Brimstone reports strong results, increases dividend

The Group reported a profit for the year of R421.9 million, a 30% increase from R324.5 million in the prior year. This increase in profit is mainly due to strong performance by its major associate Oceana Group, the largest fishing company in Africa, which contributed R366.4 million, an increase of R171 million compared to the prior year.

Total assets increased by 5% to R12.3 billion from R11.7 billion in the prior year. Net asset value per share increased to R14.57 per share from R13.40 per share at prior year end. Brimstone declared a dividend of 40 cents per share, up from 33 cents per share in the previous year.

“In a year where we experienced higher interest rates, a weaker currency, higher fuel costs, supply chain disruptions due to the deteriorating situation at our ports and continued loadshedding, Brimstone produced a strong set of results reporting a 30% increase in profit for the year. The resilience and diversification of our portfolio companies have enabled this stellar result,” says Brimstone’s CEO Mustaq Brey.

 

FOOD  

Brimstone’s subsidiary, JSE-listed Sea Harvest Group benefitted from strong demand across all markets and improved pricing, while their hard currency exposure allowed it to benefit from the weaker Rand during the year. The results were constrained by lower volumes as a result of difficult fishing conditions, above inflation cost increases, load shedding, and lower global prawn prices.  

Sea Harvest reported an increase in earnings before interest and tax of R577 million, up by 15% from R500 million in the prior year. Headline earnings per share decreased to 100 cents from 105 cents from the prior year.

The fair value of Brimstone’s investment in Sea Harvest at year end was R1.5 billion. Brimstone will receive a dividend of R63.8 million from Sea Harvest in April 2024.

Brimstone held 32.7 million shares (25.1% stake) in Oceana Group with a market value of R2.3 billion at year end, up from R2.1 billion at the prior year end. Brimstone recognised R366.4million as its share of profits from Oceana based on Oceana’s reported earnings for the year to 30 September 2023 – this included Brimstone share of profits realised by Oceana from the sale of its Commercial Cold Storage business during the year. Brimstone received dividends of R142.4 million from Oceana during the year under review.

 

FINANCIAL SERVICES AND PROPERTY

Brimstone’s 18% stake in Aon Re Africa, a leading reinsurance broker licensed and operating in Sub-Saharan Africa and the rest of Africa, contributed R22.5 million to profits and delivered a dividend of R15.4 million during the year under review.

The Group’s investment in Equites (a JSE listed REIT) was revalued downwards by R40.3 million to R194.7 million at year end. Brimstone received a dividend of R21.4 million from Equites during the year under review. Subsequent to year end, Brimstone disposed of 8.8 million of its 13.9 million shares in Equites for a total cash consideration of R123.9 million, on the open market.

FPG Property Fund is a Cape-based black-owned and managed unlisted property fund specialising in the retail convenience market. It owns 34 convenience shopping centres in South Africa with an expanding footprint in the United Kingdom. The property portfolio is valued in excess of R8 billion on a gross basis. The investment was revalued upwards by R50.3 million to R362.6 million at year end. Brimstone received a dividend of R4.3 million from FPG Property Fund during the year under review.

 

RESTRICTED BEE

Milpark Education contributed R24.9 million in equity accounted earnings during the year under review. Brimstone received a dividend of R13.8 million from Milpark during the year . The carrying value of Milpark at year end was R87.5 million. Brimstone sold this investment and received R117.5 million on the disposal subsequent to year end.  

Brimstone’s stake in MTN Zakhele Futhi was revalued downwards by R4.1 million to R31.2 million at year end. This scheme matures in November 2024.

Brimstone’s stake in Phuthuma Nathi was revalued downwards by R76 million to R176.3 million at year end. Brimstone received a dividend of R38.6 million from Phuthuma Nathi during the year under review. Subsequent to year end, Brimstone disposed of 1 million  of its 1.8 million Phuthuma Nathi shares, for a total cash consideration of R100 million.

Brimstone stake in listed higher education group STADIO was revalued upwards by R13.5 million to R227.4 million at year end. Brimstone received a dividend from STADIO of R3.9 million during the year under review.

 

HEALTHCARE

Brimstone’s subsidiary Obsidian Health is a leading supplier of innovative healthcare solutions to both the private and public healthcare sectors within Sub-Saharan Africa.

Obsidian contributed R3.7 million to Group profit during the year under review, down from R5.2 million in the prior year. Obsidian managed to grow revenue by regaining market share which was lost during the COVID-19 period due to stock outs, benefiting from increased caseloads as hospitals returned to normal operations post COVID-19, and achieving additional sales to existing customers through organic growth of existing agency product portfolios. Profitability was however impacted due to a decline in margins driven by large global manufacturer price increases combined with the depreciation of the Rand and increased freight costs.

 

OTHER INVESTMENTS

South African Enterprise Development (SAED), an investment vehicle providing equity growth capital to high potential small and medium sized enterprises, of which Brimstone owns 25%, contributed R8.7 million in equity accounted earnings for the year. Brimstone accrued a dividend of R1.6 million from SAED for the year under review.

“Brimstone has clearly indicated that it would reduce its debt. The result of this debt reduction strategy can be seen after year end as the Company disposed of certain investments realising in excess of R300 million. The proceeds of these disposals were utilised to reduce debt. This process is on-going and we will continue to rationalise the portfolio and thereby reduce debt in this high interest rate environment. We have also continued to repurchase our own shares as a means to restore value to all shareholders.

In a year with forthcoming elections, we reiterate our call on government to do everything in its power to reduce unemployment,  stabilise our energy resources and transport infrastructure which are vital components to the success and growth of our economy,” says Fred Robertson, Executive Chairman of Brimstone.