing activities                    450 054      (626 117)   (1 086 515)

Financing activities

Dividends paid by Company and 

subsidiaries                           (104 652)     (104 943)     (108 056)

Repayments of borrowings               (414 925)     (388 857)     (480 064)

Loans raised                             66 813       365 834       643 125

Repayment of financial liabilities      (61 269)      (23 912)      (22 253)

Further investment in subsidiary              -             -        (1 479)

Shares repurchased                            -             -       (23 851)

Proceeds on issue of trust units/shares       -         6 844        15 172

Issue of shares by subsidiary            38 400     1 239 943     1 253 995

Distributions made to participants 

of share trusts and repurchase

of shares by subsidiary                       -      (167 321)     (248 733)

Units/shares repurchased                 (2 881)      (55 831)       (5 699)

(Decrease)/increase in bank overdrafts  (28 077)       31 442        80 341

Net cash (used in)/generated from 

financing activities                   (506 591)      903 199     1 102 498

Net (decrease)/increase in cash 

and cash equivalents                   (143 780)      278 983       285 148

Cash and cash equivalents at 

beginning of period                     780 217       495 082       495 082

Foreign exchange differences                115            10           (13)

Cash and cash equivalents at 

end of period

Bank balances and cash                  636 552       774 075       780 217



Condensed Consolidated Statement of Changes in Equity

for the 6 months ended 30 June 2018


                                                                    Revalu-

                                          Share       Capital         ation

R'000                                   capital      reserves      reserves


Balance at 1 January 2017 

- Audited                                    41       380 181        14 143

Attributable profit 

for the year ended 

31 December 2017                              -             -             -

Other comprehensive loss                      -       (30 730)       12 368

Total comprehensive income                    -       (30 730)       12 368

Recognition of share-based payments           -        32 074             -

Dividend paid                                 -             -             -

Recognition of forfeitable share 

plan reserves                                 -       (78 396)            -

Recognition of change in value 

of share option 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 - Audited        41       307 630        19 592



Attributable loss for the 

six months ended 30 June 2018                 -             -             -

Other comprehensive loss                      -       (95 784)            -

Total comprehensive loss                      -       (95 784)            -

Dividend paid                                 1        36 855             -

Recognition of change in value of 

share option liability directly in equity     -         6 282             -

Shares repurchased by subsidiary              -           (25)            8

Shares issued by subsidiary                   -             -             -

Balance at 30 June 2018 - Unaudited          42       254 958        19 600



1 January 2017 to 30 June 2017 

- Unaudited

Balance at 1 January 2017 

- Audited (as previously disclosed)          41       380 181        14 143

Adjustment for restatement following 

finalisation of purchase price 

allocation of the Mareterram 

acquisition (refer to note 1)                 -             -             -

                                             41       380 181        14 143


Attributable profit for 

the six months ended 30 June 2017             -             -             -

Other comprehensive loss                      -       (30 782)            -

Total comprehensive loss                      -       (30 782)            -

Recognition of share-based payments           -        (1 913)            -

Dividend paid                                 -             -             -

Recognition of forfeitable 

share plan reserves                           -       (55 001)            -

Shares repurchased by subsidiary              -             -             -

Shares issued by subsidiary                   -        20 885        (6 920)

Distributions made to participants 

of share trusts of subsidiary                 -             -             -

Issue of share capital                        -         6 844             -

Share of non-distributable reserves 

of associates transferred 

directly to equity                            -        (2 552)            -

Balance at 30 June 2017 

- Unaudited                                  41       317 662         7 223



Condensed Consolidated Statement of Changes in Equity

for the 6 months ended 30 June 2018 (continued)


                                                      Foreign

                                      Cash flow      currency       Changes

                                        hedging   translation            in

R'000                                   reserve       reserve     ownership


Balance at 1 January 2017 

- Audited                                32 534       (29 119)     (163 938)

Attributable profit 

for the year ended 

31 December 2017                              -             -             -

Other comprehensive loss                 (7 869)      (13 302)            -

Total comprehensive income               (7 869)      (13 302)            -

Recognition of share-based payments           -             -             -

Dividend paid                                 -             -             -

Recognition of forfeitable share 

plan reserves                                 -             -             -

Recognition of change in value 

of share option 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 - Audited    11 987       (21 315)      579 857



Attributable loss for the 

six months ended 30 June 2018                 -             -             -

Other comprehensive loss                (16 324)       10 858             -

Total comprehensive loss                (16 324)       10 858             -

Dividend paid                                 -             -             -

Recognition of change in value of 

share option liability directly in equity     -             -             -

Shares repurchased by subsidiary              1           (19)         (985)

Shares issued by subsidiary                   -             -             -

Balance at 30 June 2018 - Unaudited      (4 336)      (10 476)      578 872



1 January 2017 to 30 June 2017 

- Unaudited

Balance at 1 January 2017 

- Audited (as previously disclosed)      32 534       (29 119)     (163 938)

Adjustment for restatement following 

finalisation of purchase price 

allocation of the Mareterram 

acquisition (refer to note 1)                 -             -             -

                                         32 534       (29 119)     (163 938)


Attributable profit for 

the six months ended 30 June 2017             -             -             -

Other comprehensive loss                 (5 846)       (7 904)            -

Total comprehensive loss                 (5 846)       (7 904)            -

Recognition of share-based payments           -             -             -

Dividend paid                                 -             -             -

Recognition of forfeitable 

share plan reserves                           -             -             -

Shares repurchased by subsidiary              -             -             -

Shares issued by subsidiary             (12 678)        21 106      744 540

Distributions made to participants 

of share trusts of subsidiary                 -             -             -

Issue of share capital                        -             -             -

Share of non-distributable reserves 

of associates transferred 

directly to equity                            -             -             -

Balance at 30 June 2017 

- Unaudited                              14 010       (15 917)      580 602



Condensed Consolidated Statement of Changes in Equity

for the 6 months ended 30 June 2018 (continued)


                                       Attribu-

                                       table to

                                         equity

                                        holders          Non-

R'000                     Retained       of the   controlling

                          earnings       parent     interests         Total


Balance at 1 January 2017 

- Audited                2 193 293    2 427 135       175 252     2 602 387

Attributable profit 

for the year ended 

31 December 2017            45 958       45 958       101 116       147 074

Other comprehensive loss         -      (39 533)      (10 074)      (49 607)

Total comprehensive income  45 958        6 425        91 042        97 467

Recognition of 

share-based payments             -       32 074        (1 843)       30 231

Dividend paid             (102 743)    (102 743)       (2 200)     (104 943)

Recognition of 

forfeitable share 

plan reserves                    -      (78 396)            -       (78 396)

Recognition of change 

in value of share option 

liability directly in equity     -       (5 613)         (988)       (6 601)

Transfer to share-based 

payment liability 

(modification)                   -      (19 789)            -       (19 789)

Acquisition of 

non-controlling interest

in subsidiary                    -         (399)       (1 080)       (1 479)

Share of distribution made 

by associate               (23 323)     (23 323)            -       (23 323)

Distributions made to 

participants of share 

trusts and share 

repurchase                (248 733)    (248 733)       (3 113)     (251 846)

Shares issued by 

subsidiaries                19 758      786 176       522 820     1 308 996

Issue of share capital           -       38 568             -        38 568

Repurchase of trust units        -       (5 699)            -        (5 699)

Treasury shares acquired         -      (23 851)            -       (23 851)

Change in investment in 

subsidiary                       -          170          (170)            -

Balance at 

31 December 2017 

- Audited                1 884 210    2 782 002       779 720     3 561 722



Attributable loss for 

the six months ended 

30 June 2018              (282 120)    (282 120)       54 976      (227 144)

Other comprehensive loss         -     (101 250)        1 874       (99 376)

Total comprehensive loss  (282 120)    (383 370)       56 850      (326 520)

Dividend paid             (102 415)     (65 559)      (39 093)     (104 652)

Recognition of change 

in value of share option 

liability directly in equity     -        6 282         1 785         8 067

Shares repurchased by 

subsidiary                      90         (930)       (1 951)       (2 881)

Shares issued by subsidiary      -            -        38 400        38 400

Balance at 30 June 2018 

- Unaudited              1 499 765    2 338 425      835 711      3 174 136



1 January 2017 to 

30 June 2017 - Unaudited

Balance at 1 January 2017 

- Audited 

(as previously 

disclosed)               2 193 293    2 427 135       160 896     2 588 031

Adjustment for 

restatement following 

finalisation of purchase 

price allocation of 

the Mareterram acquisition 

(refer to note 1)                -            -        14 356        14 356

                         2 193 293    2 427 135       175 252     2 602 387


Attributable profit 

for the six months 

ended 30 June 2017        (244 102)    (244 102)       43 127      (200 975)

Other comprehensive loss         -      (44 532)        3 584       (40 948)

Total comprehensive loss  (244 102)    (288 634)       46 711      (241 923)

Recognition of 

share-based payments        (1 018)      (2 931)       (6 053)       (8 984)

Dividend paid             (102 743)    (102 743)       (2 200)     (104 943)

Recognition of forfeitable 

share plan reserves              -      (55 001)            -       (55 001)

Shares repurchased by 

subsidiary                 (51 429)     (51 429)       (4 401)      (55 830)

Shares issued by subsidiary 19 758      786 691       508 252     1 294 943

Distributions made to 

participants of share 

trusts of subsidiary      (167 321)    (167 321)            -      (167 321)

Issue of share capital           -        6 844             -         6 844

Share of non-distributable 

reserves of associates 

transferred directly 

to equity                        -       (2 552)            -        (2 552)

Balance at 30 June 2017 

- Unaudited              1 646 438    2 550 059       717 561     3 267 620



HEADLINE (LOSS)/EARNINGS PER SHARE


                                      Unaudited     Unaudited       Audited

                                       6 months      6 months          Year 

                                          ended         ended         ended

                                        30 June       30 June   31 December

R'000                                      2018          2017          2017



Headline (loss)/earnings per share (cents)

  Basic                                  (118.6)       (101.4)         11.2

  Diluted                                (118.6)       (101.4)         10.9



Headline (loss)/earnings calculation

  Net (loss)/profit attributable 

  to equity holders of the parent      (282 120)     (244 102)       45 958

  (Profit)/loss on disposal 

  of property, plant, equipment 

  and vehicles                           (2 466)          234        (1 938)

  Impairment of property, 

  plant and equipment                         -           707             -

  Reversal of impairment 

  of property, plant and equipment            -          (251)            -

  Gain on remeasurement of 

  investment property                         -             -       (20 000)

  Adjustments relating to 

  results of associates                    (684)          (47)       (2 496)

  Total tax effects of adjustments          882          (161)        5 433

Headline (loss)/earnings               (284 388)     (243 620)       26 957


Weighted average number of 

shares on which (loss)/earnings

and headline (loss)/earnings 

per share is based (000's)              239 770       240 329       240 170


Weighted average number of shares 

on which diluted (loss)/earnings

and diluted headline (loss)/earnings 

per share is based (000's)              239 770       240 329       246 566



INTRINSIC NET ASSET VALUE (INAV)

                                                                     Change

                                      Unaudited     Unaudited         since

                                        30 June   31 December   31 December

                                           2018          2017          2017


INAV of Brimstone (R'm)                   4 021         4 318          -6.9%

INAV per share (cents)                    1 654         1 801          -8.2%

Fully diluted INAV per share (cents)      1 614         1 751          -7.8%

Market price per share (cents)

  Ordinary shares                         1 000         1 300         -23.1%

  "N" Ordinary shares                     1 000         1 125         -11.1%

Discount to INAV

  Ordinary shares                          39.5%         27.8%

  "N" Ordinary shares                      39.5%         37.5%


The breakdown of INAV which has been prepared on the same basis as that used 

in the integrated report for the year ended 31 December 2017, is available 

on the Company's website at www.brimstone.co.za.


FURTHER INFORMATION


1.  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 2016 financial year the Group 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 2016 financial year was prepared using provisional values as

    permitted in terms of IFRS 3 Business Combinations paragraph 45.

    Subsequent to the end of the 2016 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 IFRS 3

    paragraph 49.


    The relevant effects of the adjustment to the prior period statement

    of financial position and statement of changes in equity are

    summarised as follows:


    R'000

                         Estimated

    Assets acquired     fair value                              31 Dec 2016

    and liabilities        at time  Measurement      Exchange      Adjusted

    assumed at date             of       period          rate       closing

    of acquisition     acquisition  adjustments   differences       balance



    Intangible assets      310 918      157 648       (15 660)      452 906

    Deferred tax 

    assets/(liabilities)    30 181     (121 512)       12 071       (79 260)

    Total adjustment       341 099       36 136        (3 589)      373 646

    Less: non-controlling 

    interest's share      (137 546)     (15 940)        1 583      (151 903)

    Equity holders 

    of the parent's 

    share                  203 553       20 196        (2 006)      221 743

    Goodwill relating 

    to the parent          115 722      (20 196)        2 006        97 532


2.  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, joint ventures,

    investments at fair value through profit or loss (FVTPL), an

    investment at fair value through other comprehensive income (FVTOCI)

    and the Group's property portfolio.


                                      Unaudited     Unaudited       Audited

                                       6 months      6 months          Year 

    R'000                                 ended         ended         ended

    Segment revenues and results        30 June       30 June        31 Dec

    Segment revenue                        2018          2017          2017



    Fishing                           1 015 147     1 056 960     2 142 632

    Insurance                           187 599        83 063       234 442

    Clothing                             78 085        88 447       174 402

    Investments                          88 789        78 809       231 955

    Total revenue                     1 369 620     1 307 279     2 783 431



    Segment profit/(loss) from operations

    Fishing                             165 027       167 715       333 812

    Insurance                           (17 988)      (43 343)     (104 544)

    Clothing                            (14 481)      (14 351)       (8 674)

    Investments                          51 099        45 842       153 859

    Total profit from operations        183 657       155 863       374 453

    Fair value (losses)/gains          (403 659)     (255 117)       71 359

    Share of profits of associates 

    and joint ventures                   76 901         3 976        58 116

    Income from investments              28 932        22 292        48 942

    Finance costs                      (158 890)     (149 947)     (290 506)

    Taxation                             45 915        21 958      (115 290)

    Net (loss)/profit after taxation   (227 144)     (200 975)      147 074


3.  Fair value measurements

    This note provides information about how the Company determines fair

    values of various financial assets and financial liabilities.



    Fair value of the Company's financial assets and financial

    liabilities that are measured on a fair value basis on a recurring

    basis. Some of the Company'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

    30 June 2018           Level 1      Level 2       Level 3         Total


    Financial assets 

    at FVTPL*

    Derivative financial 

    assets                       -       75 605(3)          -        75 605

    Listed shares        2 289 546            -             -     2 289 546

    Unlisted shares        498 949            -       131 685(1)    630 634

    Unlisted shares              -            -        18 654(4)     18 654

    Non-financial 

    assets at fair value

    Investment properties        -            -        80 884(2)     80 884

    Financial asset at 

    FVTOCI**

    Unlisted shares              -            -        25 265(2)     25 265

    Total                2 788 495       75 605       256 488     3 120 588


    Financial 

    liabilities at 

    FVTPL*

    Derivative financial 

    liabilities                  -      85 005(3)           -        85 005


    R'000

    30 June 2017           Level 1      Level 2       Level 3         Total


    Financial assets 

    at FVTPL*

    Derivative financial 

    assets                       -      402 000(3)     15 057(3)    417 057

    Listed shares        2 624 153            -             -     2 624 153

    Unlisted shares 

    and loan               663 399            -             5(1)    663 404

    Available-for-sale 

    financial assets

    Unlisted shares              -            -        25 265(2)     25 265

    Unlisted shares              -            -         2 218(4)      2 218

    Total                3 287 552      402 000        42 545     3 732 097


    Financial 

    liabilities at FVTPL*

    Derivative financial 

    liabilities                  -       83 815(3)          -        83 815


    R'000

    31 December 2017       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 

    and loan               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

   

    *  FVTPL = Fair value through profit or loss

    ** FVTOCI = Fair value through other comprehensive income


    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 period.


    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 assets and liabilities.


                                      Unaudited     Unaudited       Audited

                                        30 June       30 June        31 Dec

4.  Share Capital (number)                 2018          2017          2017


    In issue (number)

    Ordinary shares                  39 874 146    40 620 604    40 620 604

    Held as treasury shares            (105 044)   (2 136 074)   (2 136 074)

                                     39 769 102    38 484 530    38 484 530



    "N" ordinary shares             227 955 544   235 907 107   227 911 954

    Held as treasury shares         (24 596 140)  (33 843 442)  (26 629 290)

                                    203 359 404   202 063 665   201 282 664



    Total net of treasury shares    243 128 506   240 548 195   239 767 194


    Weighted average 

    number of shares on which 

   (loss)/earnings and headline 

   (loss)/earnings per share 

    is based:                       239 770 496   240 328 910   240 732 715


    Weighted average number of 

    shares on which diluted 

   (loss)/earnings and diluted 

    headline (loss)/earnings 

    per share is based:             239 770 496   240 328 910   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                           239 770 496   240 328 910   240 170 204

    Dilutive instruments                      -             -     6 395 715

    Diluted                         239 770 496   240 328 910   246 565 919

    Number of instruments 

    treated as anti-dilutive          1 021 329     4 073 316     1 307 703


    Closing share price (cents)

    Ordinary shares                       1 000         1 300         1 300

    "N" ordinary shares                   1 000         1 300         1 125


    The following share movements 

    occurred during the period 

    under review

                                       Ordinary  "N" ordinary


    Shares issued (number)

    23 April 2018 - Scrip dividend    1 284 572     2 073 438



    Shares repurchased 

    and cancelled (number)

    19 June 2018                      2 031 030     2 029 848


5.  Related party transactions

    In terms of a supply agreement between joint venture group, Vuna

    Fishing Company Proprietary Limited ("Vuna") and SeaVuna Fishing

    Company Proprietary Limited ("SeaVuna"), and Sea Harvest Group

    Limited's subsidiary, Sea Harvest Corporation Proprietary Limited

    ("Sea Harvest Corporation"), fish caught by Vuna and SeaVuna is

    marketed by Sea Harvest Corporation. Purchases from SeaVuna during

    the period amounted to R103.2 million compared to R75.4 million for

    the comparative period and R165.7 million for the year ended

    31 December 2017.


6.  Subsequent events

    a) As announced on SENS on 13 June 2018 and the transaction becoming

       unconditional on 25 June 2018, Sea Harvest Group Limited, with

       effect from 2 July 2018, has together with a consortium of

       broad-based black economic empowerment investors, acquired the

       entire fishing business of Viking Fishing Holdings Proprietary

       Limited by way of the purchase of selected assets, liabilities and

       businesses from, and selected shareholdings in, the respective

       Viking Fishing group businesses; and 51% of the issued share capital

       of Viking Aquaculture Proprietary Limited for a consideration of

       R885 million. Sea Harvest is in the process of determining the fair

       values of assets and liabilities for IFRS 3 purposes.

    b) On 27 August 2018 Sea Harvest has, through its subsidiary 

       Cape Harvest Food Group Proprietary Limited, signed a share 

       purchase agreement to acquire the entire issued share capital 

       of Ladismith Cheese Company Proprietary Limited for a 

       consideration of R527 million, to be settled in cash. The 

       transaction is subject to competition commission approval.


Date: 28/08/2018 04:10:00 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.

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