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Brimstone Investment Corporation Limited -
Brimstone Investment Corporation Limited
Unaudited results for the six months ended 30 June 2003
ISIN Number: ZAE000015277 Share Code: BRT, ISIN Number: ZAE000015285
Share Code: BRN
HIGHLIGHTS
HIGHLIGHTS
- HEADLINE EARNINGS UP 24%
- NET CASH POSITION IMPROVED
- NAV PER SHARE FROM DECEMBER UP 30.8% TO 124.7 CENTS
- EMPOWERMENT SHAREHOLDING AT 57%
Group Income Statements
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 June 30 June 31 Dec
R"000 2003 2002 2002
Revenue 109 447 111 888 226 151
Cost of sales (81 244) (78 811) (157 736)
Gross profit 28 203 33 077 68 415
Selling and
administration
expenses (23 136) (23 268) (45 976)
Goodwill
amortisation (889) (889) (1 779)
Exceptional items 6 266 (200) 617
Profit from
operations 10 444 8 720 21 277
Income from
investments 1 623 1 535 2 329
Finance costs (3 265) (3 484) (8 390)
Equity accounted
retained income of
associates 2 396 4 950 16 428
Net profit before
taxation 11 198 11 721 31 644
Taxation 700 (1 430) (3 107)
Net attributable
profit 11 898 10 291 28 537
Earnings per share
(cents)
Headline 8.6 5.7 14.8
Basic 7.4 5.3 14.6
Comparable
headline
earnings 8.6 7.3 16.4
Number of shares
used in calculation
("000) 160 155 195 628 195 628
Headline earnings
calculation
Net attributable
profit 11 898 10 291 28 537
Disposal/
(revaluation) of
investment property 1 043 - (1 435)
Goodwill
amortisation 889 889 1 779
Headline earnings 13 830 11 180 28 881
Comparable headline
earnings calculation
Headline earnings 13 830 11 180 28 881
Incentive fee on
investment disposals - 3 100 3 230
Comparable headline
earnings 13 830 14 280 32 111
Group Balance Sheets
Unaudited Unaudited Audited
30 June 30 June 31 Dec
R"000 2003 2002 2002
ASSETS
Non-current assets 104 705 145 507 146 269
Property,plant,
equipment and
vehicles 19 011 26 344 16 926
Goodwill on
investment in
associate 4 447 6 226 5 336
Investments in
associate companies 67 030 104 861 115 931
Available for sale
investments 11 167 - -
Other investments
and loans 3 050 8 076 8 076
Current assets 110 948 99 586 121 369
Land and buildings - - 21 958
Inventory 39 393 33 953 42 472
Trade receivables 35 537 42 241 31 655
Other receivables 11 426 11 531 14 645
Cash and cash
equivalents 24 592 11 861 10 639
TOTAL ASSETS 215 653 245 093 267 638
EQUITY AND
LIABILITIES
Capital and
reserves 149 787 168 107 186 353
Share capital and
premium 105 675 152 371 152 371
Non-distributable
reserves 2 586 45 45
Distributable
reserves 41 526 15 691 33 937
Non-current
liabilities 9 119 14 201 11 311
Long-term interest
bearing borrowings 8 463 13 966 10 655
Deferred taxation 656 235 656
Current liabilities 56 747 62 785 69 974
Short-term interest
bearing borrowings 25 092 28 942 36 909
Bank overdraft 9 180 653 10 161
Trade and other
payables 21 233 30 308 18 766
Taxation 1 242 2 882 4 138
TOTAL EQUITY AND
LIABILITIES 215 653 245 093 267 638
NAV per share
(cents) 124.7 85.9 95.3
Shares in issue at
end of period
("000) 120 091 195 628 195 628
Group Cash Flow Statements
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 June 30 June 31 Dec
R"000 2003 2002 2002
Cash generated from
trading 6 808 11 349 25 788
Movement in working
capital 4 882 2 307 (10 931)
Cash generated from
operating
activities 11 690 13 656 14 857
Investment income 1 623 1 535 2 329
Finance costs (3 265) (3 484) (8 390)
Dividend paid (7 859) - -
Taxation paid (2 196) - -
Cash (utilised in)/
retained from
operating activities (7) 11 707 8 796
Cash flows from
investing activities 75 646 (307) (12 782)
Net investments
disposed of 58 557 2 023 2 463
Net disposals/
(additions) to
property, plant,
equipment and
vehicles 17 089 (2 330) (15 245)
Net cash inflow/
(outflow) 75 639 11 400 (3 986)
Cash effects of
financing activities (60 705) 618 5 274
Repurchase of
ordinary shares (46 696) - -
Net (repayment)/
raising of long-term
loans (2 192) 422 9 774
Net (repayment)/
raising of short-
term loans (11 817) 196 (4 500)
Net increase in net
cash resources 14 934 12 018 1 288
Net cash resources
at beginning of
period 478 (810) (810)
Closing net cash
resources 15 412 11 208 478
Statement of changes in equity for the six months ended 30 June 2003
Share Share Non- Distribut- Total
Capital Premium distrib- able
Reserves
R"000
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 as
previously
reported 42 152 329 45 33 937 186 353
Effect of
change in
accounting
policy
AC 133
transitional
adjustment - - - 3 550 3 550
Balance at
31 December
2002 as
restated 42 152 329 45 37 487 189 903
Attributable
profit for
the six
months
ended 30
June 2003 - - - 11 898 11 898
Dividend
paid - - - (7 859) (7 859)
Shares
Repurchased (4) (46 692) - - (46 696)
Share of
non-
distributable
reserve of
associate - - 2 541 - 2 541
Balance at
30 June
2003 38 105 637 2 586 41 526 149 787
Segmental information for the 6 months ended 30 June 2003
Operating Headline
R"000 Revenue Profit Earnings Assets Liabilities
Financial
services - - (111) 4 634 -
Industrial 106 396 11 839 12 599 170 431 64 082
Investments
in
transition 306 (1 663) (979) 14 217 -
Corporate 2 745 268 2 321 26 371 1 784
Total 109 447 10 444 13 830 215 653 65 866
Comments on results
Brimstone Investment Corporation enjoyed an excellent six months largely
attributable to profits earned on the disposal of its interest in Nando"s Group
Holdings in April 2003.Headline earnings for the period were up 23.7% to R13.8
million (2002: R11.2 million), translating to comparable headline earnings of
8.6 cents per share (2002: 7.3 cents per share). Net asset value has increased
to 124.7 cents from 95.3 cents a share at the previous year end. The group also
boasts a healthy bank balance, with R15.4 million group cash resources on hand.
During the period, the company repurchased and cancelled 62 192 957 "N" ordinary
shares and purchased as treasury shares 3 599 400 ordinary and 9 744 077 "N"
ordinary shares. These transactions considerably enhanced the black economic
empowerment of the company, to the extent that we are proud to advise that the
black economic shareholding now stands at 57% of issued capital.
Results for the period
Accounting Policies
This report has been prepared in compliance with South African Standards 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. An exception is the implementation of
accounting standard AC133, which establishes the principles for recognising,
measuring and disclosing information about financial instruments.
Accounting standard AC133 requires all financial instruments to be
classified according to definitions contained in the statement. Brimstone"s
financial instruments were analysed and it was found that certain investments
needed to be reclassified in terms of AC133 and these have accordingly been
reclassified as "available for sale" assets.
Available for Sale Assets
These are assets which are not part of a portfolio of assets for which there is
a pattern of trading for the purposes of generating profits from short-term
price fluctuations. Brimstone has elected to recognise fair value gains or
losses on these assets directly in the income statement. The fair values of
these assets have been determined at the previous period end and the financial
effects have been disclosed in the "Statement of changes in equity" as an
adjustment to opening retained income. Any movements thereafter have been taken
directly to the income statement. No other adjustments were required following
the adoption of this standard.
Headline earnings have been determined in terms of the requirements of the South
African Institute of Chartered Accountants" Circular 7/2002 which has
necessitated the restatement of comparative information for the six months ended
30 June 2002.
(R"000)
Headline earnings reported 30 June 2002 11 380
Impairment of unlisted investment (200)
Restated headline earnings 30 June 2002 11 180
Industrial
Sea Harvest
This Saldanha based company continues to provide a substantial dividend and
income stream. This is in spite of trading conditions made difficult by the
appreciation in the Rand, congestion at SA Ports and poor fishing conditions. A
number of these issues have now been rectified and Sea Harvest is looking
forward to an improved performance during the remainder of the financial year.
Scientific Group
The success story continues for this medical equipment company. The company
continues to trade well despite difficult market conditions and contributed
positively to earnings during the period.
Spitz
The management of this niche retailer have turned this company into a leader in
the very competitive retail environment. Improved cashflow and a focus on
profits has resulted in an impressive contribution to the bottom line.
Nando"s Group Holdings Limited
Brimstone has concluded the sale of Nando"s shares resulting in an extraordinary
profit of R7.8 million for the period.
Brimstone Clothing Corporation (Pty) Ltd
(House of Monatic)
The Rand exchange rate had an adverse affect on exports to the USA and the UK.
The company is evaluating new markets and has set up representative offices in
the USA.
Financial Services
Lion of Africa
Short term insurance company Lion of Africa again turned in a satisfactory
performance for the first six months. The company is extremely well positioned
within the competitive insurance sector in terms of its strong black empowerment
credentials, and management is confident of strong earnings for the coming
period.
Peoples Bank
No profits have accrued and it is likely to take some time before a profit
stream develops. The directors however are confident of the long term success of
this initiative, to the extent that Brimstone has recently increased its stake
in this banking group to 10%.
Investments in Transition
Keerom Street Chambers was sold during the period and directors and management
are currently negotiating the disposal of a number of other investments.
Shareholders will be notified as to progress in this regard.
Prospects
Clarity on the structure of empowerment charters across the mining, resources
and financial services sectors during the next six months should pave the way
for heightened deal flow and an exciting passage of business for Brimstone.
Providing further impetus is the fact that Brimstone is even more firmly
entrenched as one of the very few companies on the JSE Securities Exchange which
has the majority of its voting and economic power vested in its black
shareholders.
In view of the group"s results the directors are positive about future
prospects.
Prof GJ Gerwel FJ Robertson
Chairman Deputy Chairman
Cape Town, 19 August 2002
Date: 19/08/2003 04:34:30 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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