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Brimstone Investment Corporation Limited - Unaudited Results for the 6 months
ended 30 June 2002
Brimstone Investment Corporation Limited
Unaudited Results for the 6 months ended 30 June 2002
Group Income Statements
R`000 R`000 R`000
Unaudited Unaudited Audited
6 Months 6 Months 15 Months
ended ended ended
30 June 2002 31 Mar 2001 31 Dec 2001
Revenues 111 888 131 121 213 903
Cost of sales (78 811) (85 420) (152 333)
Gross profit 33 077 45 701 61 570
Selling and
administration
expenses (23 268) (34 627) (48 829)
Operating profit
before exceptional
items 9 809 11 074 12 741
Exceptional items (200) (12 112) 1 109
Operating profit
/(loss) 9 609 (1 038) 13 850
Income from
investments 1 535 1 759 2 379
Finance costs (3 484) (4 450) (11 747)
Equity accounted
Earnings /
(losses) 4 950
Goodwill
write-down (889) (914) (1 779)
Net profit / (loss)
before taxation 11 721 (6 745) 8 393
Taxation (1 430) (3 918) (235)
Net attributable
profit/(loss) 10 291 (10 663) 8 158
Earnings/(loss) per share (cents)
Headline 5.8 1.2 4.5
Basic 5.3 (5.5) 4.2
Comparable
headline
earnings 7.4 1.2 5.8
Number of shares
used in calculation
(`000) 195 628 195 628 195 628
Headline earnings calculation
Net attributable
profit 10 291 (10 663) 8 158
Exceptional
items 200 12 112 (1 109)
Goodwill
write-down 889 914 1 779
Headline
earnings 11 380 2 363 8 828
Comparable headline earnings calculation
Headline
earnings 11 380 2 363 8 828
Incentive fee
on investment
disposals 3 100 - 2 513
Comparable
headline
earnings 14 480 2 363 11 341
Group Balance Sheets
R`000 R`000 R`000
Unaudited Unaudited Audited
30 June 2002 31 Mar 2001 31 Dec 2001
ASSETS
Non-current assets 145 507 127 977 142 879
Property, plant and
equipment 26 344 41 893 25 554
Goodwill in
associate 6 226 8 230 7 115
Interest in
associate companies 104 861 58 182 101 934
Investments and
loans 8 076 19 672 8 276
Current assets 99 586 115 024 87 183
Inventory 33 953 50 067 35 071
Trade and other
receivables 53 772 52 559 46 121
Cash resources 11 861 12 398 5 991
TOTAL ASSETS 245 093 243 001 230 062
EQUITY AND
LIABILITIES
Capital and
reserves 168 107 138 995 157 816
Share capital and
premium 152 371 152 371 152 371
Non-distributable
reserves 45 - 45
Distributable
reserves 15 691 (13 376) 5 400
Non-current
liabilities 14 201 17 095 13 779
Long-term
interest-bearing
borrowings 13 966 16 126 13 544
Deferred taxation 235 969 235
Current liabilities 62 785 87 006 58 467
Short-term
interest-bearing
borrowings 29 541 35 804 28 746
Bank overdraft 54 8 552 6 801
Trade and other
payables 30 308 39 230 21 468
Taxation 2 882 3 325 1 452
TOTAL EQUITY AND
LIABILITIES 245 093 243 001 230 062
NAV per share
(cents) 85.9 71.1 80.7
Shares in issue at
end of period (`000)195 628 195 628 195 628
Group Cash Flow Statements
R`000 R`000 R`000
Unaudited Unaudited Audited
30 June 2002 31 Mar 2001 31 Dec 2001
Cash generated from
trading 11 349 13 739 15 680
Movement in working
capital 2 307 15 952 (4 873)
Cash generated from
operating activities13 656 29 691 10 807
Investment income 1 535 1 759 1 365
Finance costs (3 484) (4 450) (11 747)
Taxation paid - (5 578) -
Cash retained from
operations 11 707 21 422 425
Cash flows from
investing activities(307) (13 489) 10 238
Net investments
Disposed of/
(acquired) 2 023 (5 602) 14 843
Net additions
to property,
plant and
equipment (2 330) (7 887) (4 605)
Net cash inflow 11 400 7 933 10 663
Cash flows from
financing
activities 1 217 (3 668) (9 409)
Net raising/
(repayment) of
long-term
liabilities 422 (502) (1 226)
Net raising/
(repayment) of
short-term
liabilities 795 (3 166) (8 183)
Net increase in
net cash resources 12 617 4 265 1 254
Net overdraft in
Subsidiary
re-consolidated - - (1 645)
Net cash resources at
beginning of period (810) (419) (419)
Closing net
cash resources 11 807 3 846 (810)
Statement of changes in equity for the 6 months ended 30 June 2002
Share Share Non-distribut- Distributable
Capital Premium able reserves Reserves Total
Balance at
30 September
2000 42 152 329 - (2 713) 149 658
Attributable
loss for the
six months
ended 31 March
2001 - - - (10 663) (10 663)
Balance at 31
March 2001 42 152 329 - (13 376) 138 995
Attributable
profit for the
nine months
ended 31
December 2001 - - - 18 821 18 821
Transfer to
capital
redemption
reserve in
respect of
preference
share
redemption in
subsidiary - - 45 (45) -
Balance at 31
December 2001 42 152 329 45 5 400 157 816
Attributable
profit
for the six
months
ended 30
June 2002 - - - 10 291 10 291
Balance at
30 June 2002 42 152 329 45 15 691 168 107
Segmental information for the 6 months ended 30 June 2002
Operating Headline Impairment
Revenue Profit Earnings Losses Assets Liabilities
Financial
services - - (1 524) - 3 094 -
Industrial 110 004 14 494 18 384 (889) 200 997 56 813
Investments
in
transition1 798 1 679 548 (200) 27 612 14 116
Corporate 86 (6 364) (6 028) - 13 390 6 057
Total 111 888 9 809 11 380 (1 089) 245 093 76 986
Comments on results
During the period Brimstone cemented its two-pillar investment strategy in the
Industrial and Financial Services marketplace. It maintains a strong presence in
the underlying businesses through non-executive directorships in those companies
in which it has an interest.
The results for the six months ended 30 June 2002 show an improved position
to that of the previous reporting period.
It is pleasing to report that headline earnings per share of 5.8 cents for
the half-year exceeds those of the fifteen months ended 31 December 2001. This
in turn has improved the net asset value per share to 85.9 cents from 80.7 cents
at the end of the financial year.
The management contract between Brimstone Investment Corporation Limited
and Brimstone Management Company (Pty) Limited was terminated by mutual
agreement on 31 July 2002. All staff and contracts of the management company
have been taken over Brimstone Investment Corporation Limited. Provision has
been made for incentive fees payable on termination of the contract.
Results for the period
Accounting Policies
The accounting policies in respect of the financial year ended 31 December 2001
have been consistently applied to the results for the period ended 30 June 2002.
These policies conform to South African Statements of Generally Accepted
Accounting Practices.
Industrial
Sea Harvest
This company continues to perform well and is a major contributor to Brimstone`s
earnings line. The depreciation of the Rand and a higher proportion of export
sales were factors in the results achieved.
Scientific
Scientific`s recovery from the difficulties it experienced in the previous
financial year is pleasing. Increased sales volumes and improved cost controls
were fundamental to the turnaround in reported positive earnings.
Spitz
The management of Spitz has adapted to the challenges of this niche market,
delivering improved profits and cashflow for the review period. They have
recently acquired the distribution rights to additional international brands
including Prada.
Nando`s Group Holdings Limited
Nando`s return to the franchise model and a growing contribution from offshore
operations is beginning to pay off. This, however, is a long term strategy and
we are currently re-evaluating this investment.
House of Monatic
The 100% held subsidiary continues to perform well in difficult local trading
conditions. The results for the six months ended 30 June 2002 are marginally
ahead of expectation due to increased exports to the United States of America,
Africa and the United Kingdom.
Financial Services
Brimstone`s exposure to the financial services industry is through its effective
8% interest in Peoples Bank, 3% holding in African Harvest Limited (held via its
25.05% share of NECorp Holdings (Pty) Ltd) and its 30% interest in Lion of
Africa Insurance Company Limited.
African Harvest
This company continued its poor run resulting in equity-accounting for a loss in
the period.The recent sale of the major assets might enable Brimstone to realise
its investment.
Lion of Africa
The insurer is benefiting from measures taken to improve the quality of the
personal line book, reduce costs and the closure of unprofitable branches.
Although results for the half- year are a considerable improvement on those of
the previous comparable period, Brimstone has not taken any profits to account
because previously reported losses are in excess of the cost of its investment.
Peoples Bank
The transaction became effective on 1 January 2002. Because of the risk free
funding structure earnings are only expected to flow through a few years down
the line.
Investments in Transition
The sale of Keerom Street Chambers is well advanced with transfer to be
registered towards the end of October or early November 2002.
Our investment in Eersterivier Medical Centre was written down by a further
R200 000 as the company was placed in liquidation and the clinic sold to the
State.
Management continues to work on disposing of the remaining investments.
Cautionary announcement-Proposed repurchase of shares
Following the cautionary announcement of 9 September 2002, the company has
proceeded with the proposed transactions as set out in the document.
Shareholders are advised to continue to exercise caution in dealing in Brimstone
shares.
Prospects
The proposed repurchase of shares should significantly enhance net asset value
per share as well as increase the empowerment economic interest in the company.
Similar performance is expected from all investments in the second half of
the year.
Dividend
No dividend is proposed at this time.
Prof GJ Gerwel MA Brey
Chairman Deputy Chairman
Cape Town, 23 September 2002
Date: 23/09/2002 05:02:00 PM Produced by the JSE SENS Department
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