| Wed 25 Aug 2010, 7:53 | | BRT/ BRN - Brimstone - Unaudited Results for the six months ended 30 June |
|
BRT BRN
BRT
BRT/ BRN - Brimstone - Unaudited Results for the six months ended 30 June
2010
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")
Highlights
- HEPS 149 cents per share
- Completion of Life Healthcare Transactions
- Substantial reduction in debt
Commentary
The six months under review has seen significant value unlocking
developments within the Brimstone Group. The listing of Life Healthcare
Group (LHC) on the JSE on 10 June 2010 and Brimstone`s realisation of an
effective 6.02% has provided a sizeable cash injection to considerably
reduce Brimstone`s overall debt at 30 June 2010. The LHC transaction has
provided Brimstone shareholders with an opportunity to participate in the
newly listed entity. Shareholders have further benefited from Health
Strategic Investments (HSI) shares, listed on the JSE and unbundled by
Brimstone to its shareholders in August 2010.
Earnings per share have increased from 5.4 cents to 146.3 cents whilst
headline earnings per share are up from 1.8 cents to 149.0 cents.
Attributable profit has increased substantially from R12.8 million to 30
June 2009 to R349.7 million for the period ending 30 June 2010.
Brimstone`s results include a reversal of a CGT provision and recognition
of STC credits. This is as a result of Brimstone effectively realising a
portion of its LHC interest through a series of share repurchases and the
unbundling of an effective interest in LHC in terms of Section 46 of the
Income Tax Act.
Dividends received from underlying investments amounted to R185.2 million
over the six month period compared to R50.5 million to 30 June 2009.
Results for the period
These 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 2009 which comply with the
Companies Act of South Africa and International Financial Reporting
Standards.
Issue of shares
The following shares were issued during the period under review:
Ordinary "N" ordinary
24 May 2010 capitalisation award - 1 305 179
23 June 2010 share option scheme 1 663 588 2 884 859
Brimstone Portfolio
Life Healthcare Group
Following the LHC transactions, but before the overallotment option and
the unbundling to Brimstone shareholders, Brimstone retained a 15.63%
shareholding in the LHC listed entity. The investment is accounted for on
a fair value through profit or loss basis at 30 June 2010. Brimstone has
confidence in the future prospects of LHC and has opted to retain 5.5% of
the investment after the overallotment option and the unbundling.
Sea Harvest
The excellent fishing conditions experienced in the previous year
continued throughout the period under review and this, together with a
strong focus on efficiency improvements across the entire business,
contributed to reduced production costs.
Export volumes were under pressure due to the global slowdown and
depressed Southern European markets, particularly in the foodservice
sector as consumers traded down to cheaper options. On the local market
the retail business performed well and Sea Harvest maintained its status
as the leading frozen white fish supplier in South Africa.
During the period under review revenue declined by 11% driven by the
strong Rand relative to the Euro, Sea Harvest`s major trading currency.
Overall a positive result was achieved, considering the deteriorating
economic conditions throughout the period. The good fishing conditions are
expected to continue over the medium term; however, the continuing strong
Rand and depressed international seafood market could impact margins
negatively.
House of Monatic
The first six months of the year have been tough but an improved trading
result has been achieved.
The future order book has been weakened by the prevailing challenges
within the economic environment but efforts to reduce costs and optimise
work processes within the business remain on-going.
Lion of Africa Holdings Company (Lion of Africa)
Growth in the first six months has been good and underwriting results
continue to show improvement for all classes except the motor portfolio
which remains highly competitive. Brimstone received a dividend of R8.9
million during the period under review.
Lion of Africa is the largest Black-owned short-term insurer and has an A-
rating from the GCR rating agency for claims paying ability.
Oceana
Oceana recorded good results across its operations in the first half of
this year, with improvements being shown across each of its market
segments. From an inshore fishing perspective, canned fish sales volumes
increased due to a more robust supply chain with imported product
continuing to supplement local supplies. Profit from canned fish
operations was above that of last year and good landings of anchovies to
the group`s fishmeal plants during the winter months are expected.
Cold storage revenues increased due to higher frozen capacity and a higher
overall occupancy.
Fishing conditions in the southern African region are expected to remain
reasonably stable.
Rex Trueform and African & Overseas Enterprises (Queenspark)
Brimstone continues to evaluate value-unlocking options. The underlying
business of Queenspark appears to be solid and we expect positive results
from the company.
Aon South Africa
Brimstone currently holds an effective 18% shareholding in one of the
largest insurance brokers and risk managers in South Africa. Aon continues
to grow its client base and consolidate recent acquisitions.
Aon Re Africa
Both the legal and operational aspects of the Benfield merger have been
completed in early 2010 and have proceeded smoothly.
The company continues to perform well despite difficult market conditions
and the outlook for the year remains positive.
Scientific Group
The first half of 2010 has been a difficult trading period. Although
turnover declined, improved margins and well controlled expenses have
resulted in improved profitability.
Scientific completed the acquisition of Indigenous Systems, a company
specialising in electro-surgery and other surgical medical devices and
consumables.
The acquisition brings a strong product portfolio and a team with strong
relationships within the private hospital groups, offering attractive
growth opportunities.
Nedbank Group
The mark-to-market value of Brimstone`s rights to Nedbank shares,
accounted for as options has been revalued at period end. The
independently calculated option valuation was based on a closing share
price of R120 per share.
Old Mutual plc
The mark-to-market value of Brimstone`s rights to Old Mutual plc shares,
accounted for as options, has been revalued based on the closing share
price of R11.91 per share.
Tiger Brands
The mark-to-market value of Brimstone`s rights to Tiger Brands shares,
accounted for as options has been revalued on the closing share price of
R170.25 per share.
Headline Earnings Per Share
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R`000 2010 2009 2009
Headline earnings per share (cents) 149.0 1.8 130.9
Diluted headline earnings
per share (cents) 149.0 1.8 129.9
Headline earnings calculation
Net profit attributable to
equity holders of the parent 349 684 12 810 325 710
Profit on disposal of property,
plant, equipment and vehicles (474) - (3 614)
Impairment of property, plant,
equipment and vehicles - - 618
Realised loss on disposal of associate - 15 660 14 146
Gain on bargain purchase - (23 301) (23 300)
Impairment of goodwill - 86 -
Impairment of investment
in associate 4 684 - -
Adjustments relating to
results of associates 2 275 (1 259) (1 838)
Total tax effects of adjustments - 209 194
Headline earnings 356 169 4 205 311 916
Weighted average number of
shares on which earnings per
share is based (000`s) 239 065 237 112 238 238
Weighted average number of
shares on which diluted earnings
per share is based (000`s) 239 065 238 908 240 166
Intrinsic Net Asset Value
Intrinsic Net Asset Value at 30 June 2010 calculated on a line-by-line
basis is estimated to be R2 871.8 million or 1 186.7 cents per share.
Events Subsequent to 30 June 2010
On 9 July 2010 Brimstone disposed of 8 305 400 LHC shares for R112 million
in terms of the overallotment option.
During July 2010 Brimstone acquired the remaining 26% shareholding in Lion
of Africa, the holding company of short-term insurer Lion of Africa
Insurance Company Limited from joint shareholder, Commlife Holdings,
making Lion of Africa a 100% subsidiary.
On 20 August 2010 Brimstone unbundled 109 646 136 shares in HSI to its
shareholders in the ratio of 40 HSI shares for every 100 Brimstone shares
held by its shareholders. The distribution amounted to R1 485.7 million
and resulted in a downward price adjustment of Brimstone shares in the
market.
Prospects
The transactions concluded over the past six months have placed Brimstone
on course to write a new chapter in its evolution as one of South Africa`s
leading empowerment investment companies. In the past fifteen years, the
company has pursued opportunities that bring about wealth creation and
measurable empowerment opportunities for its business partners and
shareholders. The company will continue to pursue value enhancing
transactions for its shareholders and to this end it has broadened its
team through the further employment of highly-skilled staff.
Board of Directors
In accordance with Section 3.59 of the JSE Limited Listings Requirements
it is reported that Mr T M F Phaswana resigned as an independent non-
executive director of the Company during March 2010. There were no further
changes to the Board during the period.
On behalf of the board
Prof GJ Gerwel MA Brey
Non-Executive Chairman Chief Executive Officer
25 August 2010
Condensed Group Statements of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
R`000 2010 2009 2009
Revenue 896 606 213 337 865 131
Sales and fee income 711 436 162 853 704 096
Dividends received 185 170 50 484 161 035
Operating expenses (695 747) (177 340) (696 012)
Operating profit 200 859 35 997 169 119
Fair value (losses)/gains (109 628) 15 163 380 679
Exceptional items (4 273) 6 002 (32 952)
Profit before net finance costs 86 958 57 162 516 846
Income from investments 10 410 5 232 10 615
Finance costs (113 067) (48 117) (137 677)
Share of profits of associates 16 218 23 701 10 587
Net profit before taxation 519 37 978 400 371
Taxation 352 120 (13 471) (67 670)
Profit for the period 352 639 24 507 332 701
Other comprehensive income
Net value gain on
available-for-sale financial asset - - 4 786
Total comprehensive income
for the period 352 639 24 507 337 487
Profit attributable to:
Equity holders of the parent 349 684 12 810 325 710
Non-controlling interests 2 955 11 697 6 991
352 639 24 507 332 701
Total comprehensive income
attributable to:
Equity holders of the parent 349 684 12 810 328 436
Non-controlling interests 2 955 11 697 9 051
352 639 24 507 337 487
Earnings per share (cents)
Basic 146.3 5.4 136.7
Diluted 146.3 5.4 135.6
Condensed Group Statements of Financial Position
Unaudited Unaudited Audited
30 June 30 June 31 December
R`000 2010 2009 2009
ASSETS
Non-current assets 2 024 004 3 741 282 4 181 395
Property, plant, equipment
and vehicles 323 515 338 573 324 132
Goodwill 12 140 - 12 140
Intangible assets 196 682 210 827 208 532
Deferred acquisition costs 30 103 - 36 236
Investments in associate companies 274 197 328 529 261 978
Investments 1 185 039 2 856 726 3 336 153
Deferred taxation 2 328 6 627 2 224
Current assets 2 950 003 606 883 1 417 601
Inventories 207 582 181 926 191 259
Trade and other receivables 385 917 267 080 396 135
Reinsurance contracts 359 292 - 491 654
Taxation 1 370 130 4 486
Cash and cash equivalents 397 599 151 163 334 067
1 351 760 600 299 1 417 601
Non-current asset classified
as held for distribution to
equity holders 1 485 705 - -
Non-current asset classified
as held for sale 112 538 6 584 -
TOTAL ASSETS 4 974 007 4 348 165 5 598 996
EQUITY AND LIABILITIES
Capital and reserves 2 848 574 2 167 205 2 568 462
Share capital 45 43 43
Capital reserves 272 005 271 068 262 506
Revaluation reserves 6 753 4 027 6 753
Retained earnings 2 464 222 1 872 977 2 196 566
Attributable to equity holders
of the parent 2 743 025 2 148 115 2 465 868
Non-controlling interests 105 549 19 090 102 594
Non-current liabilities 945 732 1 914 976 1 878 660
Long-term interest
bearing borrowings 724 155 1 380 288 1 291 891
Long-term provisions 19 188 19 495 19 245
Deferred taxation 202 389 515 193 567 524
Current liabilities 1 179 701 265 984 1 151 874
Short-term interest
bearing borrowings 364 498 38 911 200 510
Bank overdrafts 14 734 18 298 17 874
Trade payables 244 710 97 924 214 026
Other payables 75 559 102 794 77 331
Insurance contracts 465 434 - 628 129
Short-term provisions 14 249 - 13 585
Taxation 517 8 057 419
TOTAL EQUITY AND LIABILITIES 4 974 007 4 348 165 5 598 996
NAV per share (cents) 1 133.5 897.6 1 030.3
Shares in issue at end
of period (000`s) 241 995 239 308 239 324
Condensed Group Statements of Changes in Equity
Share Capital Revaluation Retained
R`000 capital reserves reserves earnings
Balance at 1 January 2009
- audited 42 268 345 4 027 1 918 747
Attributable profit for the
year ended 31 December 2009 - - - 325 710
Other comprehensive income - - 2 726 -
Recognition of share-based payments - 2 533 - -
Dividend paid - - - (57 389)
Non-controlling shareholders`
share of equity at acquisition - - - -
Issue by subsidiary of ordinary
and preference share capital - - - -
Issue of share capital 1 3 091 - -
Treasury shares acquired - (197) - -
Increase in treasury shares
held by share trust - (286) - -
Transfer to capital redemption
reserve fund - 1 662 - (1 662)
Transfer current year share
of non-distributable reserve of
associate - (11 160) - 11 160
Share of non-distributable reserves
of associate transferred directly
to equity - (1 482) - -
Balance at 31 December 2009
- audited 43 262 506 6 753 2 196 566
Attributable profit for the six
months ended 30 June 2010 - - - 349 684
Recognition of share-based
payments - 316 - -
Dividend paid - - - (80 008)
Issue of share capital 2 33 181 - -
Treasury shares acquired - (26 702) - -
Transfer current year share of
non-distributable reserve
of associate - 2 020 - (2 020)
Share of non-distributable reserves
of associate transferred directly
to equity - 684 - -
Balance at 30 June 2010
- unaudited 45 272 005 6 753 2 464 222
1 January 2009 to 30 June 2009
Balance at 1 January 2009
- audited 42 268 345 4 027 1 918 747
Attributable profit for the six months
ended 30 June 2009 - - - 12 810
Recognition of share-based payments - 1 254 - -
Dividend paid - - - (57 388)
Issue of share capital 1 3 091 - -
Increase in treasury shares held
by share trust - (232) - -
Non-controlling interest arising
on acquisition of subsidiary - - - -
Transfer current year share of
non-distributable reserve of
associate - 1 192 - (1 192)
Share of non-distributable reserves
of associate transferred
directly from equity - (2 582) - -
Balance at 30 June 2009
- unaudited 43 271 068 4 027 1 872 977
Attributable
to equity Non-
holders of controlling
R`000 the parent interests Total
Balance at 1 January 2009
- audited 2 191 161 7 028 2 198 189
Attributable profit for the
year ended 31 December 2009 325 710 6 991 332 701
Other comprehensive income 2 726 2 060 4 786
Recognition of share-based payments 2 533 - 2 533
Dividend paid (57 389) - (57 389)
Non-controlling shareholders`
share of equity at acquisition - 15 639 15 639
Issue by subsidiary of ordinary
and preference share capital - 70 876 70 876
Issue of share capital 3 092 - 3 092
Treasury shares acquired (197) - (197)
Increase in treasury shares
held by share trust (286) - (286)
Transfer to capital redemption
reserve fund - - -
Transfer current year share
of non-distributable reserve of
associate - - -
Share of non-distributable reserves
of associate transferred directly
to equity (1 482) - (1 482)
Balance at 31 December 2009
- audited 2 465 868 102 594 2 568 462
Attributable profit for the six
months ended 30 June 2010 349 684 2 955 352 639
Recognition of share-based
payments 316 - 316
Dividend paid (80 008) - (80 008)
Issue of share capital 33 183 - 33 183
Treasury shares acquired (26 702) - (26 702)
Transfer current year share of
non-distributable reserve
of associate - - -
Share of non-distributable reserves
of associate transferred directly
to equity 684 - 684
Balance at 30 June 2010
- unaudited 2 743 025 105 549 2 848 574
1 January 2009 to 30 June 2009
Balance at 1 January 2009
- audited 2 191 161 7 028 2 198 189
Attributable profit for the six months
ended 30 June 2009 12 810 11 697 24 507
Recognition of share-based payments 1 254 - 1 254
Dividend paid (57 388) - (57 388)
Issue of share capital 3 092 - 3 092
Increase in treasury shares held
by share trust (232) - (232)
Non-controlling interest arising
on acquisition of subsidiary - 365 365
Transfer current year share of
non-distributable reserve of
associate - - -
Share of non-distributable reserves
of associate transferred
directly from equity (2 582) - (2 582)
Balance at 30 June 2009
- unaudited 2 148 115 19 090 2 167 205
Condensed Group Statements of Cash Flow
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
R`000 2010 2009 2009
Operating activities
Net attributable profit 352 639 24 507 332 701
Adjustments for non-cash items (299 070) (48 691) (338 580)
Operating cash flows before
movements in working capital 53 569 (24 184) (5 879)
(Increase)/decrease in inventories (16 323) 5 573 (3 760)
Decrease in trade and
other receivables 10 218 69 917 78 050
Decrease in deferred
acquisition costs 6 133 - -
Increase/(decrease) in trade
and other payables 29 576 (11 033) (33 438)
Decrease in reinsurance contracts 132 362 - -
Decrease in insurance contracts (162 695) - -
Cash generated from operations 52 840 40 273 34 973
Income taxes paid (9 905) (7 370) (15 954)
Finance costs (95 345) (31 249) (86 889)
Net cash (used in)/from
operating activities (52 410) 1 654 (67 870)
Investing activities
Interest received 10 410 5 232 10 615
Dividends received from associates 3 826 15 357 36 695
Dividends received from
other equity investments 181 344 35 127 124 340
Loan repayments and recoveries
from associate and investments - 43 180 39 280
Proceeds on disposal of investments 534 351 169 292 178 105
Proceeds on disposal of property,
plant, equipment and vehicles 588 - 14 533
Acquisition of property, plant,
equipment and vehicles (25 331) (14 209) (39 392)
Acquisition of businesses - (498 424) (375 404)
Disposal of businesses - (482) (482)
Acquisition of investments (91 109) (148) (17 426)
Net cash from/(used in)
investing activities 614 079 (245 075) (29 136)
Financing activities
Dividends paid (63 654) (57 388) (57 441)
Repayments of borrowings (491 470) (569 343) (626 653)
Loans raised 70 000 971 881 999 638
Shares repurchased (26 702) (232) (483)
Proceeds on issue of shares 16 829 3 092 3 092
Issue of shares by subsidiary - - 66 770
Decrease in bank overdrafts (3 140) (6 803) (7 227)
Net cash (used in)/from
financing activities (498 137) 341 207 377 696
Net increase in cash and
cash equivalents 63 532 97 786 280 690
Cash and cash equivalents at
beginning of period 334 067 53 377 53 377
Cash and cash equivalents at
end of period
Bank balances and cash 397 599 151 163 334 067
Segmental Information
Profit/(loss) Headline
from profit/
R`000 Revenue operations (loss)
Fishing 406 510 38 289 1 954
Insurance 211 802 6 670 5 573
Clothing 87 371 (1 153) (3 520)
Investment management 190 923 157 053 352 162
Total 896 606 200 859 356 169
R`000 Assets Liabilities
Fishing 915 100 624 402
Insurance 753 839 630 871
Clothing 147 572 59 387
Investment management 3 157 496 810 773
Total 4 974 007 2 125 433
Directorate
Prof. GJ Gerwel (Chairman), F Robertson (Executive Deputy Chairman)*,
MA Brey (Chief Executive Officer)*, LZ Brozin (Financial)*, PL Campher,
M Hewu, N Khan, MK Ndebele, Y Pahad, LA Parker, AA Roberts, FD Roman
* Executive
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 E-mail:
info@brimstone.co.za
Date: 25/08/2010 07:53:01 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.
