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Brimstone - Reviewed Results For The Year Ended 31 December 2004
Brimstone Investment Corporation Limited
ISIN Number: ZAE000015277 Share Code: BRT,
ISIN Number: ZAE000015285 Share Code: BRN
(`Brimstone` or `the Company`)
Brimstone Investment Corporation Limited
REVIEWED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004
GROUP INCOME STATEMENTS
Reviewed Restated
year ended year ended
31 December 31 December
R`000 2004 2003
REVENUE 187 626 206 904
Cost of sales (141 939) (152 235)
GROSS PROFIT 45 687 54 669
Selling and
administration
expenses (44 133) (45 741)
Goodwill amortisation (8 921) (1 779)
Exceptional items 11 073 21 034
PROFIT FROM OPERATIONS 3 706 28 183
Income from investments 10 033 3 880
Finance costs (17 306) (6 731)
Equity accounted retained
income of associates 19 752 5 548
NET PROFIT BEFORE
TAXATION 16 185 30 880
Taxation (344) (233)
NET ATTRIBUTABLE PROFIT 15 841 30 647
EARNINGS PER SHARE (CENTS)
Headline 20.8 14.9
Basic 13.3 22.1
DILUTED EARNINGS PER SHARE (CENTS)
Headline 20.1 14.9
Basic 12.9 22.0
DIVIDENDS PER SHARE (CENTS)
Declared after reporting
date 10.0 8.0
Weighted average number
Of shares on which
Earnings per share is
based (000`s) 118 799 138 727
Weighted average number
Of shares on which
Diluted earnings per
Share is based (000`s) 123 170 139 097
HEADLINE EARNINGS
CALCULATION
Net attributable
profit 15 841 30 647
Profit on sale of
associate - (13 191)
Goodwill
amortisation 8 921 1 779
Disposal of
investment
property - 1 493
HEADLINE EARNINGS 24 762 20 728
GROUP BALANCE SHEETS
Reviewed Restated
31 December 31 December
R`000 2004 2003
ASSETS
Non-current assets 275 181 234 386
Property, plant,
Equipment and vehicles 16 475 18 025
Goodwill on investment
in associate 33 310 40 082
Investments in associate
companies 204 765 163 445
Available for sale
Investments 20 631 12 834
Current assets 106 259 128 980
Loan - 3 205
Inventory 31 347 35 374
Trade receivables 34 049 28 095
Other receivables 17 184 9 033
Cash and cash
equivalents 23 679 53 273
TOTAL ASSETS 381 440 363 366
EQUITY AND LIABILITIES
Capital and reserves 173 816 167 530
Share capital and
Premium 105 979 106 041
Non-distributable
reserve 7 858 3 280
Distributable reserves 59 979 58 209
Non-current liabilities 156 153 10 397
Long-term interest
bearing borrowings 17 514 8 852
Preference shares 137 000 -
Deferred taxation 1 639 1 545
Current liabilities 51 471 185 439
Short-term interest
Bearing borrowings 25 304 20 289
Short-term loan
convertible into
preference shares - 137 035
Bank overdraft 7 449 4 827
Trade payables 10 895 8 883
Other payables 7 774 13 118
Taxation 49 1 287
TOTAL EQUITY AND
LIABILITIES 381 440 363 366
NAV per share (cents) 146.4 141.0
Shares in issue
at end of
period (`000) 118 718 118 783
GROUP CASH FLOW STATEMENTS
Reviewed Restated
year ended year ended
31 December 31 December
R`000 2004 2003
Cash generated from
trading 5 423 11 956
Movement in working
capital (13 410) 16 035
Cash (utilised in)
/generated from
operating activities (7 987) 27 991
Investment income 10 033 3 880
Finance costs (17 341) (6 731)
Dividend paid (9 493) (7 771)
Taxation paid (1 488) (2 196)
Cash (utilised in)
/retained from
operations (26 276) 15 173
Cash flows from
investing
activities (19 555) (39 070)
Investments acquired (29 495) (137 293)
Proceeds on investments
disposed of 12 259 81 885
Additions to property,
plant and equipment (2 503) (5 042)
Proceeds on disposal of
property, plant and
equipment 184 21 380
Net cash outflow (45 831) (23 897)
Cash effects of
financing activities 13 615 71 865
Repurchase of ordinary
shares (62) (46 747)
Long-term loan advances 11 584 -
Repayment of long-term
loans - (1 803)
Short-term loan
advances 3 931 137 035
Repayment of short-term
loans (1 838) (16 620)
Net (decrease)/increase
In net cash resources (32 216) 47 968
Net cash resources at
beginning of year 48 446 478
Closing net cash
resources 16 230 48 446
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2004
Share Share Non- Distributable Total
Capital Premium distrib- Reserves
utable
R`000 Reserves
Restated
balance at
1 January 2003
as previously
reported 42 152 329 45 37 487 189 903
Change in
accounting
policy for
share trust - 417 - (16) 401
Change in
accounting
policy for
share trust
of
associate - - - (1 444) (1 444)
Restated
Balance 42 152 746 45 36 027 188 860
Attributable
profit for
the year
ended 31
December 2003 - - - 30 647 30 647
Dividend paid - - - (7 771) (7 771)
Shares
Repurchased (4) (46 743) - - (46 747)
Share of
non-dist-
ributable
reserve of
associate - - 2 541 - 2 541
Transfer share
Of non-dist-
ributable
reserve
of
associate - - 694 (694) -
Balance at
31 December
2003 38 106 003 3 280 58 209 167 530
Attributable
profit for
the year
ended 31
December
2004 - - - 15 841 15 841
Dividend paid - - - (9 493) (9 493)
Increase in
treasury
shares held
by share
trust - (62) - - (62)
Transfer
current year
share of
non-distr-
ibutable
reserve of
associate - - 4 578 (4 578) -
Balance at
31 December
2004 38 105 941 7 858 59 979 173 816
SEGMENTAL INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2004
Operating Headline Impairment
R`000 Revenue Profit Earnings Losses Assets Liabilities
Financial
Services 500 8 931 17 785 - 50 016 11 587
Industrial 186 759 3 289 12 305 8 921 290 185 190 374
Investments
in transition 367 2 936 2 940 - 12 035 60
Corporate - (11 450) (8 268) - 29 204 5 603
Total 187 626 3 706 24 762 8 921 381 440 207 624
COMMENTARY
Headline earnings per share for the year ended 31 December 2004 improved by 39%
to 20.8c from 14.9c the prior year. On the balance sheet, net asset value showed
an increase to 146.4c (2003:141c) per share. Results are considered gratifying
in light of a decline in revenue to R187.6m (2003: R206.9m) resulting from
difficult trading conditions in certain of the company`s core underlying
investments.
Afrox Healthcare
Shareholders are referred to last week`s press reports noting that the R4bn
acquisition of Afrox Healthcare by the Bidco consortium led by Brimstone,
Mvelaphanda and financial institutions, has been approved by the Competition
Tribunal.
Valuation of put option
In the course of preparing the circular to shareholders regarding the
acquisition by Brimstone of an effective 20.3% in Afrox Healthcare Limited dated
7 March 2005, merchant bankers assessed the net asset value of Brimstone. The
directors noted that no value was assigned to Brimstone`s put option to Tiger
Brands relating to its investment in Sea Harvest Corporation Limited.
A decision was taken to approach two independent experts to reassess the value
of the option with a view to determining whether any fair value for the option
should be included in the 2004 annual financial statements.
These valuations confirmed that the option could not be reliably measured
because the range of acceptable values was wide and the directors have
accordingly decided not to assign a separate value to the option which is
consistent with the approach adopted in -previous years. This complies with the
requirements of AC133.
RESULTS FOR THE YEAR
Accounting policies
This report has been prepared in compliance with South African Statements of
Generally Accepted Accounting Practice 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.
These results for the year ended 31 December 2004 have been reviewed by Deloitte
and Touche and their review opinion is available for inspection at the company`s
registered office.
Change in accounting policy and prior year adjustment
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:
`000
Share premium at 1 January 2003 as previously reported 152 329
Capital reduction net of treasury shares held by share trust 417
As restated 152 746
Dividends paid as previously reported 7 825
Dividends paid to share trust (54)
As restated 7 771
Shares repurchased and debited to share premium
as previously reported 46 692
Adjustments to include share trust 51
As restated 46 743
Prior year number of shares issued, other receivables and other payables have
been restated to take account of the change in accounting policy.
Prior year adjustment
In addition to the change in accounting policy set out above, the results
attributable to an associate as reported in previous years have changed as a
result of that associate changing its accounting policy to consolidate its share
trust. The following previously reported figures have been impacted by both the
change in accounting policy and the prior year adjustment.
Distributable reserves at 1 January 2003 as previously reported 37 487
Change in accounting policy - distributable reserves of
share trust (16)
Prior year adjustment - effects of restatement of results of
associate (1 444)
As restated 36 027
Profit attributable to shareholders as previously reported 30 569
Change in accounting policy - adjustments to include
share trust (7)
Prior year adjustment - effects of restatement of results of
associate 85
As restated 30 647
INDUSTRIAL INVESTMENTS
House of Monatic
Results for this high-end men`s clothing manufacturer represent a minimal
contribution to headline earnings and continue to be impacted by cheap imports
and the reduced Rand value of exports into the US and European markets. Looking
forward into 2005 the order book is healthy due to support from local retailers
but the industry as a whole remains vulnerable to imports and Rand strength.
Lenco
Lenco`s two main divisions, Versapak and Xactics, enjoyed brisk trade -during
the final quarter of the 2004 year, contributing positively to equity accounted
earnings.
Sea Harvest
The results of the company continued to be affected by competitive markets and
the strong Rand exchange rate. High landings of small hake in SA waters resulted
in reduced prices for fish products. We remain concerned about the state of the
resource and the industry as a whole.
Scientific Group
Scientific Group is a supplier of medical equipment to the healthcare sector.
During the year Brimstone increased its stake from 20% to 26.042%, and its
contribution to profits improved.
FINANCIAL
Lion of Africa
Lion benefited from a positive underwriting cycle and lower crime levels to
contribute strongly to earnings for the period. During the year Brimstone
reached agreement with Santam to increase its stake in Lion of Africa from 30%
to 39%, subject to Competition Commission approval. This will enhance Lion`s
empowerment credentials creating further business opportunities.
Aon South Africa
The acquisition of an effective 18% in Aon South Africa was finalised in
December 2004. No income from this investment accrued to the group -during the
2004 year.
PROSPECTS
The Group continues to seek ways of unlocking shareholder value, and will
continue to evaluate opportunities for growth both through acquisition and
organic growth. In addition we are committed to improving operational
efficiencies in the coming year. We look forward to enhanced earnings across all
of our business interests in 2005.
Shareholders are referred to the renewal of cautionary announcement dated 7
March 2005 and are reminded to continue to exercise caution when dealing in the
company`s securities until further announcements are made.
DIVIDEND
The board of Brimstone has declared a dividend of 10 cents per share payable to
shareholders. In compliance with the requirements of STRATE, the company has
determined the following salient dates for the payment of the dividend. The last
day to trade cum dividend is Friday 1 April 2005. The dividend is payable to all
shareholders of Brimstone recorded in the books of the company at the close of
business on Friday 8 April 2005. Shares will commence trading ex dividend from
Monday 4 April 2005. The dividend is payable Monday 11 April 2005. Shares may
not be rematerialised or dematerialised from Monday 4 April to Friday 8 April
2005, both days inclusive.
On behalf of the board.
Prof GJ Gerwel MA Brey
Non-Executive Chairman Chief Executive Officer
10 March 2005
Date: 10/03/2005 05:05:14 PM
Produced by the JSE SENS Department
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