| Thu 6 Mar 2003, 14:39 | | BRIMSTONE INVESTMENT CORPORATION LIMITED - REVIEWE |
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Brimstone Investment Corporation Limited
(Registration number 1995/010442/06)
(Incorporated in the Republic of South Africa)
ISIN Number: ZAE000015277 Share Code: BRT, ISIN Number: ZAE000015285
Share Code: BRN
Reviewed results for the year ended 31 December 2002
HIGHLIGHTS
- Headline earnings up 149%
- NAV up 18%
- Maiden dividend proposed
Group Income Statements
Reviewed Audited
12 Months 15 Months
ended ended
31 Dec 31 Dec
R`000 2002 2001
Revenue 226 151 213 903
Cost of sales (157 736) (152 333)
Gross profit 68 415 61 570
Administration expenses (19 706) (19 238)
Selling and distribution expenses (26 270) (29 591)
Profit from operations 22 439 12 741
Income from investments 2 329 2 379
Finance costs (8 390) (11 747)
Equity accounted retained
income of associates 16 428 5 690
Goodwill amortisation (1 779) (1 779)
Exceptional items 617 1 109
Net profit before taxation 31 644 8 393
Taxation (3 107) (235)
Net attributable profit 28 537 8 158
Earnings per share (cents)
Headline 14.8 5.9
Basic 14.6 4.2
Comparable headline earnings 16.4 7.2
Number of shares used in calculation
(`000) 195 628 195 628
Headline earnings calculation
Net attributable profit 28 537 8 158
Revaluation/(impairment) in value
of investment property (1 435) 1 676
Goodwill write-down 1 779 1 779
Headline earnings 28 881 11 613
Comparable headline earnings calculation
Headline earnings 28 881 11 613
Incentive fee on investment disposals 3 230 2 513
Comparable headline earnings 32 111 14 126
Group Balance Sheets
Reviewed Audited
31 Dec 31 Dec
R`000 2002 2001
ASSETS
Non-current assets 146 269 142 879
Property, plant, equipment and vehicles 16 926 25 554
Goodwill on investment in associate 5 336 7 115
Investments in associate companies 115 931 101 934
Other investments and loans 8 076 8 276
Current assets 121 368 87 183
Land and buildings 21 959 -
Inventory 42 472 35 071
Trade receivables 31 654 35 245
Other receivables 14 644 10 876
Cash and cash equivalents 10 639 5 991
TOTAL ASSETS 267 637 230 062
EQUITY AND LIABILITIES
Capital and reserves 186 353 157 816
Share capital and premium 152 371 152 371
Non-distributable reserve 45 45
Distributable reserves 33 937 5 400
Non-current liabilities 11 311 13 779
Long-term interest bearing borrowings 10 655 13 544
Deferred taxation 656 235
Current liabilities 69 973 58 467
Short-term interest bearing borrowings 46 431 28 746
Bank overdraft 639 6 801
Trade and other payables 18 766 21 468
Taxation 4 137 1 452
TOTAL EQUITY AND LIABILITIES 267 637 230 062
NAV per share (cents) 95.3 80.7
Group Cash Flow Statements
Reviewed Audited
12 Months 15 Months
ended ended
31 Dec 31 Dec
R`000 2002 2001
Cash generated from trading 25 787 15 680
Movement in working capital (10 930) (4 873)
Cash generated from operating activities 14 857 10 807
Investment income 2 329 1 365
Finance costs (8 390) (11 747)
Cash retained from operations 8 796 425
Cash flows from investing activities (12 782) 10 238
Investments acquired - (11 249)
Proceeds on investments realised 2 462 26 092
Additions to property, plant and equipment (15 365) (4 671)
Proceeds on disposal of property, plant
and equipment 121 66
Net cash (outflow)/inflow (3 986) 10 663
Cash effects of financing activities 14 796 (9 409)
Long-term loan advances 11 441 282
Repayment of long-term loans (1 667) (1 508)
Short-term loan advances 6 522 8 420
Repayment of short-term loans (1 500) (16 603)
Net increase in net cash resources 10 810 1 254
Net overdraft in subsidiary re-consolidated - (1 645)
Net cash resources at beginning of year (810) (419)
Closing net cash resources 10 000 (810)
Statement of changes in equity for the year ended 31 December 2002
Non-distri- Distri-
Share Share butable butable
Capital Premium Reserves Reserves Total
Balance at
30 September
2000 42 152 329 - (2 713) 149 658
Attributable
profit for the
fifteen months
ended
31 December
2001 - - - 8 158 8 158
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 year
ended
31 December
2002 - - - 28 537 28 537
Balance at
31 December
2002 42 152 329 45 33 937 186 353
Segmental information for the year ended 31 December 2002
Operating Headline Impairment
Revenue Profit Earnings Losses Assets Liabilities
Financial
services - - (2 414) (3 095) 2 205 -
Industrial 222 168 30 442 40 028 3 127 224 752 64 033
Investments
in transition 3 983 3 168 662 1 235 30 242 13 413
Corporate - (11 171) (9 395) - 10 438 3 838
Total 226 151 22 439 28 881 1 267 267 637 81 284
COMMENTS ON RESULTS
Brimstone Investment Corporation continued to underline its commitment to its
core investments within the industrial and financial services sectors during the
2002 financial period. A strong focus on efficiencies, management process and on
building a culture of good corporate governance, has reaped rewards for
underlying investments, the group, and its shareholders.
Results were gratifying in light of continuing competitive conditions
across all business sectors and considering that 2001 was a 15 month period.
Headline earnings showed a 149% increase to R28.9 million from R11.6 million in
2001, and annualised revenues increased by 32.2% to R226.2 million. This
translated to headline earnings per share of 14.8 cents, up from 5.9 cents per
share for the prior 15-month period, on a restated basis.
The group cash position moved positively from (R0.8) million at end 2001 to
R10 million at year end, and was further increased to more than R17 million on
22 January 2003 following the registration of sale of Keerom Street Properties.
The improved results were reflected in an enhanced NAV per share of 95.3 cents,
up from 80.7 cents at the end of the previous period.
As alluded to at 30 June 2002, 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 have
been taken over by Brimstone Investment Corporation Limited.
Results for the period
Accounting Policies
This report has been prepared in compliance with the South African Statement of
Generally Accepted Accounting Practice applicable to Interim Financial Reporting
and in accordance with the principles applied in the most recently published
annual financial statements, except for headline earnings which have been
determined in terms of the requirements of the South African Institute of
Chartered Accountants` circular 7/2002. Comparative information has been
restated accordingly.
Review Opinion
The financial information has been reviewed by our auditors, Deloitte & Touche,
whose unqualified review opinion is available for inspection at the registered
office of the company.
Industrial Investments
Sea Harvest
Sea Harvest was again a significant contributor to the bottom line, as the
benefits of expanded international markets, more value added products and
greater production and marketing efficiencies take root. Prospects continue to
be good for this company.
The Scientific Group
The holding in the Scientific Group was acquired in November 1999 from the
liquidators of MacMed in the belief that the company represented good solid
value in the medical equipment sector. That belief has not been misplaced and
the company has turned in a gratifying performance for the year under review,
contributing some R2.9 million to earnings compared with a reported loss in the
previous period.
Spitz
We continue to be impressed by the excellent management team of Spitz, a team
that continues to adapt to the challenges of this niche market. Faith in the
abilities of the team has been rewarded with a sparkling performance, much of
which was influenced by an excellent sales environment for its products during
the high season.
House of Monatic
Increased export activity into the US market as a result of the opportunities
afforded by AGOA, as well as into Africa and the UK, have contributed
significantly to excellent results from this company. It is unusual in this
market to have a clothing company operating at full capacity, and we are truly
proud of this achievement. House of Monatic has also now established a presence
in the US market, and is having notable success with its own brands.
Nando`s Group Holdings Limited
As stated in the recent circular to shareholders Brimstone is proposing to
dispose of its investments in Nando`s Group Holdings in the current financial
year.
Financial Services
Lion of Africa Insurance Limited
The Lion of Africa can easily be singled out as the best turnaround performer of
the year, having delivered a net attributable profit of R19.4 million with
positive results in both the underwriting and investment areas. Premium income
increased by 22.9% to R331 million during the year. We look forward to continued
positive returns from the company, which continues to build on its impressive
portfolio of corporate clients in the private and public sectors.
NECorp Holdings
The investment in African Harvest, held through the group`s 25% investment in
NECorp Holdings (Pty) Ltd, has provided the major disappointment within the
group`s investment portfolio. During the period NECorp sold its holding in
African Harvest at a loss. Brimstone`s equity accounted portion of this loss was
R1.5 million and, in addition, the investment was written down by a further R3.1
million. The investment has therefore been fully written off and, it is
anticipated, will have little influence on results in future.
Peoples Bank
As stated at the interim results stage, the risk free funding structure of the
Peoples Bank transaction will see earnings flow through in the medium to long-
term. As such no earnings have been brought to account for the period under
review.
Investments in Transition
Effective 22 January 2003, Keerom Street Chambers was successfully disposed of
for a consideration of R21 750 000. Management continues to work on disposing of
the remaining investments that are not in concert with the intended two pillar
approach that has characterised Brimstone`s growth.
Prospects
Brimstone Investment Corporation will continue with the process of improving its
balance sheet and disposing of its remaining non core investments, releasing
management to focus on businesses where they can add substantial value.
Management will continue to look for deals that will improve cash flows and
quality of earnings.
The bedrock of Brimstone`s success has been its impeccable empowerment
credentials, its partnership approach and management`s active participation in
attracting deal flow and managing the company`s underlying investments.
The company is set to benefit from the Financial Services Charter and is also
looking specifically at the mining and energy sectors with a view to accessing
opportunities which it is believed will be afforded in these sectors in the next
few years.
In evaluating these opportunities, it is important to note that Brimstone
remains committed to its fundamental underlying philosophy. The group will seek
to involve itself in business ventures that are empowering, financially sound
and where it believes it can add significant value.
The directors and management of Brimstone believe that, having secured a firm
financial footing for the company, it is positioned for real and sustainable
growth for its shareholders into the future.
Dividends
In view of the positive results the board of Brimstone has proposed that a
dividend of 4.0 cents per share be paid to shareholders. This marks a milestone
for the company as it is the first time an annual dividend has been proposed.
The dividend is covered 3.7 times by headline earnings.
In compliance with the requirements of STRATE, the electronic settlement and
custody system used by the JSE Securities Exchange South Africa, the company has
determined the following salient dates for the payment of the dividend. The last
day to trade cum dividend is Friday 4 April 2003. The dividend is payable to
all shareholders of Brimstone recorded in the books of the company at the close
of business on Friday 11 April 2003. Shares will commence trading ex dividend
from Monday 7 April 2003. The dividend is payable on Wednesday 16 April 2003.
Share certificates may not be dematerialised or rematerialised between Monday 7
April 2003 and Friday 11 April 2003, both days inclusive.
Prof GJ Gerwel MA Brey
Chairman Chief Executive Officer
Cape Town, 6 March 2003
Date: 06/03/2003 01:53:00 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
