| Wed 27 Feb 2008, 16:59 | | BRT / BRN - Brimstone - Reviewed results for the 1 |
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BRT BRN
BRT
BRT / BRN - Brimstone - Reviewed results for the 12 months ended 31 December
2007
BRIMSTONE
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")
Reviewed Results for the 12 months ended 31 December 2007
Highlights
NAV per share R10.13 up 50.2%
Dividend 32 cents up 100%
Total assets R4 billion up 42.8%
Group Income Statements
Reviewed Audited
year ended year ended
31 December 31 December
R`000 2007 2006
Revenue 623 723 377 953
Cost of sales (454 327) (268 632)
Gross profit 169 396 109 321
Selling and administration expenses (144 834) (79 190)
Fair value gains 1 100 897 1 408 997
Exceptional items 102 796 10 721
Profit from operations 1 228 255 1 449 849
Income from investments 19 173 9 558
Finance costs (176 804) (190 318)
Share of profits of associates 7 314 28 172
Net profit before taxation 1 077 938 1 297 261
Taxation 232 627 195 745
Net attributable profit 845 311 1 101 516
Attributable to:
Equity holders of the parent 842 050 1 099 427
Minority interest 3 261 2 089
845 311 1 101 516
Earnings per share
(cents) Basic 359.8 474.1
Diluted earnings per share
(cents) Basic 349.2 458.4
Group Balance Sheets
Reviewed Audited
year ended year ended
31 December 31 December
R`000 2007 2006
ASSETS
Non-current assets 3 632 945 2 568 137
Property, plant, equipment and vehicles 64 499 38 418
Goodwill - 11 049
Intangible asset 26 742 -
Investments in associate companies 456 202 512 416
Investments 3 085 502 2 006 254
Current assets 316 621 198 306
Inventories 126 183 81 354
Trade receivables 58 669 68 481
Other receivables 55 805 31 200
Taxation 436 202
Cash and cash equivalents 75 528 17 069
TOTAL ASSETS 3 949 566 2 766 443
EQUITY AND LIABILITIES
Capital and reserves 2 376 896 1 570 691
Share capital 41 40
Capital reserves 267 418 271 325
Revaluation reserves 4 027 3 977
Retained earnings 2 101 978 1 297 049
Minority interest 3 432 (1 700)
Non-current liabilities 1 182 388 1 008 652
Long-term interest bearing borrowings 766 239 797 198
Deferred taxation 416 149 211 454
Current liabilities 390 282 187 100
Short-term interest bearing borrowings 60 204 33 321
Preference shares for redemption 137 000 -
Bank overdrafts 18 233 45 709
Trade payables 105 775 66 410
Other payables 45 220 39 986
Taxation 23 850 1 674
TOTAL EQUITY AND LIABILITIES 3 949 566 2 766 443
NAV per share (cents) 1 012.9 674.5
Shares in issue at end of year (000`s) 234 315 233 104
Group Cash Flow Statements
Reviewed Audited
year ended year ended
31 December 31 December
R`000 2007 2006
Operating activities
Net attributable profit 845 311 1 101 516
Adjustments for:
Share of profits of associate (33 900) (43 903)
Income from investments (21 143) (10 359)
Increase in fair value of investments (1 100 897) (1 415 444)
Impairment of investment in associate 1 388 -
Impairment of goodwill 11 049 -
Minority interest written off 1 871 -
Finance costs 176 804 190 318
Taxation 232 627 195 745
Depreciation of property, plant,
equipment and vehicles 5 410 2 652
Share-based payment expense 2 281 2 208
Profit on disposal of investments (117 104) (4 274)
Loss on disposal of property, plant,
equipment and vehicles 27 96
Operating cash flows before movements
in working capital 3 724 18 555
Increase in inventories (35 954) (31 861)
Decrease/(increase) in receivables 1 831 (30 401)
(Decrease)/increase in payables (1 496) 38 176
Cash used in operations (31 895) (5 531)
Income taxes paid (6 502) (3 724)
Finance costs (76 863) (40 624)
Net cash used in operating activities (115 260) (49 879)
Investing activities
Interest received 19 173 9 558
Dividends received from associates 26 586 15 731
Dividends received from other equity investments 1 970 801
Loan repayments and recoveries from associates
and investments 73 921 4 086
Proceeds on disposal of investments 205 978 43 738
Proceeds on disposal of property, plant,
equipment and vehicles 285 235
Replacement of property, plant,
equipment and vehicles (31 265) (2 597)
Acquisition of subsidiaries
- shares acquired and loans advanced (6 442) (20 878)
Loan repayments - 7 001
Acquisition of associates and investments (78 956) (384 838)
Net cash from/(used in) investing activities 211 250 (327 163)
Financing activities
Dividends paid (37 633) (27 867)
Repayments of borrowings (36 498) (23 059)
Loans raised 69 481 364 989
Shares repurchased (8 749) (543)
Proceeds on issue of shares 3 074 4 058
(Decrease)/increase in bank overdrafts (27 670) 37 550
Net cash (used in)/from financing activities (37 995) 355 128
Net increase/(decrease) in cash and cash
equivalents 57 995 (21 914)
Cash and cash equivalents at beginning of year 17 069 36 633
Cash and cash equivalents acquired on
acquisition of subsidiaries 464 2 350
Cash and cash equivalents at end of year
Bank balances and cash 75 528 17 069
Segmental information
Operating Headline
R`000 Revenue Profit Earnings Assets Liabilities
Financial
services 13 681 33 593 23 038 489 375 22 683
Industrial 609 669 141 901 (10 284) 698 245 561 052
Healthcare 370 1 072 789 764 862 2 644 661 908 125
Enterprise
development 3 (1 452) 531 4 781 71
Corporate - (18 576) (25 757) 112 504 80 739
Total 623 723 1 228 255 752 390 3 949 566 1 572 670
Group Statements of Changes in Equity for the year ended 31 December 2007
Share Capital Revaluation
R`000 capital reserves reserves
Balance at 1 January 2006 - audited 38 262 346 3 977
Attributable profit for the year ended
31 December 2006 - _ -
Minority shareholder share of
accumulated deficit at acquisition of
subsidiary - - -
Recognition of share-based payments - 2 208 -
Dividend paid - - -
Issue of share capital 2 4 056 -
Increase in treasury shares held by
share trust - (542) -
Transfer current year share of
non-distributable reserve of associate - 3 257 -
Balance at 31 December 2006 - audited 40 271 325 3 977
Attributable profit for the year ended
31 December 2007 - - -
Gain on available-for-sale investment - - 50
Total recognised income and expense
for the year - - 50
Recognition of share-based payments - 2 281 -
Dividend paid - - -
Issue of share capital 1 3 073 -
Treasury shares acquired - (3 512) -
Increase in treasury shares held by
share trust - (5 237) -
Transfer to capital redemption reserve
fund - 138 -
Transfer current year share of
non-distributable reserve of associate - (650) -
Minority interest written off - - -
Balance at 31 December 2007 - reviewed 41 267 418 4 027
Attributable
to equity
Retained holders of
R`000 earnings the parent
Balance at 1 January 2006 - audited 228 746 495 107
Attributable profit for the year ended 31
December 2006 1 099 427 1 099 427
Minority shareholder share of accumulated
deficit at acquisition of subsidiary - -
Recognition of share-based payments - 2 208
Dividend paid (27 867) (27 867)
Issue of share capital - 4 058
Increase in treasury shares held by share trust - (542)
Transfer current year share of non-distributable
reserve of associate (3 257) -
Balance at 31 December 2006 - audited 1 297 049 1 572 391
Attributable profit for the year ended 31
December 2007 842 050 842 050
Gain on available-for-sale investment - 50
Total recognised income and expense for the year 842 050 842 100
Recognition of share-based payments - 2 281
Dividend paid (37 633) (37 633)
Issue of share capital - 3 074
Treasury shares acquired - (3 512)
Increase in treasury shares held by share trust - (5 237)
Transfer to capital redemption reserve fund (138) -
Transfer current year share of non-distributable
reserve of associate 650 -
Minority interest written off - -
Balance at 31 December 2007 - reviewed 2 101 978 2 373 464
Minority
R`000 interest Total
Balance at 1 January 2006 - audited 419 495 526
Attributable profit for the year ended 31 December
2006 2 089 1 101 516
Minority shareholder share of accumulated deficit at
acquisition of subsidiary (4 208) (4208)
Recognition of share-based payments - 2208
Dividend paid - (27867)
Issue of share capital - 4058
Increase in treasury shares held by share trust - (542)
Transfer current year share of non-distributable
reserve of associate - -
Balance at 31 December 2006 - audited
Attributable profit for the year ended 31 December
2007 3 261 845 311
Gain on available-for-sale investment - 50
Total recognised income and expense for the year 3 261 845 361
Recognition of share-based payments - 2 281
Dividend paid - (37 633)
Issue of share capital - 3 074
Treasury shares acquired - (3 512)
Increase in treasury shares held by share trust - (5 237)
Transfer to capital redemption reserve fund - -
Transfer current year share of non-distributable
reserve of associate - -
Minority interest written off 1 871 1 871
Balance at 31 December 2007 - reviewed 3 432 2376 896
Acquisition of subsidiary
On 1 March 2007 the Group acquired Canterbury International South Africa (Pty)
Ltd for a total consideration of R12 million. The company manufactures and
distributes sport and casualwear. The transaction has been accounted for on the
purchase method of accounting. Brimstone`s share of profits from date of
acquisition to 31 December 2007 amounted to R6.4 million.
R`000 Acquisition value
Total assets 55 667
Non current assets 27 280
Current assets 28 387
Total liabilities
Current liabilities 43 645
Net assets acquired 12 022
Total consideration 12 022
Paid in cash (8 865)
Balance of purchase price to be paid 3 157
Net cash outflow arising on acquisition
Cash consideration paid 8 865
Cash and cash equivalents acquired 464
8 401
Pro forma results of the Brimstone Group if the
company acquired had been
consolidated from 1 January 2007:
R`000
Revenue 637 399
Headline earnings 751 346
Changes to prior year Cash Flow Statement
R`000
Net cash used in operating activities as previously reported (199 573)
Adjustment for non-cash component of finance costs 149 694
Net cash used in operating activities as presently reported (49 879)
Net cash from financing activities as previously reported 504 822
Adjustment to repayments of borrowings for non-cash
component of finance costs (20 325)
Adjustment to loans raised for non-cash component
of finance costs (129 369)
Net cash from financing activities as presently reported 355 128
There was no change to basic and diluted earnings per share.
Commentary
Results for the financial year to 31 December 2007 saw Net Asset Value per share
rise 50.2%, from 674,5 cents to 1 012.9 cents, reflecting the continued growth
of the group`s-diversified portfolio of underlying investments. Brimstone ended
2007 with total assets of R4 billion, up from R2,7 billion a year ago.
While headline earnings per share were lower than the previous year, this was as
a result of the re-evaluation of the classification of the investment in Life
Healthcare (LHC) to be accounted for at fair value through profit and loss. This
change had a significant impact on the results to 31 December 2006 as the 22%
stake in LHC was accounted for on a fair value basis over a 21 month period from
date of acquisition, compared to the current 12 month reporting period.
The LHC business, which has become Brimstone`s anchor investment, continues to
show strong organic growth, contributing to operating profit and cash flows.
There were also strong performances from a number of the group`s other
investments, which combined with the proceeds from the sale of the stake in
Lenco, enabled Brimstone to declare a dividend of 32 cents per share, 100%
higher than the previous year.
During the year, Brimstone repurchased 517 042 "N" ordinary shares for R3.5
million via its subsidiary Septen Investments (Pty) Ltd and 739 508 "N" ordinary
shares for R5.2 million via the share trust.
Results for the year
Auditors` review opinion
The results have been reviewed by Deloitte & Touche whose unmodified review
report is available for inspection at the company`s registered office.
These condensed consolidated financial results-comply with IAS 34: Interim
Financial Reporting. The accounting policies and methods of computation used in
the preparation of this report are consistent with those used in the annual
financial statements for the year ended 31 December 2006 which comply with the
Companies Act of South Africa and International Financial Reporting Standards
except for the adoption of IFRS 7 - Financial Instruments:
Disclosure and the adoption of the amendment of IAS 23: Borrowing Costs. The
adoption of these-standards did not impact the condensed consolidated financial
results.
Issue of shares
The following shares were issued to directors and employees during the year in
terms of the share option scheme.
Ordinary "N" ordinary
23 March 2007 1 056 396 1 411 057
Brimstone portfolio
Healthcare
Life Healthcare
The Life Healthcare Group is one of the largest private hospital operations
outside the United States. Its principal business is acute hospital care and
comprises one of the widest geographic spreads of acute care hospitals and day
surgical centres in South Africa.
The Life Healthcare business has delivered steady growth since acquisition in
March 2005. The hospital business has increased paid patient days at an average
annual rate of 6%. This growth is attributable to an ageing population, new
technology and the disease profile in South Africa which has required an
increase in capacity both at existing facilities and through new hospitals. The
ongoing capital expenditure program has included new hospitals - Life Fourways
in Sandton which opened in July 2006 and a relocation in East London to the new
Life Beacon Bay scheduled to open in August 2008; extensions to existing
hospitals; the introduction of new technologies and upgrading of facilities. A
joint venture operation in the United Kingdom has secured four contracts, which
are now fully operational, to provide services to the national health
authorities. HLC continues to nurture positive relationships with its -
supporting doctors, medical funders and suppliers in order to sustain the
quality of its services while containing costs to the consumer. The hospital
business was awarded ISO9001:2000 accreditation in July 2007, the first hospital
group in South Africa to achieve such a rating. The business is well positioned
to sustain continued growth.
Scientific Group
The Scientific Group continues to perform well and benefits from a wider market
presence. Future prospects are promising and we are confident that this niche
sector of the healthcare industry will continue to expand.
Industrial
House of Monatic
While trading conditions in the local textile industry have been difficult,
Brimstone is moving forward with its strategy to strengthen the House of Monatic
Group`s marketing, design and manufacturing portfolio through the acquisition
and-development of premium brands.
House of Monatic acquired an effective 51% of Canterbury SA on 1 March 2007.
Canterbury SA is the official kit supplier to the rugby Springboks, a high
profile contract that is expected to impact positively on future earnings. The
success of the Springboks in the 2007 Rugby World Cup provided a boost to sales
of Springbok supporters merchandise.
Lenco
This investment was disposed of in July 2007 realising R203 million for
Brimstone`s entire interest in Lenco.
Oceana
Oceana`s performance was well ahead of last year. Significantly higher volumes
of pelagic fish and lobster were processed through Oceana`s plants; horse
mackerel landings in South Africa and Namibia were higher and international
market prices for fishmeal and lobster improved substantially. Additional
supplies of canned fish were sourced internationally as demand continued to
exceed supply on the local market. Sales of french fries were at record levels
due to strong demand from quick service restaurants. Average activity levels in
the group`s cold storage division were high but product dwell times were shorter
due to faster turnaround of customer product.
Queenspark
In September 2007, Brimstone acquired shareholdings in African & Overseas
Enterprises Limited and Rex Trueform Limited, which equates to 33% of the well
established Queenspark clothing chain.
Sea Harvest
During 2007, Sea Harvest`s operating profit increased significantly with a
strong focus on maximising margin and containing costs. Good results were
achieved because of a focus on the right products for the right markets.
Locally, the company managed to recover its lost market share in the retail
market. The company`s focus will remain on ensuring that the maximum value is
extracted from every kilogram of fish caught. The business is well structured to
continue profitably despite quota cuts.
Financial services
Aon South Africa
A steady performance by Aon for the period produced satisfying results. Aon
continues to follow a positive growth trend within a competitive market.
Aon Re Africa
As of 1 March 2007, Brimstone acquired an effective 18% of Aon Re Africa (Pty)
Ltd. Aon Re Africa are established reinsurance brokers operating throughout sub-
Saharan Africa. Brimstone is well satisfied with the results achieved to date
and future prospects look promising.
Lion of Africa Insurance Company
Results for Lion of Africa have been disappointing and reflect the general trend
of short term insurers with losses coming from the motor and property classes.
The growing number of new cars and the ongoing challenge of deteriorating road
infrastructure combine to make this class of business difficult for insurers.
Management are confident that their corrective measures will bear fruit in the
new financial period. Premium growth has been good and the company continues to
build its brand as a new face in the SA short term sector.
Nedbank
Brimstone`s rights to Nedbank Group Limited shares, accounted for as options,
contributed positively to earnings for the year, which is a direct result of the
increase in the underlying Nedbank share price. In its second year of delivering
value to Nedbank, the Brimstone consortium-generated performance fees in the
process, part of which, in terms of the agreement, will be applied to acquiring
additional Nedbank shares.
Old Mutual
Brimstone`s rights to Old Mutual plc shares, also accounted for as options, were
marginally down, in line with the overall performance of the share markets and
the reduction of Old Mutual`s underlying share price. The Brimstone/Mtha
Consortium continues to contribute positively to Old Mutual.
Entrepreneurial development
Commercial success underpins Brimstone`s empowerment philosophy. In line with
this, the company has formed an entrepreneurial investment fund which will
identify and develop new entrepreneurs. In October 2006 a 20% stake was acquired
in Hot Platinum which provides complete casting solutions for platinum, gold and
other metals primary to the jewellery market. This-venture continues to perform
well in its second year of operation.
Earnings per share
Reviewed Audited
year ended year ended
31 December 31 December
R`000 2007 2006
Headline earnings per share (cents) 321.5 474.2
Diluted headline earnings per share (cents) 312.0 458.5
Headline earnings calculation
Net profit attributable to equity holders of
the parent 842 050 1 099 427
Loss on disposal of property, plant,
equipment and vehicles 27 96
Realised gain on disposal of associate (117 104) -
Impairment of goodwill 11 049 -
Impairment of investment in associate 1 388 -
Adjustments relating to results of associate (5 488) -
Total tax effects of adjustments 20 468 -
Headline earnings 752 390 1 099 523
Weighted average number of shares on
which earnings per share is based (000`s) 234 005 231 875
Weighted average number of shares on which
diluted earnings per share is based (000`s) 241 157 239 815
Prospects
Since Brimstone`s inception twelve years ago, the company has always sought to
stay true to its goals of being profitable, empowering, and having a positive
social impact on the businesses and the individuals with whom it is involved,
including shareholders, employees, suppliers, customers and the greater
community.
We are confident that Brimstone will continue to deliver on each of these
undertakings in 2008 by adding value to our business partners and through
strategic acquisitions, job creation and involvement in the upliftment of
disadvantaged-communities in South Africa.
Dividend
The board of Brimstone has declared a dividend of 32 cents per share payable on
Monday 31 March 2008. In compliance with the requirements of Strate, the company
has determined the following salient dates for the payment of the dividend. The
last day to trade cum dividend is Wednesday, 19 March 2008. The dividend is
payable to all shareholders of Brimstone recorded in the books of the company at
the close of the business on Friday, 28 March 2008. Shares will commence trading
ex-dividend from Thursday, 20 March 2008. Shares may not be rematerialised or
dematerialised from Thursday, 20 March 2008 to Friday, 28 March 2008, both days
inclusive.
On behalf of the board
Prof GJ Gerwel MA Brey
Non-Executive Chairman Chief Executive Officer
27 February 2008
Registered Office: Boundary Terraces, 1 Mariendahl Lane, Newlands 7700
Transfer Secretaries: Computershare Investor Services (Pty) Ltd, 70
Marshall Street, Johannesburg 2001 Sponsor: Nedbank Capital, 135 Rivonia
Road, Sandton 2196
Website: www.brimstone.co.za
E-mail: info@brimstone.co.za
Date: 27/02/2008 16:59:01 Produced by the JSE SENS Department.
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