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Brimstone Investment Corporation Limited - Unaudited Results For The Six Months
Ended 30 June 2004 And Further Cautionary Announcement
Brimstone Investment Corporation Limited
ISIN Number: ZAE000015277 Share Code: BRT,
ISIN Number: ZAE000015285 Share Code: BRN
Registration Number: 1995/010442/06
(Incorporated in the Republic of South Africa)
(`Brimstone` or `the Company`)
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004 AND FURTHER CAUTIONARY
ANNOUNCEMENT
COMMENTARY
Headline earnings per share for the six months to end June 2004 increased by 29%
to 11.2 cents from 8.7 cents for the comparable period in 2003. The results are
considered gratifying in light of the decline in revenue to R83.9 million (2003:
R109.4 million). Goodwill amortisation of R4.5 million related to last year`s
R85.3 million acquisition of an additional 10.76% stake in Sea Harvest. The
acquisition of Sea Harvest and Lenco had the effect of increasing finance costs
to just under R8 million. Exceptional income of R6.1 million relates mainly to
the sale of Brimstone`s stake in Peoples Bank. In line with company policy no
dividend has been declared at the interim stage.
Afrox Healthcare
Brimstone`s involvement with an empowerment consortium (`BIDCO`) for the
acquisition of the entire issued share capital of Afrox Healthcare has to date
not been concluded and is subject to approval by the Competition Tribunal. The
Tribunal is currently adjourned and recommences on 15 September 2004. Your
directors are confident of a positive outcome.
RESULTS FOR THE PERIOD
Accounting Policies
This report has been prepared in compliance with South African Statements 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 change in accounting policy
relating to the consolidation of the Share Trust, details of which are set out
below.
Change in accounting policy
The company has changed its accounting policy relating to the Brimstone
Investment Corporation Limited Share Trust, which has now been consolidated.
Prior period financial statements have been restated accordingly. The effects of
this change are set out below:
30 June 03 31 Dec 03
Dividends paid as previously reported 7 859 7 825
Adjustments to include the Share Trust (60) (60)
As restated 7 799 7 765
Prior period share capital and premium, number of shares in issue, other
receivables and other payables have been restated to take into account the
treasury shares held by the Share Trust and to eliminate intergroup balances.
Industrial
Sea Harvest
The results of both the South African and Namibian operations were impacted by
higher landings of small fish and the strong Rand. An improvement in fish
populations and size mix is expected. This provides confidence for future
earnings.
Scientific Group
Medical equipment supplier Scientific had a positive six months, selling more
equipment for the period with improved margins despite slightly reduced turnover
because of the stronger Rand. Brimstone is in the process of acquiring an
additional 6% of the company.
Lenco
The company performed satisfactorily for the first six months of the year. In
line with the seasonal nature of the packaging industry, particularly within the
food and beverage sectors, directors are confident of improved returns during
the latter part of the financial year.
House of Monatic
While production and sales volumes of men`s clothing remain strong, the bottom
line was adversely affected by the reduced Rand value of exports into the US and
UK markets. While positive indicators for the remainder of the financial year
include a stronger forward order book, the industry remains vulnerable.
Financial
Lion of Africa Insurance Company
In line with the positive business climate in the insurance industry which has
seen a number of SA`s short term insurers return to profitability, Lion of
Africa reported strong earnings growth during the six month period on the back
of improved underwriting results across all commercial, personal and corporate
business segments. Brimstone has reached agreement in principle to increase its
stake in Lion of Africa to 39%, reflecting its belief in Lion`s sound business
model, empowerment credentials and excellent prospects for growth.
Aon South Africa
During the period under review Brimstone has agreed to acquire an effective 18%
of insurance broking and consulting company Aon South Africa (Pty) Ltd for R9.3
million. Aon South Africa is a subsidiary of listed Dutch company Aon Holdings
bv and is considered a strategic acquisition complementing Brimstone`s holding
in short term insurer Lion of Africa. To finalise the acquisition, we await SARB
approval.
Prospects
Brimstone continues to be seen as an empowerment partner of choice in the
industrial and financial services sectors. Our business is driven through deal
flow and astute management of profit generating assets. We have confidence in
the growth prospects of our underlying investments and will continue to evaluate
investments that yield positive results and create wealth, both for our
stakeholders and for the communities in which we operate.
Further cautionary announcement
Further to the cautionary announcement dated 14 July 2004, relating to the offer
by Business Venture Investments No. 790 (Proprietary) Limited (`BIDCO`) to
acquire all of the issued share capital of Afrox Healthcare Limited (`Ahealth`),
holders of ordinary and `N` ordinary Brimstone shares (`shareholders`) are
advised that discussions are still in progress regarding Brimstone`s
participation in BIDCO. Accordingly, shareholders are advised to continue to
exercise caution when dealing in Brimstone`s securities until a further
announcement is made.
On behalf of the board
Prof GJ Gerwel MA Brey
Non-Executive Chairman Chief Executive Officer
23 August 2004
Group Income Statements
Restated Restated
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 June 30 June 31 Dec
R`000 2004 2003 2003
Revenue 83 909 109 447 206 904
Cost of sales (62 322) (81 244) (152 235)
Gross profit 21 587 28 203 54 669
Selling and
administration
expenses (22 197) (23 136) (45 734)
Goodwill
amortisation (4 534) (889) (1 779)
Exceptional
items 6 136 6 266 21 034
Profit from
operations 992 10 444 28 190
Income from
investments 5 269 1 623 3 880
Finance costs (7 979) (3 265) (6 731)
Equity
accounted
retained
income of
associates 10 842 2 396 5 463
Net profit
before
taxation 9 124 11 198 30 802
Taxation (324) 700 (233)
Net attributable
profit 8 800 11 898 30 569
Earnings per
share (cents)
Headline 11.2 8.7 14.9
Basic 7.4 7.5 22.0
Diluted
earnings
per share
(cents)
Headline 11.1 8.7 14.8
Basic 7.3 7.5 22.0
Weighted
average
number of
shares on
which earnings
per share is
based (000`s) 118 748 158 945 138 699
Weighted
average
number of
shares on
which diluted
earnings per
share is
based (000`s) 120 379 158 945 139 069
Headline earnings calculation
Net
attributable
profit 8 800 11 898 30 569
Profit on sale
of associate - - (13 191)
Disposal of
investment
property - 1 043 1 493
Goodwill
amortisation 4 534 889 1 779
Headline
earnings 13 334 13 830 20 650
Group Balance Sheets
Restated Restated
Unaudited Unaudited Audited
30 June 30 June 31 Dec
R`000 2004 2003 2003
ASSETS
Non-current
assets 248 781 104 705 235 745
Property,
plant, equipment
and vehicles 18 361 19 011 18 025
Goodwill on investment in
associates 35 632 4 447 40 082
Investments in associate
companies 175 647 67 030 164 804
Available for sale
investments 19 141 11 167 12 834
Other investments
and loans - 3 050 -
Current assets 118 156 110 956 128 939
Loan - - 3 205
Inventory 39 360 39 393 35 374
Trade receivables 35 084 35 537 28 095
Other receivables 9 937 11 434 8 992
Cash and cash
equivalents 33 775 24 592 53 273
TOTAL
ASSETS 366 937 215 661 364 684
EQUITY AND LIABILITIES
Capital and
Reserves 168 210 150 218 168 877
Share capital and premium 106 000 106 046 106 000
Non-distributable
reserves 3 280 2 586 3 280
Distributable
reserves 58 930 41 586 59 597
Non-current
liabilities 146 511 9 119 10 397
Long-term
interest bearing
borrowings 8 205 8 463 8 852
Preference shares 137 000 - -
Deferred
taxation 1 306 656 1 545
Current
liabilities 52 216 56 324 185 410
Short-term interest
bearing borrowings 23 977 25 092 20 289
Short-term loan
convertible into
preference shares - - 137 035
Bank overdraft 7 716 9 180 4 827
Trade
payables 7 260 11 072 8 848
Other
payables 12 900 9 738 13 124
Taxation 363 1 242 1 287
TOTAL EQUITY AND
LIABILITIES 366 937 215 661 364 684
NAV per
share (cents) 141.7 126.4 142.2
Shares in issue at end of
period (000`s) 118 748 118 823 118 748
Group Cash Flow Statements
Restated Restated
Unaudited Unaudited Audited
6 Months 6 Months 12 Months
ended ended ended
30 Jun 30 Jun 31 Dec
R`000 2004 2003 2003
Cash generated
from trading 1 362 6 808 11 963
Movement in working
capital (13 732) 4 820 16 049
Cash (utilised in)
/generated from
operations (12 370) 11 628 28 012
Investment income 5 269 1 623 3 880
Finance costs (7 979) (3 265) (6 731)
Dividend paid (9 467) (7 799) (7 765)
Taxation paid (1 487) (2 196) (2 196)
Cash (utilised in)
/retained from operating
activities (26 034) 25 15 200
Cash flows from investing
activities 641 75 646 (39 070)
Net investments
disposed of /(acquired) 2 949 58 557 (55 408)
Net (additions)
/disposals of property, plant,
equipment and
vehicles (2 308) 17 089 16 338
Net cash (outflow)
/inflow (25 393) 75 671 (23 870)
Cash effects of
financing activities 3 006 (60 737) 71 838
Repurchase of
ordinary shares - (46 728) (46 774)
Net repayment of
long-term loans (647) (2 192) (1 803)
Net raising/(repayment) of
short-term loans 3 653 (11 817) 120 415
Net (decrease)/increase in net
cash resources (22 387) 14 934 47 968
Net cash resources
at beginning of period 48 446 478 478
Closing net cash resources 26 059 15 412 8 446
Statements of changes in equity
Share Share Non-dist- Distribut-
R`000 Capital Premium ributable able Reserves
Reserves Total
1 January 2003 to 31
December 2003 (restated)
Restated balance at
1 January 2003 as
previously reported 42 152 329 45 37 487 189 903
Change in accounting
policy for Share Trust - 403 - - 403
Restated balance 42 152 732 45 37 487 190 306
Attributable profit for
the year ended 31
Dec 2003 - - - 30 569 30 569
Dividend paid - - - (7 765) (7 765)
Shares
Repurchased (4) (46 692) - - (46 696)
Increase in treasury
shares held by Share
Trust - (78) - - (78)
Share of non-
distributable reserve
of associate - - 2 541 - 2 541
Transfer current
year share of non-
distribut-
able reserve of
associate - - 694 (694) -
Balance at
31 Dec 2003 38 105 962 3 280 59 597 168 877
1 January 2004 to 30 June 2004
Attributable profit for
the six months
ended 30 June 2004 - - - 8 800 8 800
Dividend paid - - - (9 467) (9 467)
Balance at 30 June
2004 38 105 962 3 280 58 930 168 210
1 January 2003 to
30 June 2003 (restated)
Restated balance at
1 January 2003 as
previously reported 42 152 329 45 37 487 189 903
Change in accounting
policy for Share Trust - 403 - - 403
Restated balance 42 152 732 45 37 487 190 306
Attributable profit for
the six months ended 30
June 2003 - - - 11 898 11 898
Dividend paid - - - (7 799) (7 799)
Shares repurchased( 4) (46 692) - - (46 696)
Increase in treasury
shares held by Share
Trust - (32) - - (32)
Share of non-dist-
ributable reserve of
associate - - 2 541 - 2 541
Balance at 30 June
2003 38 106 008 2 586 41 586 150 218
Segmental information for the six months ended 30 June 2004
Operating Headline
R`000 Revenue Profit Earnings Assets Liabilities
Financial
services 250 250 3 562 8 835 -
Industrial 83 374 (115) 3 979 300 408 195 078
Investments in
transition 285 6 387 6 213 19 206 197
Corporate - (5 530) (420) 38 488 3 452
Total 83 909 992 13 334 366 937 198 727
Date: 23/08/2004 04:44:26 PM Produced by the JSE SENS Department
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